Medicaid growth adds more managed care membership

June 1, 2011

Unemployment is stagnating growth in the commercial sector, but driving up enrollment in Medicaid managed care.

NATIONAL REPORTS-Unemployment is stagnating growth in the commercial sector but driving up enrollment in Medicaid managed care. Total membership in Medicaid managed care grew by 11% from June 2008 to June 2009.

Further, estimates for 2010 show an increase in managed care Medicaid enrollment of an additional 5%, representing 35 million lives.

Information is based on data reported to the Centers for Medicare and Medicaid Services and the National Association of Insurance Commissioners, analyzed by Mark Farrah Associates.

"To meet these challenges, managed Medicaid controls costs more efficiently and provides better case management and oversight of provider contracting, resulting in a higher quality network of providers," she says.

Margaret A. Murray, CEO of the Association for Community Affiliated Plans, says that Medicaid managed care increases access. It's also a viable model for dual eligibles, and Murray estimates $150 billion in savings for state and federal governments over 10 years for Medicaid and Medicare.

Carve-out arrangements in capitated Medicaid managed care programs are fairly common for services such as behavioral health, dental, transportation and pharmacy benefits, and are paid through traditional fee for service (FFS). But pharmacy benefit management will increasingly come back in-house for many Medicaid plans.

Johnson says that healthcare reform has removed the major incentive for states to use a drug carve-out because Medicaid health plans can now receive the same manufacturers' rebates as a FFS program. The program requires drug companies to provide rebates in order to receive federal reimbursement for outpatient drugs dispensed to Medicaid beneficiaries.

A recent study sponsored by MHPA finds that a collective savings of $11.7 billion over 10 years could be achieved by 14 identified states if they abandon their current pharmacy carve-out model in favor of a capitated, carve-in approach. Health plans also pay pharmacies lower dispensing rates and ingredient costs, encourage the use of generics and demonstrate lower utilization rates.

Johnson says if a Medicaid plan brings pharmacy and other ancillary services in-house, the result is integrated care delivery for members.

"There is a bipartisan acceptance across the country of the value of managed care in keeping Medicaid costs in tow," Johnson says. "Managing a growing population of members in Medicaid due to reform, an sufficient number of providers and strong expectations of cost savings will be challenging to reconcile over the next many years."

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