What happens in Medicaid is important for many provider organizations and many health plans. Medicaid is now one of the largest funders of health benefits and many specialty provider organizations have a large proportion of their revenue coming from Medicaid beneficiaries (see Medicaid Is The Largest Payer – Now What?). What we have seen over the past few years, is a steady increase in the proportion of the Medicaid beneficiaries in some type of managed care program, which has now reached 70%.
The trends in Medicaid managed care enrollment is the focus of our new report, The 2017 OPEN MINDS Medicaid Managed Care Update: A State-By-State Analysis, which has enrollment statistics for every state Medicaid plan – by fee-for-service, primary care case management, and managed care financing arrangements.
But with the uncertainty in Washington—the now-aborted repeal of the Patient Protection and Affordable Care Act (PPACA), the specter of state block grants, and the uncertainly about the direction of Tom Price, M.D., Secretary of the Health and Human Services (see CMS Proposes to Cancel Bundled Payment and Incentive Models)—getting a sense of direction is difficult. One question that our team often debates is whether we’ll see more Medicaid managed care – or if the state reliance on managed care will slow or reverse. Recently two events gave us pause and make it more difficult to “read the tea leaves.” Both Alabama and Oklahoma canceled plans to implement comprehensive managed care programs citing concerns with federal funding and opportunities for more flexible Medicaid spending (see Alabama Medicaid to Pursue an Alternative to Regional Care Organizations and Agency cancels managed care RFP).
On one side of the coin is the perspective that uncertainty at the federal level is going to slow the adoption of managed care. As mentioned above, both Oklahoma and Alabama have already canceled their plans. State governments may enter a state of paralysis and decide that no decision is the best decision, since moving managed care requires a significant investment of time and money (see State Budget Cuts Ahead? Be Deliberate In Your Preparation). In this scenario, managed care growth will not completely go away. We’ll just see more incremental development, one population at a time or a specific set of services instead of large-scale moves.
On the other side, the state budget situation may drive states to continue moving more of their covered population to Medicaid health plans. Medicaid health plans assume much of the state administrative burden and much of the financial uncertainty in budgeting. And, Medicaid health plans are good insulation from the political pain of rationing and possible block grants. In addition, Seema Verma, MPH, CMS Administrator and Tom Price pledged in January to speed up the approval process for 1115 waiver demonstrations (see Price and Verma Letter To The Governors).
On a more granular level, there is the issue of whether this uncertainty will affect the move of long-term services and supports to managed care. One perspective is that the move to managed long-term services and supports (MLTSS) is already fairly slow and will continual to move at a snail’s pace. For example, Nebraska has been planning to implement LTSS since 2014 (see Nebraska Medicaid Managed Long-Term Services and Supports Program Concept and Design and Nebraska Medicaid Long-Term Services And Supports Presentation). And New York is using health homes as the first step to moving the developmental disability population to managed care in the future (see New York Medicaid To Launch Health Homes For People With Developmental Disabilities and What Does ‘Value-Based’ Look Like In The I/DD Field?.) There are only 22 states that currently have MLTSS compared to the 41 states with any type of managed care and the market penetration is relatively limited.
The other side of the equation is that the LTSS budget is large and getting larger (see The LTSS Shift – Finding The Opportunities). And the U.S. population is getting older and has more disabilities. Using managed care models, and the financial resources of private health plans, provides states with an opportunity to stabilize their growing budget. At the same time, as a result of policy changes, a greater proportion of the population is finally served in the community (see Over 50% Of Medicaid LTSS Expenditures For HCBS In 2013). This had two results, this population has become more visible and there is renewed interest in innovative service delivery and financing models.
What we do know is that these decisions will be driven by state governors and state legislatures. And, we will continue to see states adopt different policies and practices – further increasing the disparities between state health and human service systems. Our recent coverage on studies comparing states on a variety of related parameters illustrates this phenomenon: Hawaii Is Top-Ranked State For Health Care; Louisiana Ranks Last, Mississippi Tops The List Of States With The Most At-Risk Youth. Disability Employment Rates Best In Arkansas; Worst In Maine. Mental Health America Ranks Connecticut/Oregon With The Lowest/Highest Mental Illness Prevalence, and State Medicaid Per Capita Spending For Non-Elderly Adults With Disabilities Averaged $16,000+, With $9,000 To $40,000 Range.
What this means for every organization in the space is the need to plan for multiple scenarios. And, if you work with a national organization that means planning for multiple scenarios in each state that you serve. There is a best practice for this – scenario-based planning – but the best practice doesn’t make the uncertainty any less unsettling. To learn more about scenario-based planning, see Preparing For An Uncertain Future In Health & Human Services: A Guide To Scenario-Based Strategy Development, 6 Management Best Practices For Sustainability In A Changing Market, and Considering Future Scenarios: The OPEN MINDS Guide To Scenario-Based Planning.
And to facilitate this scenario-based planning, keep an eye on the market metrics in the specific states where your organization operates using our suite of state-by-state health and human service system analyses – Behavioral Health Coverage For The Medicaid SMI Population: A State-By-State Analysis, Physical Health Coverage For the Medicaid SMI Population: A State-By-State Analysis, State Medicaid Mental Health Medication Management Policies: The 2017 OPEN MINDS Update, and State Medicaid Programs With MLTSS: The 2016 OPEN MINDS Update.