Medicaid Reforms Could Save Tens of Millions

Massey Whorley, policy adviser to Governor McAuliffe

A new forecast of Virginia’s $10 billion Medicaid program supposes that the implementation of managed-care reforms will slow runaway costs, reducing growth in spending to 2.5% in the first year and 3.4% the second year, down from an 7.8% increase in the current fiscal year. While the program still will cost an additional $670.6 million over three years, that’s a lot less than it would have been, reports the Richmond Times-Dispatch.

The McAuliffe administration is expanding the number of people, primarily elderly and disabled, who will receive services through managed-care contracts with private insurers.

“A huge part of [the reduction] is the effect of reforms and the amount of money being moved from fee-for-service to managed care,” said McAuliffe policy adviser Massey S.J. Whorley. The number will swell from about 30,000 people under managed care to almost 200,000. Explains the T-D:

Fee-for-service has been the traditional way of reimbursing providers for services to Medicaid patients in an uncoordinated fashion. Managed care allows the state to shift the risks of serving patients to insurers who are paid a fixed amount per person, per month to coordinate their care. 

“The plans are taking a very substantial risk,” said Doug Gray, executive director of the Virginia Association of Health Plans, which includes five of the six companies that are providing managed care to more than 216,000 elderly and disabled Virginians. “These are very sick people who could have very high costs. The commonwealth has protected themselves from costs over and above the contract amount.”

The attraction for insurers is the potential to lower the cost of care and keep the difference, while saving the state money, but Gray cautioned against expecting an immediate windfall as the state expands managed care to riskier populations. “We are hopeful and optimistic there will be savings, but I wouldn’t want to be overly aggressive about promising,” he said.

House Appropriations Chairman S. Chris Jones, R-Suffolk, said the reforms are working, but he would hesitate to read too much into the initial forecast. “This is the right step to have taken. … There is no doubt the reforms are starting to have an impact.”

Bacon’s bottom line: Everybody cross your fingers and hope this works. Out-of-control Medicaid spending has soaked up a disproportionate share of new tax dollars generated by the state, forcing legislators to under-fund other critical priorities like K-12 schools and higher-ed. The shift to managed care may ease the fiscal pain for the next biennial budget.

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13 responses to “Medicaid Reforms Could Save Tens of Millions

  1. Managed care if the way to go – not only for Medicaid because it is the antidote for fee-for-service which incentivizes providers to sell as many services as they will be reimbursed for – independent from whether or not other providers are also knowingly or unknowingly selling similar services and none of them as much interested in knowing all the services already provided much less the efficacy of the services provided.

    Managed care typically works off of one electronically-shared medical record as opposed to fee-for-service which has a medical record for each provider and those records in theory are “shared” and in practice not electronically and paper instead.

    Prior to managed care – Medicaid recipients could end up going to multiple different primary care providers and specialists depending on who would take Medicaid for reimbursement and when.

    In reality – the same problem occurs with people on other insurance including Medicaid as people change providers when they move and/or suffer from chronic conditions that require multiple specialists.

    Here’s a fun fact: Nationally, 1/2 of all baby deliveries are paid for with Medicaid. In Virginia it’s less than 27%

    http://www.whijournal.com/article/S1049-3867(13)00055-8/fulltext#tbl1

  2. Posted on behalf of Becky Dale:

    I am guardian for a disabled relative and he got pushed into the health insurance from Medicaid, as of Oct. 1, and from my perspective the transfer is a disaster.

    His new insurance company is VA Premiere. He lives at home with help from a personal care attendant. Medicaid had been paying the attendant, using Public Partnerships as the fiscal agent. Since the transfer the attendant has not been paid for the time period ending Oct. 18 or the time period ending Nov. 1. When I first called Public Partnerships, I was told it was a technical issue and would be resolved by the end of the week. It wasn’t.

    When I called later in the week I was told that they didn’t have the proper paperwork from the insurance company establishing that he had Medicaid and waiver eligibility. I called VA Premiere and spoke to George’s care coordinator, who said she would look into it. As of yesterday, even she was having trouble finding out anything. She hasn’t returned my phone calls today. Yesterday I also called the state’s long term ombudsman. She told me today that DMAS is actively working on the issue. Meanwhile the care attendant who should have been paid a week and a half ago hasn’t been paid. I would think this is against labor laws. Who is responsible?

    This is not only affecting my relative but apparently many, many care attendants. Call Public Partnerships and the opening message says if your timesheet says “pending,” to give them another day or two. George has been on Medicaid for a number of years and it does not make sense that he would lose his eligibility simply because an insurance company took over from Medicaid. I don’t know why they can’t just pay the attendants and work out their paperwork issues later. The attendants have been counting on receiving their pay so they can pay bills and it is a great hardship.

