qotd: Medicaid managed care is not fulfilling its promise

Inquiry
April 16, 2015
The Expanding Role of Managed Care in the Medicaid Program
By Kyle J. Caswell, PhD, Sharon K. Long, PhD, The Urban Institute,
Washington, DC

Abstract

States increasingly use managed care for Medicaid enrollees, yet
evidence of its impact on health care outcomes is mixed. This research
studies county-level Medicaid managed care (MMC) penetration and health
care outcomes among nonelderly disabled and nondisabled enrollees.
Results for nondisabled adults show that increased penetration is
associated with increased probability of an emergency department visit,
difficulty seeing a specialist, and unmet need for prescription drugs,
and is not associated with reduced expenditures. We find no association
between penetration and health care outcomes for disabled adults. This
suggests that the primary gains from MMC may be administrative
simplicity and budget predictability for states rather than reduced
expenditures or improved access for individuals.

From the Discussion

This study finds that increased MMC penetration in a county is
associated with an increase in the probability of an ED visit, and
reported difficulty seeing a specialist and unmet need for prescription
drugs among nonelderly non-SSI Medicaid adults. Furthermore, we find no
evidence of reduced expenditures associated with increased MMC
penetration for the non-SSI population. For nonelderly SSI Medicaid
adults, we observe no consistent evidence that MMC penetration
influences medical care access, use, or expenditures. We do not,
however, interpret this as evidence that MMC has no impact on the
outcomes examined. Our SSI sample is small, raising concerns about the
precision of our estimates for this subpopulation, a limitation of the
MEPS sample size.

Overall these results, especially among non-SSI Medicaid enrollees,
seemingly contradict conventional theories on the expenditures and
benefits of managed care. That is, managed care is generally intended to
provide access to appropriate care in a timely, efficient, and
cost-effective way by shifting the locus of care from higher cost
settings to primary care. If successful, one would expect higher levels
of primary care use, lower levels of specialist use that could be
provided in primary care settings, lower levels of unmet need for care,
and lower levels of inpatient stays and ED visits for ambulatory care
sensitive conditions, and, as a result, reduced expenditures associated
with those changes. Nonetheless, incentive structures created by managed
care organizations may not always result in intended/desired outcomes.

There are characteristics of states' Medicaid programs that may lead to
outcomes that are inconsistent with conventional managed care theory.
The largest factor, perhaps, is the programs' low reimbursement rates.
Low rates, combined with incentives to reduce expenditures within
managed care organizations, could lead to reductions in appropriate
access to care and/or quality of care should it limit the number and/or
quality of providers available (e.g., narrow limits on number or type of
prescription drugs or specialist care). Furthermore, reductions in
appropriate care could eventually lead to more high-cost care (e.g.,
inpatient and/or ED care).

Our findings for the non-SSI population will help to inform the trend
toward medical homes and accountable care organizations (ACOs). That is,
to the extent that medical homes and ACOs in Medicaid are based on the
MMC model, the benefits generated from these alternatives may also be
limited. Silow-Carroll et al., however, highlight that the ACO model
with its focus on greater integration and coordination of care, and
greater emphasis on high-risk individuals, could offer greater
improvements in care than have been generated by the traditional MMC
model to date. These authors also note that many managed care
organizations, including MMC organizations, are shifting toward the ACO
model. Consequently, if the ACO model is more successful in achieving
its intended benefits than the current MMC model, such a move could
improve MMC. Going forward, it will be important to study whether ACOs
and medical homes, whether stand-alone models or models developed as
part of MMC plans, can produce the improvements over fee-for-service
Medicaid that to date have largely proven elusive with MMC.

http://inq.sagepub.com/content/52/0046958015575524.full

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Comment by Don McCanne

Most states are moving most of their Medicaid patients into Medicaid
managed care programs. As of 2011, 74% of Medicaid patients were in
Medicaid managed care organizations (CMS data). The states contend that
this shift will improve care coordination while reducing costs. What
does this report from The Urban Institute show us?

The study was limited to nonelderly Medicaid beneficiaries. The study
was not powered to determine the impact on the disabled, but conclusions
can be drawn for the nonelderly nondisabled. For this group, increased
Medicaid managed care penetration is "associated with increased
probability of an emergency department visit, difficulty seeing a
specialist, and unmet need for prescription drugs, and is not associated
with reduced expenditures." Based on these criteria, care was less
coordinated and costs were not reduced. Some would consider this massive
experiment to be a failure.

Although conclusions from this study cannot be applied to the elderly
nor to the disabled, it seems intuitive that a program that is not
working for younger, healthier individuals would not work any better for
the elderly and disabled. However, the authors do suggest that greater
attention to integration and coordination through medical home or ACO
models could improve care for high-risk patients. Integration and
coordination theoretically should be beneficial.

The management of care has been turned over to 267 mostly for-profit
Medicaid managed care organizations (2014). These organizations are
driven by the bottom line so the additional costs of improving
integration and coordination remain targets for reducing overhead. They
are businesses first, providing a market product - health care.

How could a single payer system improve on this? Imagine federally
qualified health centers functioning as medical homes or ACOs.
Integrating and coordinating care is part of their mission. Other
private primary care groups in the community also serve as coordinators
of care, ensuring access to specialists, hospitals, and other facilities
and services. These are service organizations first, providing a crucial
community service - health care.

These entities would be providing care for everyone on the same basis;
the Medicaid designation would disappear. That is, payments would be
going directly to the health care delivery system rather than to the
wasteful tangled mess of intermediary money managers.



Kip Sullivan provides an excellent discussion of this topic at the PNHP
Blog:

http://pnhp.org/blog/2015/05/05/managed-care-should-focus-on-the-very-sick-but-that-could-mean-the-end-of-managed-care/