1. Medicaid Managed Care Felicien Fish Brown, Kaiser Permanente
Medicaid Congress, Washington DC
June 14, 2007

2. Kaiser Permanente Comprehensive integration of services
Health education and preventive care
Primary care physicians working closely with specialists and hospitalists
Hospital outpatient offices
Pharmacy, radiology, laboratory
Medicaid, SCHIP participation
California, Hawaii, Colorado, Oregon

3. 10 Years of Medicaid and Managed Care Enrollment Growth
65.3%
47.8%
Millions
Source: CMS, June 30, 2006.

4. Wide state variation in average annual Medicaid payment per member
California $2,325
Oregon $3,177
Virginia $3,877
Indiana $4,067
Illinois $4,531
Maryland $5,542
North Dakota $5,766
Connecticut $6,670
New York $7,817

5. Why Medicaid Managed Care?
Lower preventable hospitalization rates in California
38% lower than FFS for TANF and TANF-related enrollees
25% lower than FFS for SSI population
Modest savings for Aged/Blind/Disabled in Oklahoma
Costs were 4% less than FFS in
Study by Primary Care Research Center at University of California, Funded by California Healthcare Foundation.

6. Why Medicaid Managed Care?
Evidence of better access to physicians in California (2004 data) and preventive services in New York (2005 data)
Can target populations based on conditions such as asthma and sickle cell
Evidence of better cost effectiveness (Lewin study)

7. According to Arizona ACCHS The Value of Managed Care
Improves health status and reduces cost of high risk populations
Better medical care cost control
Market competition for members drives quality and innovation.
Provides a organized health plan for business community buy-in.
Stabilizes providers
Improves State’s economic vitality
Complements other State public health and human service goals

8. What is Medicaid managed care?
Full-risk, comprehensive benefit Medicaid health plans account for 42% of total Medicaid managed care enrollees (about 19 million)
Less than 20% of Medicaid dollars are in managed care
In California, managed care accounts for 48% of beneficiaries but less than 25% of Medicaid costs
By state - % Medicaid health plan enrollment
17 states and DC >+ 50%
10 states 25% - 50%
4 states 10% - 25%
19 states <10%

9. Barriers to Medicaid Managed Care
Dual eligible coordination
Limited benefit packages – trend?
HIFA waivers, DRA
Monthly eligibility – churning
Discourages longer-term relationship with plan/provider
Increases administrative costs

10. Barriers to Medicaid Managed Care
Payment rates
Law and regs say rates must be on “actuarially sound basis”
Need for better federal oversight
Risk adjustment would help (in CA, payment rates 2-3 times higher but costs are 4-5 times higher)
Federal UPL Rule
Health plan payments to hospitals not counted in UPL calculation
Disincentive for state to use managed care (e.g., TX)
Actuarial Soundness -- (e.g., PA, WA, MI, CA)

11. The state of Medicaid managed care Interviews with state officials
Center for Health Care Strategies, Inc. report, November 2006
Surveyed 14 states
California, Colorado, Florida, Georgia, Hawaii, Kentucky, Maryland, Michigan, Ohio, Oregon, Pennsylvania, Texas, Washington, Wisconsin
Varied in size and nature of Medicaid program

12. States generally happy with managed care
All surveyed states have full-risk managed care
Many states experimenting with managed care variations (e.g., PCCM, disease management):
Some health plans unwilling to develop state-tailored programs
Rural areas present network challenge (e.g., Pennsylvania’s ACCESS PLUS)
Broad state disease-management efforts (e.g., Georgia)

13. States want to extend managed care into new areas and for new populations
Medical home concept is appealing, especially in rural areas
Interest in expanding managed care for aged, blind, and disabled
ABD account for 25% of people but 70% of costs nationally
Some states have successful ABD managed care programs (e.g., Wisconsin, Hawaii)
But political resistance to full risk for ABD (e.g., California)
Few examples of long-term care incorporation

14. KP Medi-Cal Care Coordination Pilot
Aimed at KP Medi-Cal members with complex chronic needs
Prevalent chronic conditions include asthma, diabetes, depression, and CHF
Quality
Early intervention to coordinate and manage care
Assure participation in chronic disease programs
Monitor and improve medication compliance
Improve clinical outcomes

15. KP Medi-Cal Care Coordination Pilot
Access
Use case manager
Support transportation needs
Establish frequent communication
Utilize home tele-monitoring
Assure clinical appointment compliance
Savings
1% of enrollees account for 27% of total costs; more than $100,000 per enrollee
Reduce inappropriate ED visits

16. Medicare special needs plans growing
SNPs established in MMA with goal of Medicare-Medicaid coordination in single health plan
Rapid growth since 2003
In 2007
469 dual-eligible SNPs with 622,00 enrollees
Another 221,000 enrollees in institutionalized or chronic condition SNPs
Dual eligibles have substantially greater health care needs than typical Medicare beneficiary
Dual eligibles
20% report poor health, 3 times rate of non-duals
27% have diabetes
10% Alzheimers
34% mental disorders

17. But Medicaid SNP connection is slow
After Medicare Part D implemented, states have less financial interest in acute care for duals
In 2003 Medicaid spending for dual eligibles was:
66% long-term care
14% prescription drugs
15% other non-Medicare acute care
5% Medicare premiums
But states may want to gain access to SNP drug utilization data

18. Future of special needs plans
Federal interest in SNP reauthorization but could add additional requirements
Medicare-Medicaid coordination of benefits
Medicaid billing for non-Part D drugs
Performance reporting

19. Increased state effort to improve data reporting and quality
Identify target populations for disease management
Monitor plan and provider performance
Use for rate and risk adjustment
Pay for performance (e.g., Ohio, Michigan, Pennsylvania)
Also auto-enrollment rewards (e.g., California)

20. History of federal Medicaid quality initiatives
1991 – HCFA begins Quality Assurance Reform Initiative (technical assistance to states)
1996 – HCFA Quality Improvement System for Managed Care (QISMC) (to coordinate Medicare and Medicaid)
1997 – BBA allows managed care without waivers and established access and quality standards
2002 – CMS issues BBA final rule; managed care organizations can seek NCQA or JCAHO accreditation and states can use Medicare or private accreditation for Medicaid.

21. “Measuring managed care performance is not optional
“Measuring managed care performance is not optional. What aspects of performance to focus on, how to report on it and to whom can vary with the state context, resources, and program needs, but collection and use of performance data is critical to program improvement, accountability, and credibility.”
James Verdier and Robert Hurley, May 2004

22. What Wall Street is saying about Medicaid managed care
Publicly traded Medicaid plans considerably more profitable than private plans
Much lower inpatient and physician utilization
Unclear whether due to lower risk enrollees, better medical management, or worse access
Most profitable states are Virginia, Michigan, New Jersey, and Florida
Need for RFP process to bring in competition
Source: 6/7/07 CIBC World Markets paper based on NAIC data. Excludes California.

23. State health reform efforts What role for Medicaid managed care?
Several states considering major health reform
Need to managed Medicaid costs first
SCHIP reauthorization and expansion