Managed Care and Medicaid

¶ … Reduce Medicaid Program Costs and Enhance Utilization and the Quality of Care Through Medicaid Managed Care Medicaid is a type of health insurance provided and funded by the federal government and states to provide coverage to all Americans who are eligible low-income adults, children, elderly adults, pregnant women, and individuals with disabilities. Managed Care is a health care delivery system that was organized to manage cost and quality.

The use of managed care in Medicaid is to deliver Medicaid health benefits and additional services through contracted arrangements that are between state Medicaid agencies and managed care organizations. By contracting with different types of managed care organizations, states can reduce Medicaid program costs and better manage the use of health services as well as enhance health care quality (Medicaid.gov). Medicaid Managed Care is a federal government sponsored medical care system designed to deliver quality care and to reduce cost of health care.

It is jointly funded by Federal and state governments. Medicaid has increased access to care and reduced the cost of care by providing the covered individuals with basic health care services and other health benefits through MCOs (managed care organizations). MCOs accept payments from state Medicaid agencies for the health care services rendered. The main objectives of Medicaid are to enhance health care quality, to improve health care performance and to better health care outcomes for American citizens (Medicare and Medicaid, 2014).

There are four basic types of managed care plans that are used by Medicaid which include Health Maintenance Organization, Preferred Provider Organization, Point of Service, or Exclusive Provider Organization (Nourie, 2013). Each have their certain rules and regulations which stirs up the competition. For example, under an HMO plan you must have a primary care doctor, you can only use doctors or hospitals who are approved by your plan, and you need referrals to see specialists (Nourie, 2013).

As compared to a PPO plan which is more flexible, there is no need for a primary care doctor and you can see any doctor you want even outside of your plan for an extra cost (Nourie, 2013). The differences in each of these types of managed care plans offered through Medicaid causes competition which has an effect on costs, quality, and the use of different health care services. The majority of Medicaid enrollees are part of a Medicaid managed care plan.

In fact, seventy percent of the sixty million Medicaid beneficiaries are in a Medicaid managed care plan (Charlson, Wells, Balavenkatesh, Dunn & Michelen, 2014).). Even with the increase in Medicaid managed care plan participants the results on cost savings haven't been well. There are specific Medicaid managed care plans that have shown signs of cost savings by reducing inpatient use but according to an analysis about Medicaid managed care mandates in fifty states from 1991-2003 the effect on overall costs has been insignificant (Charlson et al., 2014).

It is important to research the cause behind the negligible effect that Medicaid managed care plans have had on costs. According to an analysis done by BMC Health Services, patients with higher comorbidity incur higher costs which suggests that high comorbidity patients may be a good start for cost savings in Medicaid Managed Care plans (Charlson et al., 2014). A limitation to this analysis was that it was based on only one Medicaid Managed Care plan at one hospital in New York City (Charlson et al., 2014).

Other studies on the savings impact of Medicaid managed care plans have produced mixed results. They have shown that there could be two potential sources of savings from Medicaid managed care plans which include reduced use of hospitals and other high-cost health services due to the improved primary care access and care management (The Henry J. Kaiser Family Foundation, 2012).

In some states the fee for service payment rates are so low that it is difficult to produce savings, the studies showed that in the same states Medicaid managed care contracting did not reduce costs to result in savings either (The Henry J. Kaiser Family Foundation, 2012). As for states with high fee for service payment rates, Medicaid managed care contracting did show a reduction in spending and therefore a result of savings (The Henry J. Kaiser Family Foundation, 2012).

Therefore, the main goal for Medicaid managed care plans should be to not only focus on high comorbidity but also on providing better access to preventative and primary care in order to reduce the risk of hospitalization and other high cost medical services. Their focus should also be headed toward more effective management of individuals with chronic illnesses since these conditions are long lasting and require a lot of spending.

