Washington Medicaid eyes moving costly SSI population to managed care

Washington Medicaid first tried moving its high-cost Supplemental Security Income (SSI) population into managed care back in the 1990s, but that effort was a failure, according to Doug Porter, the state's Medicaid director.

Currently, 693,539 individuals are enrolled in Medicaid managed care, says Mr. Porter, and 561,238 of them are children.

"The attempt to move the SSI population into our Healthy Options plan lasted for a year or less," says Mr. Porter. "The reasons for that are as varied as the number of people you ask about it who were here at the time, but for whatever reason, it was not a success."

The failure put policymakers in a "don't even think about it" mode for a number of years, according to Mr. Porter, but then economic conditions worsened. "The fee-for-service program grew so robustly and became very unpredictable," he says. "More and more folks started pushing us back to the drawing board to figure out how to manage the care of the people who cost the most money."

While the Temporary Assistance for Needy Families (TANF) population of mothers and children is relatively inexpensive to cover, says Mr. Porter, about 5% of clients drive half of the expenses in the Medicaid program, mostly elderly and disabled individuals.

"That is why we are re-procuring our managed care contracts right now. We have an RFP out on the street that people are looking at and responding to," says Mr. Porter. "We fully intend to undergo a major shift from the fee-for-service world into the managed care world."

Preston Cody, director of Washington state's Division of Healthcare Services, says that about 100,000 to 120,000 individuals in the aged, blind and disabled population will likely be moved into Medicaid managed care, but not dual eligibles.

"There wouldn't be much advantage to managing the care of those individuals, except to Medicare," he explains. "We will need to come up with a shared savings strategy with Medicare before we move the dual eligible population into managed care in Medicaid."

More obligations for plans

Back in the 1990s, says Mr. Porter, policymakers were "a little naive" in thinking that the Healthy Options plans could simply absorb the SSI population with their existing contracts, without taking the unique needs of this group into account.

"That was one problem," says Mr. Porter. "We didn't fully anticipate how the plans' obligations to this population would be greater than the existing TANF population."

In fact, plans were obliged to do a great deal more for the SSI population than was being done in the fee-for-service world, says Mr. Porter, and people were skeptical that clients would really be able to access all the services they needed.

At the time, Mr. Porter was director of California's Medi-Cal program, and was involved with the debate over expanding managed care to the 12 largest counties in the state on a mandatory basis.

"The advocates were certainly concerned about the motivation plans would have to deny or delay services to achieve a better margin," Mr. Porter says. In Washington state, stakeholders set out to make sure that managed care plans would really provide all the necessary services to clients, he explains, which quickly became unaffordable.

The managed care organizations (MCOs) are now more mature in their development, says Mr. Porter, and over time, the state has gotten better at measuring the care they provide. "We have lived with this model for some time," he says.

Washington Medicaid has worked with the MCOs on various quality improvement efforts, explains Mr. Porter, such as improving immunization rates and well-child visits.

"This has positioned us, at this point in time, to go back and revisit the SSI population," says Mr. Porter.

The state's budget includes an estimated first-year savings of $16.2 million due to the switch to managed care, says Mr. Porter. "This may be an unreasonable expectation, in their desperation to close a $5 billion shortfall," he adds. "We don't know how reasonable it is. We're going to find out when we go to the market and see what our actuaries come up with, and what plans are willing to go at risk for."

However, Mr. Porter says he is not willing to jeopardize the move to managed care if that estimated savings amount turns out to be unrealistic. "If we can't realize it, we can't realize it. That's not a reason not to move this population to managed care," he says.

The state has done a three-year look at the fiscal impact of managed care, says Mr. Cody, and expects to see some savings in the first year. The state won't necessarily go with the lowest bidder when selecting MCOs, he adds, but rather, the ones who can achieve the desired outcomes.

The MCOs that are contracted with will provide care through January 2014, says Mr. Cody, at which point an additional 400,000 to 500,000 individuals are expected to come onto the Medicaid program. Therefore, he says, "Plans have a lot of incentive to bid lower. We want the best carrier to provide the service at the lowest cost."

Duals may be next

As one of 15 states awarded a $1 million planning grant for dual eligibles, Washington is working to identify how to manage not only the Medicaid expenditures for the dual eligibles, but also the Medicare expenditures, Mr. Porter says.

"There are things that we could do in Medicaid that would likely save Medicare money, but it would cost Medicaid more," he explains. "Until we can control not just the Medicaid side but also the Medicare side, it's not worth it to any state to do that."

The goal is to have Medicare share those savings with Medicaid, says Mr. Porter, which would probably result in a more aggressive move into managed care for dual eligibles.

For instance, nursing homes which are paid for by Medicaid don't have trained staff available to medically manage a patient around the clock, says Mr. Porter. A patient with an impacted bowel or indigestion is therefore rushed by ambulance to the nearest ED, he explains, where diagnostic tests are done and the patient may be admitted, all of which Medicare pays for.

If Medicaid reimbursed nursing facilities to have better medical management on site, it could save the cost of an ambulance trip or a hospital admission, and would be better care for the patient, says Mr. Porter. "But it would cost Medicaid more to do that, and save Medicare the extra expense. That is the sad state of affairs," he says.

In the current delivery system, says Mr. Porter, providers do exactly what they are paid to do, and no more. "We've got to figure out how to change that," he says. "That is really part of the appeal of managed care."

Managed care offers a lot more flexibility for how you buy services than fee-for-service, says Mr. Porter, which is designed to pay for each pill dispensed or each admission. "You buy widgets, not outcomes," he says. "We have to move toward buying outcomes."

Contact Mr. Cody at (360) 923-2765 and Mr. Porter at (360) 725-1040 or portejd@dshs.wa.gov.