Healthcare Town Hall

Arkansas has proposed using Medicaid expansion dollars to provide subsidies so that eligible individuals can purchase health insurance through the exchange. The U.S. Department of Health and Human Services has indicated that it will consider approving such proposals.

The Arkansas proposal has various financial implications, especially with regard to provider reimbursement levels and various aspects of the Affordable Care Act, including the minimum medical loss ratio requirement and the “3Rs” (reinsurance, risk corridors, and risk adjustment). This healthcare reform briefing paper by Rob Damler, “Considerations for Medicaid expansion through health insurance exchange coverage,” examines these key considerations for a state contemplating this approach.

Medicaid Arkansas, HHS, Medicaid, Medicaid expansion, Minimum loss ratios, Rob Damler

Today, there are more than 60 million Americans enrolled in Medicaid—but what is Medicaid and how is it financed? This video explains how Medicaid is funded and how it will change under the Patient Protection and Affordable Care Act (PPACA).

Medicaid Medicaid, Medicaid expansion, Understanding healthcare costs, video

A recent report by the U.S. Government Accountability Office (GAO) evaluated variations in states’ use of Medicaid managed care. The report clustered states into four groups that shared similarities in how services were provided and how participants were enrolled.

Here is an excerpt summarizing the GAO’s findings:

In summary, we identified four groups of states that differed in their use of Medicaid managed care on the basis of the 12 indicators we included in our analysis. A handful of these indicators—namely Medicaid enrollment in MCOs (managed care organizations) and PCCM (primary care case management) programs, HMO (health maintenance organization) penetration rates, and the concentration of low-income individuals that lived in urban areas—had significant influence on how states grouped. In contrast, within the four groups, considerable variation existed among the other indicators we examined, such as states’ primary care capacity and commercial HMO market index. For labeling purposes, we typically describe the four groups on the basis of states’ enrollment of Medicaid beneficiaries in MCOs and PCCM programs—generally the predominant similarity among the states within each group:

• Group 1 states were PCCM predominant, enrolling a high percentage of beneficiaries in PCCM programs, but typically not in MCOs;

• Group 2 states typically enrolled beneficiaries in both MCOs and PCCM programs;

• Group 3 states were MCO predominant, enrolling a high percentage of beneficiaries in MCOs, but typically not in PCCM programs; and

• Group 4 states were considered “other” states in that although their enrollment of beneficiaries was similar to Group 3, they were outliers on other indicators, which differentiated them from states in the other groups we identified.

The study was conducted to gauge states’ use of Medicaid managed care as enrollment is expected to increase, which is due to the Medicaid expansion provision in the Patient Protection and Affordability Care Act (PPACA). The policy decision that states make on Medicaid may directly affect health exchanges.

For more information on state health exchanges, click here. For more on Medicaid, click here.

Medicaid Healthcare, Healthcare Reform, managed care, state exchange

Risk-based managed care is the current platform from which Medicaid recipients receive healthcare benefits, at least in part, in more than 30 states in the United States. Managed care organizations (MCOs) of all varieties contract with state Medicaid agencies to deliver and manage the healthcare benefits under the Medicaid program in exchange for predetermined capitation revenue.

The primary purpose of this report is to provide reference and benchmarking information for certain key financial metrics used in the day-to-day analysis of Medicaid MCO financial performance. The financial results are summarized on a composite basis for all reporting MCOs. Additionally, this report explores the differences among various types of MCOs using available segmentation attributes defined from the reported financial statements.

Download and read the entire report here.

Medicaid, Research Healthcare, Jeremy Palmer, managed care, Medicaid

When it comes to Medicaid costs, a single percentage point can have billion-dollar implications. Medicaid managed care premiums increased only 1.0% to 2.0% on average in recent years. This increase in premiums amounts to $36.5 to $41.9 billion over 10 years in total, with the state governments funding $13.0 to $14.9 billion. Reducing costs by even a tenth of a percent has significant implications for Medicaid, which is why increased behavioral health deserves consideration.

Milliman’s Stephen Melek’s new research paper, Bending the Medicaid healthcare cost curve through financially sustainable medical-behavioral integration, recommends providing more behavioral healthcare services to Medicaid beneficiaries, not fewer, through integrated medical-behavioral healthcare programs.

The paper also presents some data to assess the value opportunity for doing this integration, discusses the language of integrated/collaborative care, addresses the challenges in achieving financially sustainable integration models, and looks at recent innovations and pilot programs that are focused on delivering better healthcare, attempting to achieve better clinical and financial outcomes, and providing input for the case that medical-behavioral integration innovations can work well.

The entire research paper can be downloaded and read here.

Also, for more Medicaid insight from our experts, see here.

Medicaid behavioral health, cost curve, Medicaid, Mental health, Stephen Melek

Health Plan Week looks at the future of Medicaid managed care plans as states wrestle with the question of whether to expand their Medicaid programs. Here’s an excerpt:

This is the type of interest you’re seeing from Medicaid health plans, whether you’re in a big state like Ohio, or the smallest of states,” [Mlliman's Rob] Damler says, adding that mounting competition in the Medicaid space will push carriers to make their bids as compelling as possible by ensuring they have “a strong provider network, strong quality measures, experienced staff, good contracting.” But more aggressive bidding from larger, well-capitalized carriers could make it difficult for smaller carriers to compete, he adds.

