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As Medicaid Costs Rise, State Likely to Pursue More Incentivized Managed Care

June 14th, 2012

The proposed revamp of the state Medicaid system will likely include shifting more patients from fee-for-service plans to managed care, according to various state officials and health advocates.

To do it, the state would enter into performance-based contracts with care management companies.

The ongoing Medicaid redesign won’t be finalized until the end of summer, but at this month’s board meeting, Department of Community Health Commissioner David Cook said more coordinated care will help improve health outcomes and lower long-term costs.

“We can coordinate care so that we don’t do unnecessary tests; more communication between providers; more nurse follow-up on making sure people are taking their medications.”

In a shift to more managed care, DCH would invite private health management companies to bid on incentive-laden contracts.

“We’re going to be introducing something called value-based purchasing where we’re going to make sure these big contracts continue to be managed well,” Cook said.

The contracts would reward companies that hold down patient costs and improve patient care, and penalize those that don’t.

About 1.2 million Georgians on Medicaid, mostly children and low-income pregnant women, are already receiving managed care from one of three companies that contract with the state.

But the costliest Medicaid population, by far, is the aged, blind, and disabled, a group mostly using fee-for-service. Their per-patient costs are roughly $9,500 a year, compared with $3,000 for the majority of other Medicaid enrollees.

Commissioner Cook says the elderly and disabled would benefit from the shift to more managed care. To that end, DCH earlier this year formed a task force focused specifically on the aged, blind, and disabled. The task force findings will be incorporated into the final Medicaid redesign.

Health policy analyst Tim Sweeney of the Georgia Budget and Policy Institute says the key question will be how DCH defines performance-based standards in the new managed care contracts.

“Is success going to be about serving people better, higher quality care, better health outcomes or is success simply going to be about dollars and whether the state is generating savings?”

The redesign comes as the Supreme Court weighs the constitutionality of President Obama’s heath reform law, legislation that would allow an estimated 600,000 additional Georgians to enroll in Medicaid. Whatever the court decision, Commissioner Cook says Medicaid spending will continue to grow as a percentage of overall state spending.

“Right now we’re at about 16 percent of the state budget. That’s projected to grow to 17 and 18 percent in just the next year or two. The numbers are not sustainable.”