Study on Medicaid managed care is questioned

July 15, 2011

A new analysis released by the Kaiser Family Foundation?s Commission on Medicaid and the Uninsured provides an overview of online applications for Medicaid and/or Children's Health Insurance Program (CHIP).

The June 2011 Commonwealth Fund issue brief, “Assessing the Financial Health of Medicaid Managed Care Plans and the Quality of Patient Care They Provide,” examines how publicly traded health plans differ from non–publicly traded ones in terms of administrative expenses, quality of care, and financial stability.

It found publicly traded plans that focused primarily on Medicaid enrollees paid out the lowest percentage of their Medicaid premium revenues in medical expenses and reported the highest percentage in administrative expenses across different types of health plans. The publicly traded plans also received lower scores for quality-of-care measures related to preventive care, treatment of chronic conditions, members’ access to care, and customer service.

The study “used limited data to draw inappropriate conclusions regarding the Medicaid health plan industry,” according to a press statement issued by the Medicaid Health Plans of America (MHPA), the trade group representing the industry.

In the statement, MPHA says the results suggest that a relationship exists between ownership status and quality of care and costs, when it is, “impossible to accurately draw such conclusions given the large amount of missing and incomplete data in the study.”

MPHA claims inadequate sample size, under-representation of certain types of companies, and access to financial data from only three-quarters of the plans identified as meeting the criteria for the study as shortcomings.

“Far worse is that the authors had preventive and chronic condition data from only one-third of the plans (with certain types of plans over- and under-represented), yet still opted to draw universal conclusions about ownership status and quality of care,” according to the MPHA press statement.

The Commwealth Fund issue brief itself points out the study’s limitations and lists its data collection methodology.

“Overall, this analysis has several limitations,” the brief concludes, going on to list five potential problems with the analysis:

1. The number of observations within selected traits was small, especially for quality-of-care measures.

2. Publicly traded plans were underrepresented among the health plans reporting quality measures to the National Committee for Quality Assurance (NCQA) relative to their prevalence.

3. The descriptive statistical approach of the median tests assesses the financial and quality-of-care measures in isolation of the plan trait and does not control for market and policy factors that may influence the variation of these measures.

4. Health plans in Arizona and California do not follow National Association of Insurance Commissioners (NAIC) statutory financial reporting guidelines, but instead follow Statement of Financial Accounting Standards. “The reporting of administrative costs may have been affected by these different accounting standards as well as the allocation of these costs by plans owned by parent companies,” the report states.

5. Regional variation may also influence the outcome of the financial and quality-of-care measures.