Medicaid Managed Care

1
Medicaid Managed Care Felicien Fish Brown,
Kaiser Permanente Medicaid Congress, Washington
DC June 14, 2007
2
Kaiser Permanente

• Comprehensive integration of services
• Health education and preventive care
• Primary care physicians working closely with
  specialists and hospitalists
• Hospital outpatient offices
• Pharmacy, radiology, laboratory
• Medicaid, SCHIP participation
• California, Hawaii, Colorado, Oregon

3
10 Years of Medicaid and Managed Care Enrollment
Growth
65.3
47.8
Millions
Source CMS, June 30, 2006.
4
Wide state variation in average annual Medicaid
payment per member

• California 2,325
• Oregon 3,177
• Virginia 3,877
• Indiana 4,067
• Illinois 4,531
• Maryland 5,542
• North Dakota 5,766
• Connecticut 6,670
• New York 7,817

5
Why Medicaid Managed Care?

• Lower preventable hospitalization rates in
  California
• 38 lower than FFS for TANF and TANF-related
  enrollees
• 25 lower than FFS for SSI population
• Modest savings for Aged/Blind/Disabled in
  Oklahoma
• Costs were 4 less than FFS in 1998-2000

Study by Primary Care Research Center at
University of California, Funded by California
Healthcare Foundation.
6
Why Medicaid Managed Care?

• Evidence of better access to physicians in
  California (2004 data) and preventive services in
  New York (2005 data)
• Can target populations based on conditions such
  as asthma and sickle cell
• Evidence of better cost effectiveness (Lewin
  study)

7
According to Arizona ACCHSThe Value of Managed
Care

• Improves health status and reduces cost of high
  risk populations
• Better medical care cost control
• Market competition for members drives quality and
  innovation.
• Provides a organized health plan for business
  community buy-in.
• Stabilizes providers
• Improves States economic vitality
• Complements other State public health and human
  service goals

8
What is Medicaid managed care?

• Full-risk, comprehensive benefit Medicaid health
  plans account for 42 of total Medicaid managed
  care enrollees (about 19 million)
• Less than 20 of Medicaid dollars are in managed
  care
• In California, managed care accounts for 48 of
  beneficiaries but less than 25 of Medicaid costs

9
Barriers to Medicaid Managed Care

• Dual eligible coordination
• Limited benefit packages trend?
• HIFA waivers, DRA
• Monthly eligibility churning
• Discourages longer-term relationship with
  plan/provider
• Increases administrative costs

10
Barriers to Medicaid Managed Care

• Payment rates
• Law and regs say rates must be on actuarially
  sound basis
• Need for better federal oversight
• Risk adjustment would help (in CA, payment rates
  2-3 times higher but costs are 4-5 times higher)
• Federal UPL Rule
• Health plan payments to hospitals not counted in
  UPL calculation
• Disincentive for state to use managed care (e.g.,
  TX)

11
The state of Medicaid managed careInterviews
with state officials

• Center for Health Care Strategies, Inc. report,
  November 2006
• Surveyed 14 states
• California, Colorado, Florida, Georgia, Hawaii,
  Kentucky, Maryland, Michigan, Ohio, Oregon,
  Pennsylvania, Texas, Washington, Wisconsin
• Varied in size and nature of Medicaid program

12
States generally happy with managed care

• All surveyed states have full-risk managed care
• Many states experimenting with managed care
  variations (e.g., PCCM, disease management)
• Some health plans unwilling to develop
  state-tailored programs
• Rural areas present network challenge (e.g.,
  Pennsylvanias ACCESS PLUS)
• Broad state disease-management efforts (e.g.,
  Georgia)

13
States want to extend managed care into new areas
and for new populations

• Medical home concept is appealing, especially in
  rural areas
• Interest in expanding managed care for aged,
  blind, and disabled
• ABD account for 25 of people but 70 of costs
  nationally
• Some states have successful ABD managed care
  programs (e.g., Wisconsin, Hawaii)
• But political resistance to full risk for ABD
  (e.g., California)
• Few examples of long-term care incorporation

14
KP Medi-Cal Care Coordination Pilot

• Aimed at KP Medi-Cal members with complex chronic
  needs
• Prevalent chronic conditions include asthma,
  diabetes, depression, and CHF
• Quality
• Early intervention to coordinate and manage care
• Assure participation in chronic disease programs
• Monitor and improve medication compliance
• Improve clinical outcomes

15
KP Medi-Cal Care Coordination Pilot

• Access
• Use case manager
• Support transportation needs
• Establish frequent communication
• Utilize home tele-monitoring
• Assure clinical appointment compliance
• Savings
• 1 of enrollees account for 27 of total costs
  more than 100,000 per enrollee
• Reduce inappropriate ED visits

16
Medicare special needs plans growing

• SNPs established in MMA with goal of
  Medicare-Medicaid coordination in single health
  plan
• Rapid growth since 2003
• In 2007
• 469 dual-eligible SNPs with 622,00 enrollees
• Another 221,000 enrollees in institutionalized or
  chronic condition SNPs
• Dual eligibles have substantially greater health
  care needs than typical Medicare beneficiary

17
But Medicaid SNP connection is slow

• After Medicare Part D implemented, states have
  less financial interest in acute care for duals
• In 2003 Medicaid spending for dual eligibles was
• 66 long-term care
• 14 prescription drugs
• 15 other non-Medicare acute care
• 5 Medicare premiums
• But states may want to gain access to SNP drug
  utilization data

18
Future of special needs plans

• Federal interest in SNP reauthorization but could
  add additional requirements
• Medicare-Medicaid coordination of benefits
• Medicaid billing for non-Part D drugs
• Performance reporting

19
Increased state effort to improve data reporting
and quality

• Identify target populations for disease
  management
• Monitor plan and provider performance
• Use for rate and risk adjustment
• Pay for performance (e.g., Ohio, Michigan,
  Pennsylvania)
• Also auto-enrollment rewards (e.g., California)

20
History of federal Medicaid quality initiatives

• 1991 HCFA begins Quality Assurance Reform
  Initiative (technical assistance to states)
• 1996 HCFA Quality Improvement System for
  Managed Care (QISMC) (to coordinate Medicare and
  Medicaid)
• 1997 BBA allows managed care without waivers
  and established access and quality standards
• 2002 CMS issues BBA final rule managed care
  organizations can seek NCQA or JCAHO
  accreditation and states can use Medicare or
  private accreditation for Medicaid.

21
Measuring managed care performance is not
optional. What aspects of performance to focus
on, how to report on it and to whom can vary with
the state context, resources, and program needs,
but collection and use of performance data is
critical to program improvement, accountability,
and credibility.
James Verdier and Robert Hurley, May 2004
22
What Wall Street is saying about Medicaid managed
care

• Publicly traded Medicaid plans considerably more
  profitable than private plans
• Much lower inpatient and physician utilization
• Unclear whether due to lower risk enrollees,
  better medical management, or worse access
• Most profitable states are Virginia, Michigan,
  New Jersey, and Florida
• Need for RFP process to bring in competition

Source 6/7/07 CIBC World Markets paper based on
NAIC data. Excludes California.
23
State health reform effortsWhat role for
Medicaid managed care?

• Several states considering major health reform
• Need to managed Medicaid costs first
• SCHIP reauthorization and expansion