March 9, 2011

State DHS Secretary Wants to Move More Medicaid Patients to Managed Care

Posted in Federal, Programs, State, Uncategorized, Wisconsin at 2:53 pm by Jen

Wisconsin Department of Health Services Secretary Dennis Smith announced yesterday that he wants to keep Medicaid services like prescription coverage, but move the most expensive Medicaid patients into managed care.

According to the Wisconsin State Journal:

Smith said he wants to save money by making the most costly patients — such as those with complex disabilities and mental illnesses — enroll in managed care plans, which help decide what care is needed.

About two-thirds of Medicaid patients are now in managed care. The other third have “fee-for-service” arrangements, where the state pays patients’ bills directly to providers. “No one is coordinating their care,” which can mean higher expenses, Smith said.

Secretary Smith’s decision to move more Medicaid patients into managed care is similar to a decision made by Illinois Governor Pat Quinn to move half of Illinois’ Medicaid patients into managed care by 2015. Currently only 8 percent of Illinois Medicaid patients are on managed care, as opposed to around 66 percent in Wisconsin. According to the Pew Center on States, most states have around 46 percent of their patients on managed care. In these tough budgetary times, states are looking to expand the number of people in managed care, the Pew Center writes.

States have been using managed care to cut Medicaid costs for two decades. Up to now, however, the vast majority of plans covered only children and pregnant women — a large, but relatively healthy and inexpensive segment of the more than 60 million people covered by Medicaid.

At the federal level, the Pew Center on the States reports, recent health reform legislation encourages one type of managed care.

The federal health care reform law does not necessarily push states to use what is known as comprehensive or capitated managed care, in which insurance companies share risk with Medicaid programs by agreeing to serve enrollees health care needs for a set price. But it does offer hefty financial incentives for states that offer a type of managed care called “primary care case management,” where doctors receive a monthly stipend for coordinating care for Medicaid patients, including preventive care, acute care and hospitalization. Under the Affordable Care Act, the federal government will pay 90 percent of the costs for so-called “health homes,” a type of primary care coordination designed to help reduce the costs of caring for people with chronic conditions.

Given that only one percent of Medicaid patients take up 25 percent of the program’s expenditures, movement towards managed care will likely be a dominant and cost-saving trend in the near future.