MEDICAID MANAGED CARE: Commercial Plans Defecting
In a report broadcast last week, NPR's Jon Hamilton looked at how many commercial HMOs are leaving the Medicaid managed care market, complaining of low reimbursement rates and cumbersome regulations. Mathematica Policy Research's Jim Verdier said, "Commercial plans two or three years ago were very enthusiastic about Medicaid, because they thought there was an awful lot of money to be made there." Verdier, who formerly ran Indiana's Medicaid program, noted that this enthusiasm was based on two factors -- states "were not very sophisticated about setting the rates they paid managed care organizations" and the fact that "there was excessive and inefficient and costly utilization of care by" many Medicaid recipients. But commercial HMOs' rush to embrace Medicaid has reversed recently. For one, much of the first-time savings associated with moving beneficiaries into managed care systems have been realized. Verdier also noted that states have moved to cut relatively high Medicaid HMO rates. And in other states, Verdier said Medicaid rates were low in the first place. "In a lot of states, the reimbursement rates to providers have always been low in Medicaid, so that opportunity for savings ... has already been done," he said.
Flight From Medicaid
Hamilton reported that the Center for Health Care Strategies recently commissioned a study of Medicaid HMOs. Virginia Commonwealth University's Robert Hurley, who conducted the study, said of his findings, "Left in this ... current trajectory, there's a very good possibility that a number of these plans will be leaving the Medicaid program. And the concern is that these are plans who are experienced in managed care, who have some of the most sophisticated managed care systems in place." According to Hurley, the defection by big commercial HMOs is leaving plans that were specifically created to serve Medicaid patients as the sole providers in some areas. He said this development raises the question of whether it is right to assign Medicaid patients to a separate system of care. "And the other concern is that as a larger percentage of Medicaid beneficiaries move into these new plans or these plans who have limited experience, we run the risk of getting an inferior form of managed care for the Medicaid beneficiary," Hurley said. Hamilton concluded his report: "If that happened, it would defeat one of the major goals of Medicaid reform -- ending the two class system of health care in this country, where low-income Americans receive care in a separate system of clinics and hospitals. Without access to commercial HMOs, Medicaid patients could find a new two-class system, one that puts them in separate managed care plans" ("Morning Edition," 9/18). Click here to listen to the full report. Special software needed to hear the report can be downloaded free at www.real.com.