    This is Becky’s follow-up comment:

    The VA Premiere care coordinator called me just a few minutes ago. She works from home and has to get information by email or phone (can’t just walk down the hall and talk to others). The problem may stem from the fact that Public Partnerships shows Anthem as the insurer. I have told Public Partnerships that is incorrect. They have not changed their records. When I talked to Public Partnerships earlier in October they told me I had to get Anthem to notify them they are not the insurer. I did call Anthem and they would not talk to me because I was not George. Anthem never covered him. He was assigned to Anthem in August by Medicaid and I switched him to VA Premiere early in September (his doctor works with VA Premiere but not Anthem) before any coverage started. Aaagh!

  3. Add to this that Virginia probably becomes and expansion state after the smoke clears in the House of Delegates. There were already some Senate R’s ready to do it….

  4. If Medicaid expansion is a good idea, shouldn’t the General Assembly also cut state funding for indigent care and require premium cuts, in real terms, to health insurance premiums that reflect the perceived savings?

  5. I don’t think the MedicAid expansion is a done deal myself.. I think the GOP will do everything in their power to derail it – both at the State level and the national level.

    There is no doubt in my mind that the MedicAid Expansion days are numbered (also) if the National GOP gets their act together.

    I’m actually surprised that more has not been done to undermine it like they are doing right now to undermine Obamacare.

    to TMT’s question – I’m not sure what he means. Does he think that the expansion pays for “indigent care”? The expansion is for folks who work who don’t have insurance… it’s not the core Medicaid program.

    How about it TMT? can you explain further?

    • Larry, I was following up on your long-standing argument that people without health insurance go to emergency rooms and receive other non-paid care that is passed along to taxpayers and to people with health insurance. Accepting your argument as true for purposes of my response, then expanding Medicaid to lower-income workers not covered should reduce the amount of money taken from the state treasury and from people with insurance. My point is then, if your argument is true, then the savings from expanding Medicaid should be given back to the people who formerly paid for these people’s care.

      Now I don’t believe this will happen. First, I’m not convinced the cost savings from not covering these people’s health needs from taxes and higher insurance premiums will outweigh the costs for expanding Medicaid. And, second, like Obama and the State of California, there will be a deal with the insurance companies to let them keep the extra money, rather than give it back to premium payers. And no one ever gives money back to taxpayers. Read DJR’s comments on the recent election.

      • TMT – it’s not only ERs.. it’s hospitals to treat people who do not get regular care and then suffer serious and expensive long term chronic conditions like diabetes and heart disease… organ failures and need amputations, kidney dialysis, heart bypasses, etc…

        Folks who end up with untreated Chronic conditions not only cost more than just ERs – many will become “disabled”, quit work and rely entirely on entitlements and Medicaid.

        and yes – those monies known as Disproportionate Share Hospitals is being reduced already:

        ” CMS releases proposed rule for DSH allotment reductions
        Kylie Walsh | Jul 31, 2017

        Last week, CMS released a proposed rule outlining reductions in the federal Medicaid dollars allocated to each state to fund their Medicaid Disproportionate Share Hospital (DSH) programs beginning in FY 2018.

        In anticipation of lower uninsured rates and lower levels of hospital uncompensated care, the ACA set forth aggregate reductions in federal funding for DSH payments. The reductions were delayed from FY 2014 through FY 2020 to FY 2018 through FY 2025.

        The proposed rule does not include the actual FY 2018 DSH funding for each state, but does include a chart that illustrates the estimated FY 2017 funding for each state under the proposed rule for a total reduction of $2 billion.”

        https://stateofreform.com/featured/2017/07/cms-releases-proposed-rule-dsh-allotment-reductions/

        So again – it’s not just ERs… it’s all other hospital services… also… and people who have relied on ERs and charitable care for years – don’t change overnight. Once they get into the habit of only seeking care when they are really sick – it’s a habit that can be hard to change.

        I’m perplexed that you apparently think people without insurance won’t really cost taxpayers any money.. they’ll just die… instead.. apparently.

        People who don’t have insurance and use the hospitals DO get billed for the costs – and bill collectors go after them – and bankruptcy due to medical expenses is the number one cause of bankruptcy.

        Beyond that – people who are sick and do not get care – may also have families – and the entire family then ends up on welfare and other entitlements…

        The ideal solution would be that people would not need help to start with.

