This month, Georgia is expected to announce which private insurers will manage the care for 1.3 million low-income Medicaid beneficiaries. Analysts predict the incumbent plans will prevail.
States such as Georgia have been operating Medicaid managed-care programs for several years because they enjoy the predictable budgets associated with set, capitated payments. But many healthcare experts wonder if the widespread and sustained shift to Medicaid managed care is benefiting the low-income beneficiaries or insurers more, and whether the right incentives are in place.
“The question is what kinds of physician networks are these Medicaid managed-care members having access to? How coordinated is that care?” said Cindy Ehnes, the former director of California's Department of Managed Health Care. “If (insurers) don't have strong regulatory systems and networks of physicians, then those promises can break down pretty quickly.”
Georgia has operated its version of managed Medicaid since 2006. The state contracts with three for-profit, publicly traded companies—Anthem, Centene Corp. and WellCare Health Plans—to pay for and manage the healthcare services of approximately 1.34 million poor adults and children. However, those insurers do not manage care for Georgia's aged, blind and disabled populations, who have the most expensive and serious healthcare conditions.
Georgia, which has not expanded Medicaid eligibility under the Affordable Care Act, put out a request for bids this year to begin new Medicaid contracts. The state said it will work with up to four managed-care companies. A spokesman for Georgia's Department of Community Health did not give an exact date for when the state would release the awards, but industry analysts said winners will be announced in September.
Outside of Anthem, Centene and WellCare, Georgia named six other qualified vendors: AmeriHealth Caritas, CareSource Georgia, Gateway Health Plan, Humana, Molina Healthcare and UnitedHealthcare. Anthem, AmeriHealth, UnitedHealthcare and WellCare recently won the Medicaid managed-care bids in Iowa, a move that has recently been surrounded with controversy. Observers predict the three currently in power in Georgia will remain.
“We expect with high probability that the incumbents will retain the contract given our channel checks and re-election of Republican Gov. Nathan Deal during the midterms,” Ana Gupte, an analyst at Leerink Partners, said in a February report.
Anthem, Centene and WellCare receive a combined $4 billion from Georgia to care for Medicaid patients. The average medical-loss ratio for their plans is about 85%, and much of the remaining 15% profit is passed on to the companies' shareholders. The CMS this year proposed mandating an 85% medical-loss ratio for all managed Medicaid plans. But Ehnes believes that standard lacks teeth because many Medicaid plans nationwide already meet that standard.
“Fifteen percent is a hell of a lot of money, frankly, for these companies to do administration,” said Ehnes, now an executive vice president at consulting firm COPE Health Solutions. “It's really a giveaway to the private sector.”
Further, several complaints that Medicaid insurers are skimping on care have cropped up in states. In Mississippi, hospitals and doctors have “expressed frustration” with the state's managed-care companies, citing concerns over “data transparency, unfair denial of services and aggressive utilization management processes,” according to a Mississippi Hospital Association report (PDF) from December.
In Georgia, Centene was found to deny more than 19% of its prior authorization requests for behavioral health services and 30% of dental services, according to a state report (PDF). Anthem denied almost 17% of inpatient prior authorization requests.
Several other states and the HHS watchdog agency have also found Medicaid HMO members often have trouble with their physician networks due to poor state and federal oversight.
“If you are in business with a for-profit shareholder corporation, their first legal obligation is to deliver value to their shareholders, period,” Ehnes said. “Despite the fact that you might have a company that is reputable, if you don't have strong regulatory oversight, then you may be missing a whole lot of issues that arise in terms of these folks actually getting the care that they need.”
Health insurers say they are helping states steer patients toward more medically necessary care and are saving money overall. Medicaid has challenged many state budgets over the past several years since many Medicaid patients are high-cost cases. Rich Albertoni, a health policy consultant at Public Consulting Group and former Wisconsin Medicaid executive, adds that states want to move away from fee-for-service like the rest of the delivery system, and they hope private insurers can help them with that transition.
“They don't want (managed care) to be the same thing they're doing,” Albertoni said. “That's the big concern that states have.”
As Georgia finalizes its next iteration of managed Medicaid, and other states such as North Carolina consider it, many hope the delivery system and patient care reforms don't take a back seat to financial numbers. “It really is about the impact on patients who often have multiple challenges in accessing appropriate and affordable healthcare,” Ehnes said.