Report validates the value of Medicaid health plans
Report validates the value of Medicaid health plans
Medicaid health plans improve quality and yield cost savings ranging from half of 1% to 20%, according a March 2009 report from The Lewin Group in Falls Church, VA, "Medicaid Managed Care Cost Savings-A Synthesis of 24 Studies. " Researchers analyzed 24 existing studies to determine the savings achieved when states have implemented private Medicaid health plans.
Cost savings were mostly due to two factors: Drug costs and changing patterns in unnecessary inpatient utilization. In addition, Medicaid health plans earned high satisfaction ratings from enrollees.
Joel Menges, the report's lead author and a managing director at The Lewin Group, says the studies were all consistent in finding positive outcomes. "Most of the studies found savings in the range of 3% to 8%, but all did find savings," he says.
Currently, only about 20% of Medicaid money is paid through the capitation vehicle to health plans. "So, 80% of Medicaid's money is still in the traditional fee-for-service environment," says Mr. Menges. "In a situation where states are taking various kinds of axes to the Medicaid program to deal with their budget crises, a significant opportunity exists in most states to expand the use of capitation. Money can then be saved in a constructive, rather than destructive, way."
One obstacle is a strong public perception that the HMO model prevents needed care from happening. "I don't think of any of the studies we have seen are validating that concern, but that has been a significant barrier to the expansion of managed care," says Mr. Menges. "The general feeling toward the HMO industry as a whole, in the public eye, is much more negative than positive. But the reality of the model is that it is generally working quite well for the people it is serving."
Mr. Menges argues that plans can only achieve savings by keeping people healthy, avoiding unnecessary services, and treating minor issues effectively so that they do not snowball into full-blown health crises "which, unfortunately, the fee-for-service Medicaid model doesn't do a good job of averting."
More managed care needed
While only 20% of Medicaid money is capitated, roughly 50% of the Medicaid population is served in managed care. Mr. Menges says that one reason for this is that the disabled and other high-need Medicaid subgroups have largely not been moved over to the capitated setting.
"A good case can be made that we've got the least Medicaid managed care where we need it the most, for the sicker populations," says Mr. Menges. "That is where the hesitancy is particularly high, to put needy and vulnerable people in the hands of HMOs, but I think that's a misguided fear. The reality of the model is, when it's designed well, implemented by capable and experienced MCOs and monitored adequately, it can work extremely well for high-need populations."
Mr. Menges says the current health care reform movement is focusing heavily on only one major problem in the health care system-that of covering the uninsured. "The second devastating problem that our system costs too much. It is not organized to create effective, efficient results," he says. "In my view, a huge need exists to ramp up the cost-effectiveness that the Medicaid and Medicare programs are achieving per person, particularly if health care reform is going to succeed in covering even more people. There is a need to refocus more firepower on programs that achieve cost-containment."
Public distrusts HMOs
The public's distrust of HMOs is so deep-rooted, it's unlikely to be swayed by any evidence to the contrary. However, Mr. Menges says the overall performance of the capitated model has been at least equal, if not better, than the fee-for-service model, on both quality and cost-containment.
"I think that will eventually win out in the political arena, though I don't have a crystal ball of how long it will take," says Ms. Menges.
One roadblock is that the public lacks an understanding of the difference between Medicaid managed care and private sector managed care. "I think the model of coverage, whether it's Medicaid, Medicare, or elsewhere, where people can go wherever their coverage card is accepted, providers can perform whatever services they choose, and other people's money just pays for it all, that can't be cost-effective wherever that model is used," says Mr. Menges. "That model is used quite heavily in the Medicaid program right now, and I personally think that needs to change."
The Medicaid managed care industry is-and should be-a highly regulated industry, adds Mr. Menges. "Given that impoverished and highly vulnerable people are being served, there is an important need for careful design, thoughtful selection of the health plans, close monitoring and so forth," he says. "It needs to be done properly and carefully. But when it is done that way, it performs very well."
Contact Mr. Menges at (703) 269-5598 or [email protected].
Medicaid health plans improve quality and yield cost savings ranging from half of 1% to 20%, according a March 2009 report from The Lewin Group in Falls Church, VA, "Medicaid Managed Care Cost Savings-A Synthesis of 24 Studies.Subscribe Now for Access
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