Category Archives: Medicaid

Medicaid managed care market penetration quadruples over past decade

Milliman has announced the availability of its annual research into the financial results and administrative expenses associated with Medicaid managed care plans. This year’s report marks the tenth edition of Milliman’s research, and combines the financial and administrative analysis into one comprehensive report including an in-depth examination of Medicaid managed care plans’ medical loss ratios (MLR), administrative loss ratios (ALR), underwriting ratios (UW ratio), and RBC ratios. The information is of significant value to the Medicaid industry as enrollment and revenue continue to increase year-over-year.

Observing the changes that have occurred in the Medicaid managed care landscape over the last ten years provides valuable insight into the makeup of the market. We have made enhancements to this year’s report that help to highlight the growth in this industry and the ebb and flow of experience over time.

Key findings from the analysis include:

• The average underwriting gain of 0.9% in calendar year (CY) 2017 remained relatively stable from the composite gains observed in CY 2016.
• During the past ten years of our analysis, the data studied for the report has seen a 250% growth in membership and over 400% growth in revenue for the studied Medicaid managed care programs
• Administrative expenses continue to increase on a per member per month basis, but decrease as a percentage of revenue has been observed from CY 2016 to CY 2017.

To see the Medicaid administrative expenses report, click here.

Medicaid buy-in and Section 1332 State Innovation Waiver considerations

Some states are looking for ways to offer more comprehensive or lower-cost health insurance on the individual market and to entice more of those currently uninsured to purchase coverage. One option currently getting the attention of states is Medicaid buy-in.

A Medicaid buy-in option is different from Medicaid expansion efforts under the Patient Protection and Affordable Care Act (ACA). A Medicaid buy-in approach can build on a state’s existing Medicaid program infrastructure and offer a Medicaid-like plan to specified residents.

Under a Medicaid buy-in proposal, the core target population would typically be those who are purchasing insurance using advanced premium tax credits (APTCs) or who are eligible for APTCs but uninsured. A Medicaid-buy in may allow individuals not eligible for commercial group coverage to purchase a Medicaid-like plan. This type of proposal may allow a state to replace or augment the current insurance marketplace and ACA premium assistance structure under federal waiver authorities.

States could use their own funds and/or leverage federal funding to develop a buy-in program authorized by a Section 1332 State Innovation Waiver. A state’s goals for a Medicaid buy-in through a 1332 Waiver could be further supported by a Section 1115 Demonstration Waiver or other Medicaid coverage changes.

In this paper, Milliman’s Paul Houchens, Christine Mytelka, and Susan Philip discuss buy-in proposals, exploring the opportunities at a high level and laying out key considerations for states as they weigh their options.

Opioid prescription patterns affect risk scores

Opioid prescribing nationwide peaked in 2012 at over 80 prescriptions per 100 persons. Between 2012 and 2016, the prescribing rate decreased by almost 20%. Even after this decline, 19% of the U.S. population filled at least one opioid prescription during 2016.

As opioid prescribing declined, many doctors switched to other pain relief drugs. The change in prescribing patterns has potential implications for risk adjustment, because some of the drugs now being used for pain relief were previously flagged in pharmacy-based risk adjustment models as associated with high-cost conditions such as multiple sclerosis.

This brief by Christine Mytelka, Melanie Kuester, Colin Gray, and Lucas Everheart provides data on the decline in opioid prescribing and the increased use of other non-opioid pain relief drugs. Additionally, it addresses the corresponding effect that changing prescribing patterns may have on evaluating population health and risk-adjusted payments in risk-based managed care programs.

Enabling sustainable investment in social interventions: A review of Medicaid managed care rate-setting tools

Social factors have a substantial impact on healthcare outcomes and spending, particularly with respect to lower-income populations. As the nation’s largest payer for healthcare services for lower-income populations, Medicaid is front and center when it comes to these issues. This report coauthored by Milliman’s John Meerschaert and Shelly Brandel identifies practical strategies that states can deploy to support Medicaid managed care plans and their network providers in addressing social issues.

This article was published by The Commonwealth Fund. Manatt’s Deborah Bachrach and Jocelyn Guyer and RTI International’s Sarah Meier also co-authored the article.

The “Rxisk” of adjustments in 2018 ACA risk adjustment

The Centers for Medicare and Medicaid Services (CMS) is adding a new prescription drug category classification system to the 2018 risk adjustment model. Starting in 2018, a condition will be identified through a Hierarchical Condition Category with associated medical diagnosis codes, a prescribed medication, or both—each one affecting the final risk member score differently. This paper by Milliman consultants approximates the likely CMS mapping based on the publicly available information to date.

Medicaid risk-based managed care: Analysis of administrative costs for 2016

In this report, Milliman consultants summarize calendar year 2016 administrative costs of organizations reporting Medicaid experience under the Title XIX Medicaid line of business on the National Association of Insurance Commissioners (NAIC) annual statement. The primary purpose of the report is to provide reference and benchmarking information for certain key administrative expense categories used in the day-to-day analysis of Medicaid managed care organization (MCO) financial performance. It also explores the differences among various types of MCOs using available segmentation attributes defined from the reported financial statements.