Looking on the bright side of the departure of commercial plans from Medicaid
Looking on the bright side of the departure of commercial plans from Medicaid market
Reports of the death of Medicaid managed care are greatly exaggerated, say researchers tracking the field. In fact, some of the high-profile departures of commercial plans from the Medicaid market may be "acceptable," says Mathematica researcher Suzanne Felt-Lisk. At the recent annual meeting of the National Academy for State Health Policy in Cincinnati, Ms. Felt-Lisk offered some encouragement to Medicaid officials struggling to maintain the health of commercial plans serving Medicaid enrollees:
• Commercial plans still maintain a role in serving Medicaid. About 60% of Medicaid enrollees are served by commercial plans, according to a Mathematica analysis of Medicaid in 15-states.
• The significance of the departures is diminished by the relatively small size of the Medicaid enrollment they served.
• Some exits may strengthen the role of the plans that remain by increasing their enrollment and allowing the addition of services.
• A smaller number of plans may improve the ability of the state to monitor managed care plans.
• Outcomes analysis is easier with a smaller number of plans.
• A smaller number of plans may simplify enrollment choices for enrollees.
• The departure of commercial plans may reflect state policy favoring nonprofit safety-net plans.
Still, the exodus poses some operational and policy problems. Ms. Felt-Lisk notes that the shrinking of the commercial presence in Medicaid disrupted patient relationships and jeopardized states’ ability to offer a "mainstream option" to enrollees.
Just over half of the Medicaid-dominated plans, defined as those that count on Medicaid for at least 75% of their business, are provider-based, according to Mathematica’s analysis. Such safety net plans are unlikely to offer growth or even stability to Medicaid managed care markets, researchers say.
"I think we are going to get a second jolt here insofar as states may grow to rely on Medicaid-only or provider-sponsored entities when their staying power is questionable," says Robert Hurley, associate professor of health administration at Virginia Commonwealth University in Richmond, VA.
"The Medicare impacts of the Balanced Budget Act are just now hitting hospitals, and I see many of them jettisoning their [normally] unprofitable HMOs to get back to basics. Thus states may find the organizations they are growing to rely on are, in effect, unreliable," Mr. Hurley said after the meeting.
Even when it has the financial resources to expand, a small, provider-sponsored plan may not find such a move part of its "mission," Ms. Felt-Lisk noted.
Defying the odds is Kentucky, where the state is relying on sole-source partnerships with provider-sponsored organizations to provide Medicaid managed care. (See State Health Watch, November1998, p. 3.) Plans are operational in the two markets surrounding Louisville and Lexington, with a single plan for two northeast Kentucky regions expected to be up and running by November.
Sole-sourcing can free up money that otherwise would be used for marketing and similar administrative expenses, notes Rich Heine, director of quality improvement and development for Kentucky’s Department of Medicaid Services.
At the same time, he cautions against expecting too much too quickly from provider-sponsored plans anchored by an acute care provider.
"They’re not too interested in going really fast" to ratchet down hospital utilization and related costs, Heine says.
Contact Ms. Felt-Lisk at (609) 799-3535, Mr. Hurley at (804) 828-1891, and Mr. Heine at (502) 564-7940.
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