2014 Medicaid Outlook

February 1, 2014

Four key developments to watch for

Populations are Expanding

While Medicaid managed care plans have traditionally been employed by states to care for children, parents and pregnant moms, Robin Arnold-Williams, partner for Leavitt Partners, says states are going to the private market for other populations as well.

Robin Arnold-Williams“We do continue to see the expansion of Medicaid managed care across the country where you see states that have not gone in that direction previously now going that way,” Arnold-Williams says. “We see it as well in states that for many years used Medicaid managed care as the vehicle to deliver Medicaid for the traditional populations of kids now also looking to integrate all of Medicaid populations.”

For example, the elderly who also qualify for Medicare are now being enrolled in pilot projects to manage their care with a blended funding stream. The Centers for Medicare and Medicaid Services (CMS) is especially interested in demonstrating cost savings by integrating care for dual eligibles.

California's Medi-Cal program and CMS are partnering to launch a three-year demonstration in eight counties beginning this year-Cal MediConnect-which aims to create a seamless service delivery experience for dual eligible beneficiaries, with the ultimate goals of improved care quality and a more efficient delivery system. Fourteen other states have similar demonstration projects planned, each receiving up to $1 million in funding.

The Private Market is Viewed as a Type of Reform

"Medicaid managed care is viewed as a private market solution, and that why it’s retained its attractiveness,” Arnold-Williams says. “It’s viewed as ‘reform’ for traditional Medicaid especially in more conservative states that did not expand.”

For example, Kansas is moving more individuals into managed Medicaid while the governor continues to lean away from expanding Medicaid under ACA rules.

Managed Care Can Control Costs

From a legislator’s perspective, managed care can provide more predictability and is one of the best options for cost control.

“It brings certainty to your Medicaid budget,” she says. “Whereas, with a fee-for-service model, you don’t have the ability to control all the different variables. The factor you would predict is enrollment which is better than predicting fee-for-service costs.”

Plans Must Prove They Can Care for the Populations

Arnold-Williams says with expansion of managed care comes skepticism of commercial carriers’ effectiveness in handling high-need populations, such as the elderly or disabled. In fact, CMS put a project on hold that was supposed to begin January 1 in Kansas because of concerns over home-care services for the disabled.