However, a growing interest in quality measures could give some small, local carriers an advantage over much larger entitites. In their RFPs, some states are increasing the amount they will withhold from carriers that don’t hit quality measures, says Damler. While states historically might have withheld one-quarter to one-half percent of their capitation rate, more recent contracts have boosted that percentage to between 1% and 3%, he says.

Medicaid Medicaid expansion, Rob Damler

Risk-based managed care is the current platform from which Medicaid recipients receive healthcare benefits, at least in part, in more than 30 states in the United States. Managed care organizations (MCOs) of all varieties contract with state Medicaid agencies to deliver and manage the healthcare benefits under the Medicaid program in exchange for predetermined capitation revenue.

Most states require that a contracted MCO also be a licensed health maintenance organization (HMO), which includes the requirement to file a statutory annual statement with the state insurance regulator.

This report, summarizing the 2010 financial results of organizations reporting Medicaid (Title XIX) experience, provides reference and benchmarking information for key metrics used in the day-to-day analysis of Medicaid MCO financial performance and explores the differences among various types of MCOs.

Medicaid Jeremy Palmer, Medicaid

There have been many questions about how recent Milliman analysis of Nebraska’s Medicaid budget exposure compares to similar Kaiser Family Foundation (KFF)/Urban Institute analysis. Both analyses consider the effect that the Patient Protection and Affordable Care Act (PPACA) will have on Medicaid enrollment. While the two reports have different bottom line estimates (all assumptions are laid out in Milliman’s Nebraska report), they have similar adult and parent enrollment figures. This exhibit illustrates the adult and parent enrollment comparisons:

As you can see, the enrollment figures have overlapping ranges, though they do have some key differences. The KFF/Urban Institute reported values are for coverage in 2019, while the Milliman reported values were from the 2009 Current Population Survey.  The differential between the two time periods may account for 5% to 10%.  Further, Milliman estimates reflect the enrollment up to 138% of the federal poverty level (FPL); however, the Kaiser estimates reflect enrollment only up to 133% of the FPL. 

The biggest difference between Milliman’s enrollment estimates and other published estimates is the inclusion of children in the Milliman analysis. The KFF/Urban Institute analysis does not include children. Here is a breakdown of how the child enrollment estimates compare:

Research published this month by the Urban Institute in Health Affairs indicates nationwide Medicaid enrollment figures of more than 80% for children. The only state with an individual mandate already in place, Massachusetts, has child enrollment of 95%. Once enrolled in Medicaid, children will have different cost dynamics than adults, which is due to certain federal match rate specifications in PPACA.

The differences in the two reports are the result of different assumptions.

Medicaid, Reform Medicaid, Rob Damler

A new analysis looks at the cost of Medicaid expansion in the state of Nebraska and, as might be expected, the numbers are being interpreted a number of different ways. National Public Radio/Kaiser Health News has the story. The unique characteristics of Medicaid in Nebraska are another reminder of the diversity in healthcare costs from one state to another.

This report looks only at Medicaid, which is how it arrives at the cost of between $526 million and $766 million for the state. The cost of uncompensated care has been held up as justification for the state to foot these kinds of costs.

As is so often the case anytime we talk about the cost of care, in addition to considering the specifics it can be helpful to step back and look at the underlying factors driving the healthcare cost trend.

Cost, Medicaid Medicaid expansion, Nebraska, Rob Damler

A new article in Modern Healthcare looks at the Healthy Indiana Plan, a Medicaid expansion program that has yielded some interesting results. Here’s an excerpt from the Modern Healthcare piece:

While the jury is still out on how well the health savings account and preventive-care incentive are working, analysts have looked at utilization trends among the newly insured and found that those signing up for the program are sicker and more frequent users of healthcare than those enrolled in commercial, employer-sponsored health plans.

The Healthy Indiana Plan “population used more care than the typical commercial population in Indiana with the same age and gender characteristics,” says Rob Damler, principal at Milliman, a consulting and actuarial firm. Damler is the consulting actuary to the state of Indiana on the health plan.

Childless adults enrolled in Healthy Indiana, for instance, had nearly three times as many inpatient services as private plan members in the first year. And pharmacy use was nearly 50% higher than a typical commercially insured population.

This newly enrolled group was also sicker than the general population. Their relative morbidity was 65% greater than their peers covered by private health insurance. The earliest enrollees to the program also proved to be the sickest, with the highest healthcare costs, Damler says.

This phenomenon is called anti-selection, where the least healthy population seeks healthcare coverage available to them, driving up the costs to insurers and the population covered.

The Healthy Indiana Plan offers some considerations for national reform, Damler says. “One of the issues that needs to be understood is pent-up demand,” he says. “We need to be prepared that the newly insured may cost more in the first 12 to 24 months than the insured population.”

Not surprisingly, insurance companies say that without a federal law requiring everyone to carry health insurance, national healthcare reform won’t work because the chronically ill will sign up for coverage in large numbers, driving up costs, while the healthy will stay on the sidelines.

“It only works if everyone’s covered,” says Alissa Fox, senior vice president of policy at the Blue Cross and Blue Shield Association.

Medicaid, Uninsured, Universal coverage, Utilization Indiana, Rob Damler