As Medicaid, Managed Care plans grow and expand in the future cost reductions and savings are evident over the long run (The Henry J. Kaiser Family Foundation, 2012). One of the main causes of adding Managed Care to Medicaid was to reduce costs and enhance quality and access. The two general models among others that were implemented were primary care case management and risk-based capitation programs (Ae-Sook & Jennings, 2012). Risk-based capitation enrollment has been increasing at a much faster rate than primary care case management enrollment.

In a primary care case management plan the enrollee must choose a primary care doctor who is responsible for the enrollee's care in return for a monthly fee which is in addition to payments provided for medical services (National Council on Disability, 2013). This can also be considered a fee for service plan. The risk-based capitation model follows a different framework such as the HMO framework in which the plan receives a fixed payment from the state per member per month (National Council on Disability, 2013).

This puts the risk of any extra expenses on the health plan or the participating provider. The risk-based capitation model is considered more widespread than the other model because it showed more efforts to control cost and utilization while enhancing access and quality (Ae-Sook & Jennings, 2012). The majority of enrollees in 2008 for Medicaid Managed Care plans especially among children and adults chose comprehensive risked-based plans; whereas primary care case management plans had the least enrollees across the board (National Council on Disability, 2013).

Risk-based capitation plans are better at controlling costs, improving quality, and enhancing access because the physicians under their plans are rewarded based on how much health care costs they cut by controlling patients' overutilization behaviors (Ae-Sook & Jennings, 2012). Whereas primary care case management physicians are not so much worried about providing less expensive and more effective services since they are paid based on services they provide (National Council on Disability, 2013).

The same ease of accessibility to good heath care facilities stands true for those individuals who have Medicaid insurance as compared to those who dont. Past research has shown that individuals with Medicaid coverage are better off with regards to health care utilization, access to care, and meeting their health care needs compared to the uninsured.

An increasing body of research reveals that Medicaid covered children from poor socioeconomic backgrounds are much more likely to have better child care and to have a USOC (Usual Source of Care) and much less likely to have delayed or unmet health care needs, prescription drugs or dental care compared to uninsured children due to costs (Dayaratna, 2012). Studies that have investigated Medicaid benefits among children also show the same trends as those revealed among children.

A meta-analysis of literature on the benefits of Medicaid among pregnant woman revealed that Medicaid expansions have resulted in better use of prenatal care services among groups that were targeted by the expansions (Committee on the Consequences of Uninsurance, Board on Health Care Services, Institute of Medicine, 2002). Another study shows that mothers insured by Medicaid have a higher likelihood of having a USOC, a dental visit, and being screened for cancer compared to uninsured mothers (Long S. et al., 2005).

The same study also shows that young adults are likelier to have more health care visits and to report receiving timely care compared to uninsured adults (Long S. et al., 2012). A similar study recently concluded that if the individuals covered by Medicaid were uninsured they would have a much smaller likelihood of having a usual source of care, and that their frequency of visits to health care facilities for specific services would decrease considerably.

The report also concluded that these individuals would also have to use more of their own money to supplement their medical expenses (Coughlin T. et al., 2013). Researchers have also concluded that low income individuals who were previously uninsured reported significant increase in access to care and medical care use after they gained Medicaid coverage courtesy of the state expansions of eligibility. Improvements in self-reported health, healthcare use and access to health care have also been reported under the latest state expansions of Medicaid system.

To be more specific, about twelve months after being included in the Medicaid system, individuals who were previously uninsured were 50% likelier to have a regular doctor and 70% likelier to have a usual source of care compared to those who were not insured. Those who gained Medicaid coverage also reported significant increases in the utilization of preventive care, for instance, they recorded 20% and 60% increases in cholesterol and mammogram checks respectively. These individuals were also more likely to have access to prescription drugs and to use outpatient services.

Also, compared to those who were uninsured, it was reported that Medicaid covered adults were 25% likelier to self-report that they were in good health and much less likely to be depressed. These studies show clearly that Medicaid has significantly improved the provision of health care in the United States especially among the poor. It is obvious that more and more people can now have USOCs and can visit doctors for specialized care.

