Tuesday, 13 October 2015 21:23

What’s Next in Medicaid Managed Care?

Written by Phil Kamp

Over the last 50 years, Medicaid has undergone many facelifts. What began in 1965 as short-term public assistance for the country’s lowest-income citizens – particularly women and children – has steadily grown to become the nation’s largest provider of healthcare coverage. By 2024, it is estimated that some 94 million Americans are projected to have their healthcare covered by Medicaid.

As the move toward fee-for-value reimbursement continues to take hold in the healthcare industry, the Centers for Medicare & Medicaid Services (CMS) has introduced Medicaid-specific, value-focused changes, including Medicaid expansion provisions found in the Patient Protection and Affordable Care Act (PPACA) and the more recently proposed overhaul of the Medicaid Managed Care Organization (MMCO) regulations.

In the final analysis, the PPACA and MMCO changes have further accelerated Medicaid’s evolution toward functioning like an insurance plan. And similar to Medicare and commercial markets, provider organizations that embrace healthcare’s shift toward paying for value rather than volume will be better positioned not only to improve care for impacted populations, but also to gain market share. Because providers’ Medicaid margins stand to increase when Medicaid populations are better managed and measurably healthier, Medicaid managed care efforts ultimately can benefit a significant number of patients, individual healthcare providers, and affiliated provider organizations.

As a more diverse population becomes Medicaid-eligible, the need for provider organizations to have a data-driven, population health-focused strategy to address Medicaid’s objectives can be critical for success in today’s rapidly changing healthcare landscape. 

As providers evaluate their market dynamics and craft a plan to enter into risk-based arrangements for Medicaid populations, here’s what they need to know:

More Quality Measures = Increased Business Intelligence

The newly proposed rules for MMCOs include implementing a quality rating system to encompass each state's Medicaid health plans and align with what's used in Medicare Advantage and the federal and state insurance marketplaces (formerly known as exchanges). Provider organizations also will be required to help consumers make informed choices by providing unbiased health plan information online, over the phone, and in person.

The Devil in the (Actuarial) Details

CMS’s proposed MMCO rate setting guidelines would assure that rates paid to Medicaid managed care plans be “certified as actuarially sound, with enough detail to understand the specific data, assumptions, and methodologies behind that rate.” As CMS and states likely will require provider organizations to supply additional information to meet these standards, providers that have actuarial competencies, data aggregation, and analytics tools and capabilities to apply sophisticated, Medicaid-specific analysis and predictive modeling will be best positioned to negotiate more appropriate contracts.  

Defined Population Health Strategies

As Medicaid expansion and the Medicaid managed care evolution continues, MMCOs will be accountable for a changing patient population. As Medicaid begins to cover more adults, organizations must develop capabilities, care models, and care management programs that leverage more outpatient resources than inpatient. Other than well-child visits, children typically use fewer outpatient services whereas adults ideally require more outpatient care to ensure they stay healthy. In operating more diverse networks, sophisticated MMCOs also have to capture and share clinical and non-clinical information, such as transportation and the receipt of home health services, with a varied set of providers and community partners. Providers that have begun to develop population health technology skill sets and also are forming creative community partnerships will be poised to be early winners in this next era of Medicaid managed care. 

Children as a Strategic Focus

Though Medicaid is evolving beyond its traditional focus on women and children, providing care for these populations will always be core to the program. The newly proposed MMCO regulations also include the Children's Health Insurance Program (CHIP) and require provider Medicaid care models to specifically include pediatric primary, specialty, and dental providers. Therefore, provider organizations will need to assure their MMCO market share by including pediatrics. This most likely – and easily – will be accomplished through forming strategic alliances with children’s hospitals or health systems that have defined pediatric capabilities, and especially community-based pediatricians.  

State-Level, Point-of Care-Innovation Focus

Medicaid programs must live within budgetary limits set by state governments, which has led to their ability to embrace innovative approaches to improve quality while better controlling costs. While programs like the State Innovation Models Initiative will continue to provide financial and technical support for innovative care and reimbursement models, MMCOs and state agencies increasingly are becoming open to less bureaucratic dialogue, particularly to incorporate the providers’ perspectives into pilot programs that involve both clinical and financial reform ideas. While organizations should continue to keep their eyes on federal grant-related opportunities, they should also consider discussing innovative approaches (especially point-of-care improvements) with their state’s Medicaid leadership. 

It’s clear that the healthcare industry is bending over backwards to embrace new value-based reimbursement models, and Medicaid is no exception. In fact, in many markets, Medicaid has been the leading driver of value-based care change. Provider organizations that develop new skills and technologies and embrace the willingness to incorporate new payment models that eschew antiquated fee-for-service structures undoubtedly will emerge much stronger, both financially and culturally, than those that don’t. Medicaid lessons learned today also have great potential to inform and accelerate value-based approaches for other payors.

About the Author

Phil Kamp has more than 30 years of managed care experience focusing on integration strategies for health systems. As co-founder and chief strategy officer of Valence Health, Phil provides leadership and direction for the company, leading its efforts in creating patient-focused, data-driven solutions that can be implemented across a healthcare organization.

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