As the nation ages, Medicaid enrollment expands and state governments look for budget savings, more states are likely to use long term managed care for Medicaid programs, according to KPMG's Healthcare and Pharmaceutical Institute.
Long term managed care offers state governments at least some predictability in Medicaid management by transferring the risk to managed care organizations, KPMG wrote in a recent actuarial newsletter. Although there's some conflicting evidence on the question of whether MCOs save money while improving care, KPMG argued MCOs can have greater flexibility to juggle various costs and can better coordinate with home- and community-based care services that keep people out of institutionalized care and avoid ERs and continued hospitalization.
Insurers have been adapting and acquiring in aim of expanding their MCO businesses. In July, WellPoint said it's buying managed care specialist Amerigroup for $4.9 billion. Six states require enrollment in managed Medicaid long term care, and more are expanding it. Florida, for instance, is transitioning to a statewide Medicaid managed care system,with the first stage of the plan incorporating seniors and the second stage bringing in the rest of Florida's Medicaid beneficiaries. As the Southwest Florida News Press reported recently, 14 health plans have submitted applications to the state for managed care contracts.
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Perhaps one of the ripest areas for cost savings through MCOs is the avoidance of nursing home care, KPMG said. More than 60 percent of Medicaid spending pays for nursing home care, while only 25 percent of Medicaid beneficiaries are nursing home residents. Avoiding the use nursing care institutions is where MCOs might find financial returns, and it may also be a benefit for senior citizens and disabled people who prefer independence.
KPMG points to a Kaiser Health News profile, last year, of a 32 year-old Tennessee woman suffering from severe brain damage from a motorcycle accident in India. Her MCO, run by Amerigroup, transitioned her out of a nursing facility by having a chairlift installed at her family's home and having a home aide visit daily. Her care costs about $37,000 a year -- $18,000 less than the likely cost in a nursing home.
KPMG also cited a JEN Associates study of Massachusetts' Senior Care Options MCO, run by UnitedHealthcare, which prioritizes home-based care to to avoid nursing homes. The study found that enrollees were less likely to go into a nursing home, spent more time at home before entering the nursing home and, if they eventually entered one, spent less time there.