State panel recommends community-based managed care for Medicaid reform
by Tim Lockette
Jan 16, 2013 | 2813 views |  0 comments | 7 7 recommendations | email to a friend | print
Audience members listen in on the Wednesday session of a Medicaid reform panel in Montgomery. (Anniston Star photo by Tim Lockette)
Audience members listen in on the Wednesday session of a Medicaid reform panel in Montgomery. (Anniston Star photo by Tim Lockette)
MONTGOMERY — A state panel voted Wednesday to recommend converting the state’s Medicaid system to a community-based managed-care network — rejecting an effort to hand the program over to commercial managed-care companies.

If adopted by the governor and the Legislature, the switch to managed care would slow, but not halt or reverse, the growth of the state’s burgeoning Medicaid bill.

“Nobody’s saying we’re going to need less money next year,” said state Health Officer Don Williamson.

For the past few months, Williamson has headed a 16-member panel appointed by Gov. Robert Bentley to reform the state’s Medicaid system. Medicaid is a program, funded by both the state and federal governments, that provides health coverage for people living in poverty.

The total cost of the state’s program is in the billions, with only a portion of that money coming out of the state budget. The cost to the state has skyrocketed over recent years as a struggling economy resulted in more people placed on the Medicaid rolls. A majority of the state’s children — 53 percent — are now born to mothers on Medicaid.

Bentley appointed the panel to find reforms that could trim the program’s cost, which took up $603 million of the state budget this year.

The board considered two options. One would have turned Medicaid over to commercial managed-care companies, which would be paid a set fee per patient. The profit motive, supporters said, would give the companies incentive to keep costs down.

The other option was a community-based care network, in which local entities create systems to monitor and manage patient costs, in much the same way as a commercial managed-care company.

Both options were projected to save the state money, said Steve Schramm, an independent auditor hired to project the savings from both plans. By 2018, Schramm said, the community care approach would save the state between $148 million and $320 million; the projected savings from commercial managed care were higher — $268 million to $364 million over the same period.

Neither option means that Medicaid would cost less — just that it would cost less than without reform. Williamson said it wouldn’t stop the state’s Medicaid bill from growing to $650 million, but “this lets you stay at $650 million a little longer.”

Mike McKinney, former Texas health commissioner and later head of Indiana’s Medicaid managed-care plan, said that in his experience, community care plans don’t save money. He said commercial managed- care plans have a proven track record.

“We concentrate on basic care,” he said. “We try not to manage the money, but to manage the care.”

But commission members remained skeptical of the commercial approach. Rep Ed Henry, R-Decatur, said he was concerned that the plan would give state money to out-of-state companies.

On a voice vote, the commission voted overwhelmingly to approve the community care approach. Williamson said there was only one vote against — Kyle Godfrey, the commission member appointed to represent the commercial providers. Godfrey is a lawyer for United Healthcare.

It wasn’t clear how many members abstained from the vote.

The commission’s plan would divide the state into Medicaid regions, with a plan to develop a community care network in each. The state already operates similar patient care networks in four cities, but unlike private managed-care companies, those networks aren’t funded with a simple per-patient fee. The commission’s plan would expand those networks and move them toward the per-patient fee approach.

The vote is just the beginning of potential reform for the Medicaid system, however. Williamson said it would be up to Bentley to accept or reject the recommendation. Full implementation of the change would likely require legislative action as well.

The change would also require the state to get a waiver to deviate from current federal Medicaid rules. That could take a year, if it happens at all, Williamson said.

“This was the easy part,” he said of the Wednesday vote.

Capitol & statewide correspondent: 256-294-4193. On Twitter @TLockette_Star.

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