Improving the quality and cost-effectiveness of publicly financed health care
Medicaid in 2008: New Frontiers
Published: January 2008
To herald the New Year and Medicaid's accomplishments, Stephen A. Somers, PhD, President of the Center for Health Care Strategies, introduces a new column devoted to observations about how far Medicaid has traveled and opportunities ahead.
In the early 1990s managed care was Medicaid's new frontier. Plans were courting states and states were testing new delivery models to care for the program's multitude of beneficiaries. Today, at the brink of a pivotal election year, Medicaid stakeholders can be proud of the strides they have made, not only to tame the managed care frontier, but also to discover new territories worthy of exploration, especially in improving care for people with complex health and social needs.
CHCS is fortunate to have traveled with many of Medicaid's pioneers. Since 1995, we have learned from leading state agencies and health plans, helped to spread best practices, and provided technical assistance to foster innovation. Our mission remains constant: To improve health care quality for low-income children and adults, people with chronic illnesses and disabilities, frail elders, and racially and ethnically diverse populations experiencing disparities in care.
Today, I'm introducing a new column devoted to observations about how far Medicaid has traveled and opportunities ahead.
A Quick Look Back: In its early days, CHCS provided a neutral territory where some of the highly contentious stakeholders in Medicaid managed care could "leave their guns at the door" to talk candidly about technically and politically difficult contractual issues such as rate setting and risk adjustment. There is still the occasional bump in the process, but the mutual progress made on these and other issues is astounding.
Probably the single most important advance is that adversarial relationships have given way to partnership among increasingly sophisticated players. The states now know that the most effective way to conduct the $350 billion business of managing health care for Medicaid's 55 million beneficiaries is to engage openly with other stakeholders, including sister state agencies, state legislators, plans, providers, and consumer organizations, not to mention federal agencies, especially the Centers for Medicare and Medicaid Services. Today, states facing fiscal pressure do not immediately opt for the simpler steps of slicing and dicing rates, benefits, or coverage. They now have many other constructive choices to talk over with their Medicaid partners and are working together to invest in initiatives to improve care and reduce costs, particularly for the program's highest-risk beneficiaries. These options are driven by recent developments such as:
- Newfound data mining capacities, e.g., for overall strategic planning, monitoring performance, etc.;
- More advanced predictive modeling and care management programs capable of coordinating services for people with multiple chronic conditions;
- Fully capitated models for better managing long-term supports and services for people with disabilities or the frailties associated with aging, many of whom are dually eligible for Medicaid and Medicare; and
- Creation of financial incentives for higher performing plans and providers.
Health plans, including multi-state for-profits and regional, safety net non-profits, have become stable partners offering managed care options in almost every state. And in regions where health plans are not viable, a number of states have worked with hospital systems and primary care providers to create infrastructures for managing care capable of far surpassing the "good old days" of fee-for-service where beneficiaries were essentially left on their own to find a provider who would take Medicaid. There is still work to be done, however. Moving forward, a wide variety of alternative models to full-risk capitation are beginning to emerge from state to state, particularly for people with the most complex and challenging chronic needs.
Medicaid - A Land of Opportunity: I am sure it will not be news to those who are committed to tilling these fields, but I have to say that it continues to be an enormous privilege to work in Medicaid. I almost invariably find myself engaged with professionals open to pushing the boundaries of this valuable public program -- both as a way to make the lives of beneficiaries better and to get the best bang for the taxpayer dollar.
Medicaid by virtue of its size -- in terms of geographic spread, membership, and significant national investment -- is a huge arena for doing public good. The program covers 40 percent of all births in this country and roughly 50 percent of all long term care costs, thus setting the health care stage for future generations of Americans as well as millions who are nearing the end of their lives. And with health care reform on the national horizon, Medicaid -- with its established infrastructure -- can play a key role in proposals to broaden coverage to the uninsured. In particular, by focusing quality efforts where Medicaid is spending the most dollars, namely on adults with chronic illnesses and disabilities, the program can reap potential gains in improved health outcomes and, by controlling costs, can free up resources for coverage expansions.
In order for Medicaid to maximize its future opportunities it needs to consider the following steps:
- Capitalize more on its similarities (its "Oneness") as opposed to its cross-state differences;
- Serve as a learning laboratory for improving care for all high-need, high-cost populations, such as the dual eligibles who account for 42 percent of all Medicaid expenditures;
- Serve as a learning laboratory for reducing disparities, since more than half of its beneficiaries under age 65 are from racially and ethnically diverse groups; and
- Recognize its role as a dominant purchaser of health care in America and take on more of the characteristics of a high-performing business that seeks to maximize both the quality of its "product" and the returns it gets on its investments.
So with the hope and energy that a new year and new challenges bring, we look forward to furthering our work with Medicaid stakeholders to advance the quality of the health care services purchased for the public dollar. In the coming year, I will offer periodic updates on how we are all doing on the next frontiers.
Best in 2008,
Stephen A. Somers, PhD
President, CHCS