Medicaid managed care plans run by publicly traded, for-profit insurers have higher administrative costs and lower quality of care, according to a brief released last week by the Commonwealth Fund.
Findings from "Assessing the Financial Health of Medicaid Managed Care Plans and the Quality of Patient Care They Provide" found that the for-profit companies running the Medicaid managed care programs as a primary business reported 14 percent of premiums were spent on administrative costs compared to 10 percent for non-publicly traded plans owned by groups of health care providers, health systems, community health centers or clinics. Further, only 27 percent of publicly traded Medicaid-only plans reported quality measures and those that did scored 13 percentage points lower when it came to managing chronic illness. They also scored 11 percentage points lower than their non-publicly traded counterparts on a composite score measuring preventive care.
[See also: Florida pushes forward with plan to shift Medicaid to managed care; Aetna wins contract for Pennsylvania Medicaid program]
"Managed care plans represent a large piece of Medicaid's future, and plans owned by publicly traded companies will likely be a growing share of this market," said Michael McCue, a professor at Virginia Commonwealth University and lead author of the brief. "In order to assure that Medicaid provides high quality, efficient health care, it will be crucial that state Medicaid directors responsible for managed care contracts take into account publicly traded plans' commitment to Medicaid and whether they are striking the right balance between providing high quality care to patients and increasing earnings."
The report comes as states are increasingly turning to managed care programs as a means of reining in Medicaid budgets. In 2009, 72 percent of Medicaid enrollees were covered either fully or partially by a Medicaid managed care program, up from 55 percent in 2000.
The study sampled health plans with at least 5,000 enrollees, which resulted in an initial sample of 225 Medicaid managed care plans representing 23.8 million enrollees. From this study sample, the number of enrollees in managed care plans owned by publicly traded companies jumped significantly--from 5.6 million to 9.8 million between 2004 and 2009.
While the performance of the for-profit plans could be improved, the report did highlight that many Medicaid managed care plans are performing well both in terms of their overall expenses and their HEDIS scores.
"This report shows us that it is possible for health plans to keep administrative costs down and quality high for Medicaid beneficiaries," said Karen Davis, president of the Commonwealth Fund. "Millions of people are already covered by managed care plans and millions more will be added to their ranks when Medicaid is expanded in 2014 under the Affordable Care Act. Now is the time to ensure performance of private contractors to assure that scarce resources are used wisely and patients get the high quality health care they deserve."
Other significant findings of the report:
- Provider-sponsored health plans had the lowest administrative cost ratio overall, 8 precent, compared to 12 percent for non-provider sponsored plans.
- When looking at measures of patients' experience with their health care plan, non-publicly traded plans scored seven percent higher in overall patient satisfaction than the Medicaid-only publicly traded plans.
- Health plans sponsored by health care providers reported higher quality than non-provider sponsored plans--scoring eight percentage points higher when it comes to managing chronic illness and eight percentage points higher when it comes to managing preventive care.
- More than 50 percent of Medicaid enrollees in Delaware, Florida, Georgia, Illinois, Indiana, Maryland, Missouri, Nebraska, Nevada, Tennessee, Texas, Washington state, West Virginia and Wisconsin are enrolled in health care plans managed by publicly traded companies.