Could managed care outlive the backlash of the past?

December 1, 2011

Perhaps so, as federal and state programs look more to private insurers to help control spending.

Is the managed care backlash over? Perhaps so, as federal and state programs look more to private insurers to help control spending while providing quality care.

This development is somewhat surprising, as MA rate cuts authorized by the Patient Protection and Affordable Care Act (PPACA) threatened to spark a plan exodus.

Only nine of 570 MA plans achieved the five-star score in the CMS rating report for 2012 unveiled in October, while about 95 plans received four or more. These plans should grow because they may market and enroll members year-round.

However, more than 50% of MA enrollees are in the 264 plans that fell into the three star range, a level that provides a small bonus this year, but not in the future. These plans, along with some 150 plans rated below the three-star level, are under pressure to improve quality very quickly or face expulsion from the Medicare program. Leading insurers say they're investing in systems and programs designed to improve care and are serious about boosting star ratings in order to expand their programs and gain higher payments from CMS.

STATES BOOST MANAGED CARE

Meanwhile, managed care is helping state officials deal with soaring costs and diminished resources. The end of enhanced federal stimulus funds in July, coupled with rising Medicaid enrollment, has sent states scrambling for money-saving ideas. PPACA prevents states from reducing Medicaid eligibility, forcing them to boost co-pays, cut rates to hospitals and physicians and eliminate extra benefits to maintain viable healthcare programs.

Another strategy is to adopt or expand Medicaid managed care. This year, 17 states expanded managed care programs, and 24 states said they would do so next year, according to a survey by the Kaiser Family Foundation. Many states are extending managed care to additional regions or populations, such as the disabled, dual-eligibles and even long-term care patients. Several prominent states-New Jersey, New York, Texas-have major managed care initiatives underway.

Program administrators for both Medicare and Medicaid are eyeing managed care programs as key to promoting quality measurement and performance improvement strategies. The prospect of additional federal budget cuts may further spur the shift to managed care-and test whether insurers can deliver high-quality care with less money.

Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.