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Connecticut touts success of its 'managed fee-for-service' Medicaid model


Connecticut's return to a more traditional fee-for-service arrangement in its Medicaid program--which runs counter to what many other states are doing--has enabled it to save money and improve care, according to an article from the Wall Street Journal.

Connecticut calls its system "managed fee-for-service." A nonprofit administrator processes medical claims, but the state carries the financial risk. This, state officials tell the WSJ, has cut administrative costs to 5 percent of total costs, compared with 12 percent on average at Medicaid managed-care plans.

The average cost per patient, per month, is down from $718 in mid-2012, when Connecticut made the switch, to $670 last year, and the number of doctors who are willing to treat Medicaid patients is up 7 percent. Because of this, fewer patients are using emergency departments for routine care, the article says.

Many states, especially those that have expanded their Medicaid programs, have been turning to managed care contracts with private insurers as a way to control spending, and the approach has saved them some $6.4 billion this year, according to the WSJ. The article points out, though, that a study last year found no evidence that such an approach cuts costs, but found it did increase the likelihood of ER visits, difficulty seeing specialists and unmet need for prescription drugs.

"No one is saying that managed-care is perfect, but there is an overwhelming amount of data that suggests the fee-for-service model does not work," Jeff Myers, CEO of Medicaid Health Plans of America, a trade group for insurers, said in the article.

Some experts say it is unlikely that Connecticut's experience will spark a wider return to fee-for-service, as the industry is moving away from that model--albeit slower than expected. But some other states are pursuing unique approaches: Alabama, for example, recently received federal approval to expand Medicaid, and plans to hand the program over to key providers rather than large private insurers.

To learn more:
- read the article

Related Articles:
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Shift from fee-for-service to value-based models slower than expected
Illinois Medicaid lowered costs with enhanced fee-for-service model