Program stifles cost increases

July 1, 2005

Managed care principles used to save billions in Medicaid costs in Pennsylvania.

HARRISBURG, PA.-Pennsylvania has saved $2.7 billion during the past five years as a result of applying managed care principles to Medicaid through its HealthChoices Program, an analysis by the Lewin Group said.

The program has also done a better job at holding down annual increases in medical costs compared with fee-for-service, Pennsylvania's traditional Medicaid program, according to the report, which was commissioned by the Pennsylvania Coalition of Medical Assistance Managed Care Organizations.

The report focused on four areas:

"We've been able to negotiate rates with the provider community that make sense in the cost structure of [Medicaid]," he says. "We're also able to utilize education programs that talk directly to our members about how to manage significant disease states like diabetes, asthma and obesity."