“If people really want to get serious about that, our plans are ready tomorrow,” Karen Ignagni, president of America's Health Insurance Plans, said in an interview.
Not-for-profit insurers tout their managed-care experience to increase care coordination and focus on preventive and in-home care to reduce costs without compromising quality.
“Budget constraints are spurring a renewed look at managed care, but the improvements in quality of care are just as important as the dollars saved—and even more important to those served,” said Margaret Murray, CEO of the Association for Community Affiliated Plans.
The insurers see the greatest potential cost savings in expanding managed care to Medicaid's elderly population that needs long-term care. For these beneficiaries, managed care could encourage expanded use of lower cost home- and community-based care, toward which Medicaid has slowly moved for two decades.
Sebelius recently touted the potential for Medicaid programs to achieve significant savings by moving more beneficiaries from nursing homes that cost an average of $75,000 per year to “several hours of home-based care,” which averages $18,000 annually.
Reducing provider payments, however, is the most direct way to curb costs short of reducing who is covered.
An advisory group appointed by Democratic New York Gov. Andrew Cuomo last week proposed holding annual Medicaid spending growth to 4% and authorizing state health officials to enact across-the-board cuts to rates to maintain the cap.
In a January speech, Cuomo said he wanted the team to find better ways to save money than cutting rates for providers. “Let's see if we can't actually find efficiencies in the program so we actually provide a better service for less money,” Cuomo said.
The California Legislature is considering cutting payments to hospitals by 10% if they do not have contracts to provide care to Medicaid beneficiaries, which is about 75% of the state's hospitals, according to the California Hospital Association. That proposal came despite CHA's ongoing legal challenge to similar previous cuts in the Medicaid program, known as Medi-Cal, which the Supreme Court last month agreed to consider.
The hospital group is more resigned to other Medicaid cuts expected in the state, including the expansion of mandatory co-payments for hospital and some physician visits. “This is likely to be an uncollectible debt because these patients' incomes are so low and so it's effectively a net reduction in medical and hospital payments,” said Jan Emerson, vice president of external affairs for the CHA.
These proposed changes came despite Medi-Cal's last-place ranking nationally in Medicaid payments to physicians and hospitals, with its payments almost 25% less than the national average for Medicaid programs, according to the CHA.
Such provider cuts, especially in state Medicaid programs that already rank well below private insurance and Medicare reimbursement levels, will further reduce access to clinicians—especially specialty physicians—who are increasingly refusing to treat Medicaid patients, said Robert Helms, a resident scholar at the American Enterprise Institute. “That kind of defeats the purpose of the expanded access they are trying to achieve,” Helms said.
Because of the impacts on all Medicaid beneficiaries of cost-saving moves such as provider reimbursement and benefit cuts, Helms and others expect states to continue considering enrollment cuts as a longer-term and larger source of cost savings.
Looming over every state battle over the size and scope of their Medicaid plans is the planned expansion of Medicaid by at least 16 million beneficiaries beginning in 2014 under provisions of the Affordable Care Act. The law will extend eligibility to adults without children and households with incomes up to 133% of the federal poverty level.
The expansion is 100% federally funded for the first few years and 90% paid by the federal government after 2020, but current Medicaid funding problems could give states pause about their eventual burden.
“Cutting off Medicaid (enrollment) could be a slippery slope that undermines healthcare reform,” said Dr. Bruce Siegel, CEO of the National Association of Public Hospitals and Health Systems.