More State Medicaid Programs Using Managed Care, Survey Finds

Managed care continues to expand in state Medicaid programs, according to a survey of Medicaid directors on behalf of Kaiser Family Foundation’s Commission on Medicaid and the Uninsured.

The 15th annual survey, conducted by Health Management Associates, found that 48 states are using some form of Medicaid managed care and 39 are contracting with risk-based managed care organizations, or MCOs. The survey found that 37 states have created policies in the current fiscal year (or for fiscal year 2016) to use alternate payment models to reward quality or coordinate care, such as patient-centered medical homes or accountable care organizations.

More than 2 dozen states are making use of elements of the Affordable Care Act (ACA) to promote use of home- or community-based care for patients who require long-term case and support services. Pharmacy services are getting an overhaul, too; this is no surprise after Medicaid budgets took a blow throughout 2014 after the approval of Sovaldi for hepatitis C.

Kaiser and the National Association of Medicaid Directors have jointly collaborated on this survey for 15 years to gain insight into trends affecting Medicaid delivery in the states. The growth of managed care continues to make news in the states and is the subject of a proposed rule before CMS, as issues such as narrow networks, availability of specialists, and the time and distance that beneficiaries must travel for care become issues as states try to contain costs. NAMD and several national insurers that manage Medicaid contracts submitted comments to the proposed rule on July 27.

Managed care continues to grow, with notable expansions in Iowa, Florida, Indiana, Louisiana and Rhode Island. The Iowa transition was politically contentious, with Democratic legislators questioning both the policy merits and the level of savings that Republican Governor Terry Branstad says he will achieve in 2016—the savings have been pegged at $51 million for the first 6 months.

The survey also chronicled the contrast in growth between states that expanded Medicaid under the ACA and those that did not. The 29 state with expanded Medicaid in 2015 saw enrollment climb an average 18% and spending an average of 17.7%. In those states that did not expand Medicaid to those households earning up to 138% of the federal poverty level, the programs still grew, but not as much: enrollment grew an average of 5.1% and spending grew an average of 6.1%. In these states, families that had always been eligible but had not enrolled signed up, apparently due to increased awareness of eligibility criteria. Mississippi and Alabama, in particular, have reported on the budget implications of this phenomenon. Other formula-driven changes caused the spending rate to go up more rapidly in non-expansion states that were not aided by the help of the federal government’s 100% match for newly eligible beneficiaries under the criteria spelled out in the ACA.

The upcoming calendar year will be the last in which the federal government will finance the entire cost of Medicaid expansion under the ACA. In January 2017, the match rate for newly eligible adults drops to 95%.