It’s no secret that the ACA is experiencing growing pains at best and is in crisis at worst. Plagued by website concerns and the fact that many states are not committed to the Medicaid expansion, actually manifesting the increased coverage that is so central to the bill is proving to be much more difficult. Robert Reich recently remarked on his Facebook page regarding the problems with ACA implementation, “…if the problems continue, it won’t be only Democrats in trouble but the entire idea that government can do something complex and well. Yet, ironically, it won’t be the government that determines whether or not the system works as promised; it will be an array of private for-profit contractors and insurers.”

Again we see private industry creating problems but our government taking the blame in the public’s eye.

SCOTUS’ decision to allow states to choose whether to expand Medicaid created a new “donut hole” that’s particularly worrisome – people who do not qualify for Medicaid as it currently stands, but who make less than 138% of the poverty line (and thus do not qualify for the federal subsidies to purchase insurance through the exchange) have absolutely no options for health insurance! Because they were supposed to be covered under the new expanded Medicaid, no other provisions for their coverage were made.

It is extremely important that Medicaid expansion happen in every state, but we need to keep a close eye on how it’s done.

In some previous posts I’ve talked about states’ ideas for implementing Medicaid expansion and how Virginia, like many other states, seems to be leaning in the direction of increasing managed care. This basically amounts to awarding contracts to private insurance companies to handle the administration of Medicaid, with the idea that private companies will know how to better decrease costs as well as increase efficiency. Generally (but not always) this means that private companies are paid a fixed rate per enrollee, which is usually a percentage (usually around 95%) of what patients are costing the state, on average, under the prior fee for service system. Good data exists regarding this tactic in Medicare. Contracting to private companies via Medicare Advantage increases costs because programs have consistently found ways to cherry-pick for the healthiest seniors, thus minimizing risks, and have higher administrative costs than traditional Medicare.  It is estimated that Medicare private plans have resulted in overpayments of over a quarter-trillion dollars from 1985 – 2012!

However, the impact of Medicaid Managed Care on cost, access, and quality of care is more difficult to assess on a national level because Medicaid is a state program and significant variability exists between states. The patient population of Medicaid is also significantly different than Medicare. Yet there is some emerging evidence that the impact is negative, especially when for-profit companies handle care:

1) A recent study by McCue and Bailit directly compared publicly-traded with non-publicly traded Medicaid Managed Care plans and found “publicly traded plans that focused primarily on Medicaid enrollees paid out the lowest percentage of their Medicaid premium revenues in medical expenses and reported the highest percentage in administrative expenses across different types of health plans. The publicly traded plans also received lower scores for quality-of care measures related to preventive care, treatment of chronic conditions, members’ access to care, and customer service.”

2) The state of Connecticut recently ended their contracts with multiple managed care organizations (MCOs) after an independent investigation, citing concerns about insufficient transparency regarding allocation of funds and burgeoning administrative costs.

I spoke with a few physicians who provide care to a large population of patients with Medicaid about differences they’ve noticed with the Managed Care companies vs fee for service. These companies seem to increase administrative burden on physicians by ensuring “quality measures” are met. A few examples – reminders to place patients on ACE inhibitors (when many of the patients are already on these medications, but just not registered by the company), or “Members who turned 15 months old during measurement year and had at least 6 well child visits since birth.” While important aspects to consider, it’s easy to see how satisfying them may not necessarily lead to better outcomes (but give the appearance of such to policymakers). It’s even easier to see how these may balloon into huge administrative bloat for already busy doctors.

Still, many states are expected to increase their involvement with private insurance companies in expanding Medicaid.  Why? The myth persists that private companies, because they are subject to the invisible hand, will streamline administrative costs and improve quality or risk failure. All available evidence points to the contrary, because healthcare does not function like other markets. 

 

Medicaid Managed Care proponents say that coordinating care of people with chronic diseases/conditions is necessary to help them navigate the confusing system and keep them out of the hospital living longer, healthier lives. How could any multi-payer system possibly do that better, and with less administrative burden, than a single payer one? That would allow for the optimum, most efficient coordination of care, as well as quality evaluation.

Let’s work to keep an eye on further privatization of Medicaid. An example of an organization doing just this is Community Catalyst, a consumer advocacy group that conducts research and writes publications about healthcare reform, including Medicaid Managed Care. 

When these market-based experiments fail, we need advocates to step in swiftly with evidence-based explanations in order to prevent the needless suffering of patients and further waste of taxpayer money.

Advertisements