Opposing Trends in Medicaid Managed Care

Perhaps it’s too soon to call it a trend, but Connecticut’s decision to drop for-profit health plans from its Medicaid program is running counter to what’s happening in the rest of the country.  Beginning on January 1, Connecticut Medicaid will revert back to fee for service.  So far, only Oklahoma and Connecticut have abandoned the Medicaid managed care model.

Meanwhile, large for-profit health insurers across the country are booming because of government programs, such as Medicaid and Medicare.  According to the Washington Post, (Private Insurers Increasingly Reliant on Government Business, January 4, 2012), the share of large insurer revenue attributable to Medicare and Medicaid has jumped from 36 to 42 percent in the last three years.  Even non-profit health insurers, such as Blue Cross Blue Shield plans, are performing well.

States across the country, such as New York, are increasingly hiring managed care plans to run their Medicaid programs in hopes of reaping big savings.  Insurers receive fixed amounts from states with the understanding that they will save dollars by focusing on preventive services and reducing emergency room use.  In some cases, insurers can keep part of savings they generate through managing the care of Medicaid recipients.

It is not insignificant that Connecticut, the ‘insurance capital of the world’ has reversed course after a 15-year history with managed care.  According to Kaiser Health News (Connecticut Drops Insurers from Medicaid, December 29, 2011), Connecticut officials have been unimpressed with the performance of managed care plans.  A 2009 state-commissioned study showed that the state was overpaying health insurers by approximately $50 million per year, out of a total of $800 million annually spent on Medicaid managed care.  Other studies alleged that plans were spending too little on health services and that patients were having difficulty accessing doctors.

In place of managed care, Connecticut plans on spending the same amount on Medicaid for 2012, while implementing managed care-like policies, such as care coordination and providing efficiency incentives, such as electronic records and the hiring of patient coordinators.  Providers will also receive bonuses through ensuring access to preventive care such as dental checkups, and annual eye exams for diabetics.  The state also plans on increasing reimbursement for primary care services by using dollars that previously went to health plans’ profits and administrative costs.

-Jaime Venditti, 1/9/12