Insurers are also working closely with Medicaid providers to avoid the claims denials that have sunk managed-care plans in the past. WellCare of Kentucky, for instance, installed a program to make sure doctors are being heard on issues that are bothering them, such as payment issues and no-shows.
Provider-relations representatives make as many as 20 office visits a week, accompanied by WellCare employees who can adjudicate claims on the spot. “All these things are important to make sure cooperation isn't an issue or a barrier affecting our members,” said Kelly Munson, the head of the firm's Kentucky operations.
WellCare served 1.9 million Medicaid beneficiaries as of March 2014, an 11% increase from last year. That increase was almost entirely from Kentucky, where it received 60,000 new beneficiaries because of the state's Medicaid expansion under Obamacare.
Anecdotal reports suggest the surge in Medicaid managed care is impacting utilization. Insurers have been able to cut emergency room use from between 6% to 27% through their more hands-on and targeted approach, according to studies.
However, healthcare providers in some states say those reductions may be a mirage. In Georgia, where state officials began transferring Medicaid beneficiaries into care-management organizations in 2006, hospital officials claim insurers have created administrative hoops for receiving payment.
“For hospitals with smaller business office resources, (that) results in no payment for care provided if the provider didn't have the time and resources to track down payment from the companies,” said Kevin Bloye, a spokesman for the Georgia Hospital Association.
Some Medicaid managed-care plans have also run into financial difficulties. Some California hospitals struggled to get payments of any kind from Alameda Alliance for Health, said Amber Ott, the California Hospital Association's vice president of finance. In May, the state's Department of Managed Health Care took possession of the plan because of its lack of assets and working capital.
In Kentucky, some plans have instituted a policy of reimbursing hospitals only $50 for an ER visit if it turns out that a beneficiary was not experiencing an actual emergency. Hospitals that performed thousands of dollars in tests to rule out a heart attack could end up being reimbursed almost nothing, said Michael Rust, president of the Kentucky Hospital Association.
A few states are rethinking the rush into Medicaid managed care. In 2011, Connecticut announced it would no longer use private Medicaid contractors. It shifted the money previously spent on insurers' administrative costs and profits to higher pay for primary-care doctors. State Medicaid director Mark Schaefer said that after a 15-year history with managed-care organizations, there was diminishing confidence in the value of what they provided.
Oklahoma called it quits with managed-care plans in 2003 after plans serving its beneficiaries sought a mammoth rate hike, according to a Mathematica study. Since the state was struggling with budget issues, it offered a 13.6% increase. When there wasn't buy-in, state officials realized they could take over care for patients with lower administrative costs and fewer staff members.
“With Oklahoma and Connecticut, they used to be full managed care and they said, 'With what we're paying and what we're getting, we think we can do a better job,' ” said Matt Salo, executive director of the National Association of State Medicaid Directors.
But other states have had positive results. In the 1980s and early 1990s, Arizona achieved cost savings of 11% for medical services and 7% in total cost savings under managed care, compared with its costs if the state had stayed with fee-for-service medicine, according to a Lewin Group study. In 2002, a managed-care model enabled Wisconsin to achieve 10.7% savings in program expenses.
“Managed care is a tool, it's a vehicle, a means to an end,” Salo said. “If the end is higher-quality outcomes and reduced cost, you can get there with managed care.”
Follow Virgil Dickson on Twitter: @MHVDickson