        The question is what do you want to do about reality?

        People without health care don’t just go off and die… they cost taxpayers a LOT of money… way beyond the idea that it’s ERs.

        • Larry, you’ve added more evidence to the argument. Ergo, if the status quo costs more than the expansion of Medicaid costs, the difference should be refunded to taxpayers (funds taken away from indigent care and put to other state uses) and to health insurance premium payers (at least in real terms). Anything else is theft from, or fraud on, the public.

          • TMT – How do you know that the money saved does not go back into the treasury the same way any other saved money from other programs would?

            Do you get refunds from other govt programs ?

            Do you think if the govt cuts out some tax breaks that they should refund the saved money to you?

            Or is it only this program that you have that expectation?

          • The point is: In order to give the money back to taxpayers, the General Assembly must cut the appropriation to indigent care by the amount of projected cost savings to that program by expansion of Medicaid. Anything else is smoke and mirrors. The money cut can fund other General Fund programs. I’m not looking for a tax decrease or rebate. I just want to force legislators to deliver on the promise that Medicaid expansion will save taxpayers money.

  6. Like anything else TMT – you implement the program based on an expectation of savings. How much you get and how soon – needs to play out and savings will accrue to the general fund in the same way that any improvement in any program might – such as moving basic MedicAid to managed care. Do you also want to “force” legislators to do the same with MedicAid savings from managed care? They won’t really know just how effective it is until they’re actually doing it for a while. That’s just the way that things work in the real world. There are no real guarantees just changes designed to improve and lower costs and it’s usually a learning experience.

    But if we don’t do that and we demand guaranteed results BEFORE we approve it – we get nothing.. we just stay mired in stasis

    You have to go forward.. and sometimes do encounter failure but you learn from that – and make another run at it.

    I swear guy – it’s as if you oppose anything unless got a gold-plated guarantee of savings. All of these programs are a conundrum where different things are tried to make them more cost-effective. It’s not a single attempt at a silver bullet.. it’s a process.. two steps forward, one step back… move it forward.

    And it’s not rocket science that those who do not see a doctor on a regular basis are at risk for serious undetected and uber expensive disease .. and when taxpayers end up being the ones to pay the costs of undetected disease – common sense says you want a system that detects disease earlier and manages it at a lower cost.

    For those of us with insurance – we pay 3, 4, 5 times as much for a visit to the ER – to cross-subsidize those that go there without insurance. That’s IN ADDITION to the extra dollars they also get from taxpayers.

    Every single country that provides access to all citizens to health care – has less infant deaths and longer lifespans than us and the simple reason why is that periodic visits to the doctor – finds emerging diseases that can be treated and managed cheaper than if disease goes undetected and we spend 10 times as much to try to treat it.

    • Then maybe legislators shouldn’t make the argument that expanding Medicaid will save taxpayers money or that health insurance would get less expensive in real terms. But that’s the argument I’ve heard ever since the Supreme Court ruled Congress’ action in requiring states to expand Medicaid or lose all federal funding for Medicaid.

      I’m just testing the argument. Calling their bluff if you prefer. I’ve asked the question for years only to see proponents of expansion hem and haw because they cannot or will not back up their argument with action. If you cannot answer your opponent’s arguments you shouldn’t be playing in the advocacy arena.

      The argument that expanding Medicaid will save money is bogus. It will cost more. Now maybe it’s a good idea even if it costs more. But then argue that. The proponents simply have a bad argument. I earn my living poking holes in other people’s arguments and defending my own.

      • TMT – that’s the way ALL changes and reforms work guy.

        That’s the way, for instance, changes to the Flood insurance program would work or changes to how housing vouchers work.

        What you are requiring is absolute certainty in results from changes… and that’s just not realistic – with ANY program that would be changed – to save money.

        You simply don’t know that changes to Medicaid are bogus – any more than you’d know changes to flood insurance or housing vouchers would be bogus?

        How about moving Virginia Medicaid to a managed care model? Do you think that is also “bogus”?

        How do you know beforehand?

        How can you make such claims on any program changes?

        If you ran things – there would never be any changes, guy.. right? Or is it to just some programs you don’t like but you’re okay with changes to save money to other programs that you like?

        I just don’t see how you could see the future on any programs that might be changed to save money – and no one has a crystal ball to guarantee how much…

        We KNOW in general – that the more people who are insured and see doctors regularly – detect disease earlier and treat it much cheaper. That works for ALL health insurance regardless of whether it is MedicAid or Medicare or employer-provided or all the health care in other countries.. it’s a fundamental tenet .

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