Health systems set up accountable care programs, provider health plans, among other practices.
As Medicaid enrollment tops 68 million in 2014, health systems are testing out new financing and delivery systems to handle the financial risk and reimbursement issues stemming from the surge.
In Illinois, under a reform law enacted in 2012 and updated this summer, half of Illinois’ Medicaid beneficiaries are required to be enrolled in capitated managed care by 2015, either through managed care organizations or new provider-led Medicaid “accountable care entities.”
A sort of hybrid HMO-ACO, the accountable care entities are groups of providers who will contract with the state on a three-year basis to serve defined Medicaid populations in specific regions.
Some states are seeing some early success in applying the accountable care model in Medicaid.
Initially, they’re being given an 18-month trial period, with reimbursement on a traditional fee-for-service basis along with a care-coordination fee of $9 per member per month. After that trial period, the ACEs will take on full risk under a capitated basis. Among the providers serving as a Medicaid ACE in Chicago is NorthShore University HealthSystem, which created Community Care Partners with Erie Family Health Center, the Lake County Health Department and Vista Health System.
Medicaid’s enrollment growth is a sign of the economic times, when many Americans are working in lower-wage jobs or living in long-term unemployment. More than 9 million Americans enrolled in Medicaid or the Children’s Health Insurance program between October 2013 and September 2014, according to the latest federal data, pushing total enrollment to its most ever in Medicaid’s 49 year history.
In states like Illinois, where 3 million people are now in enrolled in Medicaid, many hospitals have lost money through under-reimbursement or delayed reimbursement from the state, a problem it’s faced since the program’s inception in the 1960s, said Danny Chun, vice president of the Illinois Hospital Association. In the spring of last year, the Illinois government owed providers more than $1.5 billion in unpaid Medicaid reimbursement, according to state Comptroller Judy Baar Topinka.
At the same, Medicaid beneficiaries have usually not had a great experience, between eligibility fluctuations, bureaucratic re-enrollment process, and trouble finding primary care physicians and navigating speciality and hospital services.
Whether Illinois’ Medicaid reform will achieve its goal of balancing state spending with provider financing sustainability remains to be seen — as more than 20 percent of the state’s population is covered under the program.
Other states, meanwhile, are seeing some early success in applying the accountable care model in Medicaid.
Colorado’s Medicaid accountable care program, which now covers about half of the state’s Medicaid beneficiaries, shows promise in combining the patient-centered medical home and ACOs.
Launched in 2011, Colorado’s program uses primary care providers for general and preventative care, regional collaborative organizations for case management and coordination with hospitals, and a statewide analytics contractor that measures the performance of all involved.
In its first full year, fiscal year 2013, the program saw a 15 percent reduction in hospital admissions and a 25 percent reduction in high-cost imaging, contributing to $44 million in savings, with most going to providers as incentive bonuses and $6 million returning to state coffers.
In other states, health systems have adapted to Medicaid’s challenges by launching their own health plans — trying to bring the benefits of integrated delivery networks to beneficiaries while streamlining finances under one parent organization.
There can be “easier collaboration and fewer barriers because the provider and health plan are owned by the same parent company,” said Karla Lord, the director of business operations for Gundersen Health Plan, the insurance arm of Gundersen Health System in La Crosse, Wisconsin.
Gundersen and other providers plying the integrated provider-payer model have taken their share of losses, like other managed care plans. Gunderson’s Medicaid plan posted losses in 2011 and 2012 before achieving a gain last year, according to a Milliman analysis of Medicaid managed care plans.
In New Mexico, though, Presbyterian Health Plan, the insurance arm of the eight-hospital Presbyterian Healthcare Services, was the only Medicaid plan in the state to post an operating gain in the last three years, according to Milliman data.
Presbyterian’s 30-year-old health plan is the also only insurer that has operated continuously in Medicaid since managed care’s inception in New Mexico in 1997, said Charles Milligan, Presbyterian’s senior vice president for enterprise government programs. It now covers 185,000 Medicaid members, about 35 percent of the state’s Medicaid managed care population.
Benefit mandates for Medicaid have shifted along with governors, and currently Presbyterian is making plans to participate in the next redesign of the New Mexico Medicaid, Centennial Care, which will see all Medicaid benefits covered by the health plan.