Medicaid Managed Care: Finding a System that Manages Care, Not Just Dollars
When Medicaid managed care was introduced in the 1980s, the strategy of helping to direct recipients in their health care decisions – especially those with chronic illness – held great potential for providing more appropriate care to patients at a lower cost. The “managers” are private insurance companies called Managed Care Plans (MCP) that contract with local doctors, specialists, hospitals, pharmacies and other health care providers to offer services to Medicaid recipients. Patients can choose the MCP that best meets their needs based on which providers they prefer or their specific health care needs, giving them greater access to preventive care and physicians’ offices for basic health care services. The model seeks to incentivize physicians and patients to select less-costly forms of care.  The intended result is healthier enrollees and more cost-effective care, including a reduced reliance on hospital emergency departments. But the concept, both in Ohio and nationwide, has not yet found the right balance to achieve this goal.

Expecting Feast, Receiving Famine
The Medicaid managed care strategy rolled out statewide in Ohio in the 1990s. Most Ohioans enrolled in the state’s Medicaid program were gradually required to join one of several available MCPs. Seeing the potentially large number of enrollees and the opportunity for profit, many private companies entered the market as MCPs. Welfare reform and a thriving economy kept enrollment numbers lower than expected, and the MCPs received lower reimbursement rates from the state based on an expected cost-efficiency that didn’t materialize.

Profits also failed to materialize due to poor and imprudent business practices by the MCPs. The groups began to dissolve or were ordered in liquidation, leaving hospitals and other providers with stacks of unpaid bills for care already provided to patients. Many of the MCPs that remained became lax and slow in paying providers, and began piling prior-authorization requirements and administrative work on providers to avoid paying claims. In 1998, the instability of the system led OHA to file a lawsuit against the state for failing to meet the requirement that it monitor and safeguard the financial solvency of a bankrupt MCP. Five additional MCPs left the market soon after the lawsuit was filed, emphasizing the hospital community’s concerns by creating an additional $30 million in non-payment or significantly delayed payment to hospitals. The state had turned a blind eye and attempted to outsource its responsibility for the Medicaid program, despite its previous pledge to support the Medicaid managed care system. Suddenly providers stood alone in trying to care for and financially support Medicaid managed care enrollees.

MCPs turned their focus to money and away from care.  Providers didn’t receive payment and Medicaid enrollees had a harder and harder time finding plans that met their needs and physicians or hospitals willing to contract with their MCP. In some cases, patients were bounced around between providers when their MCP left the market – bad for the continuity of their care, the transfer of their records and the trust relationship developed between health care providers and patients. On a larger scale, the financial strain put on hospitals drew resources away from care for all patients. The system was broken.

Can Ohio Make Managed Care Work?
The idea of helping Medicaid recipients manage their care in a way that gives them access to the most appropriate health care services at the lowest cost is not a fairy tale, but the right formula to make it happen remains elusive. The General Assembly has considered requiring hospitals to provide non-emergent services to patients of non-contracted MCPs at a reimbursement rate of 95 percent of the normal Medicaid payment rates. Other proposals would require hospitals to contract with a majority of MCPs or face losing other Medicaid reimbursement. These tactics would give Ohio MCPs a disincentive to contract with hospitals and to intentionally refer patients to non-contracted hospitals that must accept less. They put hospitals at financial risk because the hospitals have no contract with which to enforce timely and accurate payment. OHA adamantly opposed both provisions and worked to prevent them from becoming law.

New proposals for improving the system continue to surface. In recent years, several national, publicly-traded MCPs have entered Ohio’s market and seem to be finding success, though they transfer much of their profit out of Ohio communities because they must pay investors. Hospitals throughout the state have also created their own MCPs. Quality Care Partners, in collaboration with Genesis HealthCare System and the local physician community, submitted a proposal to Gov. Strickland for a pilot project that would allow a direct relationship between these groups and the Ohio Department of Job and Family Services (ODFJS) – without an intermediary MCP.

In addition to efforts by providers and MCPs, legislators and the state also see the need for reform in the Medicaid managed care system. OHA supports these efforts, believing meaningful oversight from the state to be paramount in protecting providers against unreliable MCPs and ultimately creating a successful Medicaid managed care program. Sen. Capri Cafaro (D-Warren) is coordinating meetings with providers, including OHA and the Ohio State Medical Association, regarding their concerns with Medicaid managed care. ODJFS has held several listening sessions on the subject, inviting interested parties such as hospitals to share their experiences and challenges. ODFJS and the Ohio Association of Health Plans also participate in an OHA Medicaid Managed Care Task Force focused on finding a formula that works for patients, providers and the state’s economy. OHA will continue collaborating with member hospitals, the Strickland administration and the legislature to determine the right formula and implement reforms to the current system. The right Medicaid managed care system will manage much more than dollars, it will improve health care for Ohioans.

Currently Participating Ohio Medicaid Managed Care Plans
► AMERIGROUP Ohio
► Buckeye Community Health Plan
► CareSource
► Molina Healthcare of Ohio
► Paramount Health Care
► Unison Health Plan of Ohio
► WellCare of Ohio

Source: Ohio Department of Job and Family Services