Table 1: Percentage of Medicaid Beneficiaries Enrolled in Managed Care by Type of Arrangement and Eligibility Category: FY 2008 Type of Plan Children Adults Disability Aged Any type of managed care 84.6 57.1 58.4 32.9 Comprehensive risked-based plans 60.0 43.8 27.9 10.9 Primary care case management 19.0 8.9 12.6 2.1 Limited benefit plans 36.6 23.6 37.0 25.2 (National Council on Disability, 2013) This shows that risk-based capitation plans have had a much higher effect on cost savings for Medicaid managed care plans than primary care case management because of the different methods used to reimburse physicians and organizations for their services.

Even though the effects on cost control, utilization of services, and quality enhancement are proven to be more positive with risk-based capitation plans, not all states are able to adopt this model. Some states cannot adopt the risk-based capitation model because they cannot recruit enough providers in order to maintain the plan and therefore switch to patient care case management plans (Ae-Sook & Jennings, 2012).

Regardless of which model each state chooses to implement, results have shown that risk-based capitation model is the correct path for an increase in cost savings, enhanced healthcare quality, and an increase in primary and preventative care in order to correctly utilize health services. Aside from which model of Medicaid managed care plan is pursued, a study by the National Bureau of Economic Research on Medicaid managed care in the U.S. has shown that it will most likely reduce spending in states with generous reimbursement fees (Duggan & Hayford, 2011).

From the year 1991 to 2003 Medicaid beneficiaries enrolled in managed care plans increased from 11% to 58% which was due to state mandates that required Medicaid recipients to enroll in a managed care plan and it has increased to 71% in 2008 (Duggan & Hayford, 2011). After using panel data from all fifty states, results show that the shift of Medicaid beneficiaries into managed care plans did not reduce Medicaid spending in the typical state but only seemed to reduce spending in states with generous reimbursement rates (Duggan & Hayford, 2011).

Some states are trying to resolve this issue by focusing more on including the elderly and disabled Medicaid recipients who account for almost two-thirds of Medicaid spending and who were exempt from the Medicaid managed care mandates in the past (Duggan & Hayford, 2011). By including these two groups, states would have more control on Medicaid spending while also including them in Medicaid managed care plans not only to lower costs but to enhance the quality of care they receive.

Even though Medicaid managed care have produced very little reductions on spending in a lot of states, it did prove to show that it was a model that produced cost savings to some degree. The Lewin Group research study has shown that not only did Medicaid managed care produce cost savings but that these savings could be significant for the Supplemental Security Income and its related population (The Lewin Group, 2004). The research also shows that the cost savings were mainly due to decreases in inpatient utilization (The Lewin Group, 2004).

This shows that beneficiaries on Medicaid managed care plans are receiving the correct primary and preventable care needed in order to decrease hospitalization rates and other complications. Pharmacy was another area where Medicaid managed care plans showed a lot of savings, drugs in the Medicaid managed care settings were ten to fifteen percent lower than in the fee for service plan (The Lewin Group, 2004). Even though Medicaid managed care plans may produce savings it does not come without risks.

One of the risks of these plans is that low payments may push good physicians out of the Medicaid program which would hinder access to primary and preventative services and also push Medicaid care toward the more expensive instructional-based services (The Lewin Group, 2004). There are several ways in which Medicaid managed care plans can increase cost savings.

These include improving access to primary and preventative healthcare by requiring participating doctors and hospitals to meet certain standards, participating in enrollee outreach and education programs to help promote the correct utilization of preventative services and a healthy life, providing individuals with a medical home in which the utilization of the doctor's knowledge is used to provide appropriate referrals, to provide individual case and disease management services, directing care to providers who practice in a cost-effective manner, by using lower cost products and services whenever it is available, and by keeping profiles on providers not only for effective cost control but also to enhance the quality of services provided (The Lewin Group, 2004).

