Medicaid managed care market is growing, but ...

From all accounts, Medicaid managed care is growing and poised for additional expansion as state Medicaid programs look for ways to cover a potential influx of 16 to 24 million new enrollees under health reform while limiting the impact on their cash-strapped budgets. But that positive outlook is dotted by a few potential storm clouds involving profits vs. quality. The convergence of these factors begs the same question that has yet to be answered affirmatively in the Medicare Advantage market: Can private insurers provide higher quality services at a lower cost than traditional fee-for-service programs?

First, the good news: New data from the Centers for Medicare and Medicaid Services (CMS) show that Medicaid managed care enrollment increased by almost 2.4 million members in 2009 to reach 23.4 million members nationwide, reports the Washington, D.C.-based trade association Medicaid Health Plans of America (MHPA). Almost half (47 percent) of all Medicaid enrollees are members of a Medicaid health plan, and almost 72 percent are enrolled in some form of managed care. In addition, Medicaid managed care enrollment is growing faster than overall program enrollment. Overall Medicaid enrollment grew 7 percent from June 2008 to 2009. By comparison, Medicaid managed care enrollment increased more than 11 percent in that same time period. (Note: The report is expected to be posted on the CMS website within the next few weeks.)

The bad news: Three out of four (i.e., 2.7 million) children didn't receive one or more required medical, vision or hearing screenings, according to a review of nine state Medicaid programs recently conducted by the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services. In addition, 41 percent of children didn't receive any required medical screenings and more than half didn't receive any required vision or hearing screenings. Most of the states involved (Arkansas, Florida, Idaho, Illinois, Missouri, North Carolina, Texas, Vermont and West Virginia) have a strong Medicaid managed care component, reports the Washington Post.

Florida, of course, also is where WellCare Health Plans has been accused of stealing $400 to $600 million from the state Medicaid program, as well as other state Medicaid programs and Medicare. Another sore spot has cropped up in Wisconsin, where the state has decided to end its Medicaid contract with Centene in southeastern Wisconsin. "We came to the conclusion about a year ago that we were unsatisfied with the quality of care we were getting, given the amount of money we were paying," Jason Helgerson, Wisconsin's Medicaid director, told the Post.

In addition, two studies published last year by Harvard Medical School researcher Marguerite Burns, Ph.D., found that enrolling adult Medicaid patients with disabilities in managed care plans did little to either improve access to care or lower Medicaid expenditures, reports the Agency for Healthcare Research and Quality.

But despite the problems, state interest in Medicaid managed care hasn't abated. Florida Republicans plan to continue to push for the expansion of managed care. "The state cannot continue to afford the fee-for-service model," Rep. Denise Grimsley (R-Lake Placid) told the Florida Current. Likewise, lawmakers in Texas want to go ahead and expand Medicaid managed care into the Rio Grande Valley, reports the Post.

So Medicaid managed care appears set to take a "runaway train" expansion route in many states. It will be interesting to see whether state lawmakers abdicate responsibility and let capitalism tread heavily through their Medicaid programs -- or heed the warning signs laid on the tracks by these studies and the way that the federal government has been forced to rein in Medicare Advantage with reimbursement cuts and better quality controls. Mind, I'm not anti-capitalism, but it seems fairly obvious that some targeted controls would benefit Medicaid managed care as well. - Caralyn