Managed Care - April 2008 - (Page 48) “The Medicaid-focused companies have become in comprehensive managed care, compared to 46 quite sophisticated, and their specialization has percent of the adults and kids. been an advantage rather than a disadvantage; for The plans have called for greater use of capitaone thing, it has expanded the contracting options tion, especially for ABD enrollees. The two trade orfor the states,” says Hurley. ganizations, the Association of Community Affil“The states are becoming more astute contraciated Plans and Medicaid Health Plans of America, tors and are coming to the realization that they can commissioned the Lewin Group to prepare a report use their leverage to obtain better on the capitation contracting in value. They have new tools to im- A study by the Center the Medicaid program. The report prove quality and efficiency, in- for Health Care Strategies said capitation is underutilized and cluding new approaches for man“up to $83 billion can be saved over found no clear quality dif- 10 years if the capitation model [is] aging care and ways of collecting data that allow them to monitor ferences between publicly immediately applied to approprithe plans,” says Somers. ate Medicaid populations, specifiOne of the leading states is Ari- traded and non-publicly cally the ABD population.” zona, where over 95 percent of the traded Medicare plans. In 2006, the Medicaid commisrecipients are in some type of sion that was established to explore managed care. “With clear goals and specific peroptions for Medicaid reform recommended the esformance measures, real progress is possible,” says tablishment of plans, created in the likeness of Anthony Rodgers, director of the Arizona Health Medicaid Advantage, for the aged, blind, and disCare Cost Containment System, the state’s Medicabled with dual legibility. aid program. “However, it takes three or four years to gear up internally and to develop working relaFull risk may not be so risky tionships and mutual understandings with the The ABD population, with its complex medical plans. It’s up to the states to lead the way.” needs, including mental health and behavioral disBoth for-profit and not-for-profit plans are orders, would seem to pose a concern for plans pushing to convert more Medicaid recipients to under full-risk capitation, but the plans are somemanaged care. what protected by a federal requirement for actuIn 2006, approximately 40 percent of all Medicarially sound rates across the entire program. The aid enrollees were in comprehensive managed care rates must reflect reasonable, appropriate, and atplans. Historically, the bulk of these enrollees have tainable costs of care, as well as administration. been non-elderly adults and children who together Hoyt is a consultant primarily to the states, not represent 76 percent of all Medicaid members. They to the plans, on these rates. “The concept of actuare the low-cost members of the Medicaid populaarially sound rates does not automatically protect tion, with premiums that average $100–$200 per each plan,” he says. “In our work, we usually develop month, says Mark Hoyt, who leads a group of a range of rates, and the states then can decide Medicaid actuaries at Mercer. where they want to be within that range and negoThe health plans are interested in expanding to tiate with plans from that perspective.” He adds the aged, blind, and disabled population. These inthat several other factors can add uncertainty to the dividuals will add covered lives and provide much rates, including administrative efficiency, the efhigher capitation rates. “The ABD enrollees made fectiveness of their managed care techniques, popup only 24 percent of the enrollment, but accounted ulation mix changes, contract negotiations with for 70 percent of the spending in 2004,” says Kaiser’s various providers, actual utilization of services that Rousseau. The monthly capitation for the ABD exceeds what was expected, positive and adverse sepopulation is between $500 and $800. In addition, lection, and program changes, if any. many members in this segment are eligible for both “It didn’t take long to realize that the Medicaid Medicare and Medicaid (so-called dual eligibles), population is different,” says Tom Kelly, CEO of which would produce a combined monthly capiSchaller Anderson. “There are many social and entation of $800 to $1,200 for Medicaid and Medicare vironmental barriers to overcome, so the keys to services. Only 17 percent of the ABD population is success go beyond covering or arranging for med- 48 MANAGED CARE / APRIL 2008
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