This study also shows that including the disabled, who only make up 17% of total Medicaid enrollment but account for 40% of total Medicaid spending, would produce higher savings (The Lewin Group, 2004). According to Figure 1 estimates from 2012 show that enrollment for the blind and disabled in Medicaid was only 16%, which was the second lowest, while Medicaid spending for the same group was the highest with 44%.

This is a clear indication that future provisions in the Medicaid managed care plans need to include the elderly and disabled in order to more effectively reduce spending (Center on Budget and Policy Priorities, 2013). Figure 1: http://www.cbpp.org/cms/index.cfm?fa=view&id=2223 (Center on Budget and Policy Priorities, 2013).

Medicaid managed care at equal cost to private insured Access to special care between Medicaid and privately insured patients Though the benefits of Medicaid are many among the newly insured, one of the weaknesses found in this system of health care delivery compared to private insurance is in specialty care.

Studies on the impact of Medicaid on specialty care found that privately insured children were less likely to have access to specialists care for certain ailments and conditions and had a lot more difficulty in finding specialist doctors ready to accept their coverage relative to privately insured children (Skinner & Mayer, 2007).

A similar study on the idea of the "secret shopper" found that specialist doctors and clinics were much more likely to refuse appointment to Medicaid children and in cases where the Medicaid covered children did get appointments they were likelier to wait for longer times than privately covered children (Bisgaier & Rhodes, 2011). However, a report by MACPAC found that the differences between privately insured and Medicaid insured children in terms of access to specialist medical care banished when health status and demographic differences were controlled.

Another possible problem with Medicaid in terms of specialist care, according to Paradise and Garfield (2013), is that state contracted managed care organizations (MCOs) have a lower health performance compared to other private health centers particularly with regards to preventive and chronic care. For example, it was found that only 80% of Medicaid managed care organizations met the standard for blood pressure control and diabetes control relative to much higher figures for non-Medicaid health centers.

The good news is that less than four percent of health centers had lower scores on all the three measures that were used to rank them. Overall, privately insured individuals and Medicaid (public) insured individuals receive a similar quality of health care, studies have revealed. Though there is a study that established that there were statistically significant differences at the national level between privately insured and publicly insured patients who received perfect care; by accounting for certain variables the differences were found to be small.

To be more specific, though perfect health care scores were higher for privately insured individuals relative to publicly insured individuals, the differences were only between one and three percent. State level differences were much smaller (less than three percent on average). The biggest private-pay and Medicaid difference of care within a state was 14% for heart attack care. However, less than ten states had more than 5% differences in preventive care, chronic care and emergency care (Weissman J. et al., 2013).

However, we do not see any high cost savings or strong evidence that suggests that Medicaid managed care plans are highly effective when it comes to cost reductions on a national level. The Synthesis Project by Robert Wood Johnson Foundation claims that it is hard to generalize about the impact of Medicaid managed care on costs, access, or quality because most of the evaluations focus on certain states and certain programs or populations within those states (Sparer, 2012).

The peer reviewed literature reviewed by this project finds little savings on the national level, but some cost savings in certain states which are mainly due to lowered provider reimbursement rates, emergency room utilization, and inpatient hospital care rather than other managed care techniques (Sparer, 2012). There is not a lot of information or knowledge about why certain states and certain programs achieve better results than others and much research needs to be done in that area on both a state and a national level.

One of the causes for successful programs may be due to management performance which provides better administration of the program (Sparer, 2012). I believe that the type of management is a strong indicator of how a successful a program may be. In any healthcare setting, having a manager and employees with the right set of qualities and skills may make the difference between a successful and an unsuccessful program.

Therefore, more research needs to be conducted on such factors in order to determine what needs to be done in order to increase cost savings from Medicaid managed care plans. While looking at the cost saving of Medicaid, we must also not forget the quality of care and a standard measure for it must be determined. Medicaid has helped reduce depression. And not only depression, other mental health conditions and diseases have also been reduced.

Clinical data collected on both the insured and the uninsured shows that, compared to the uninsured, Medicaid resulted in a 30% decrease in positive results for depression. Though gains in physical health were not statistically significant, Medicaid did increase the.