Can states make Medicaid work?

October 1, 1998

Pharmaceutical Representative

More states are turning to Medicaid managed care programs to improve services and lower costs.

More states are turning to Medicaid managed care programs to improve services and lower costs.

But while the marriage seems like a natural fit, states will have to successfully make the difficult transition from bill payer to care purchaser, according to Robert E. Hurley. Hurley is a faculty member for the Department of Health Administration at the Medical College of Virginia of Virginia Commonwealth University, Richmond.

Hurley authored a book and numerous articles on Medicaid managed care, and co-authored "Adopting and Adapting Managed Care for Medicaid Beneficiaries: An Imperfect Translation."

He recently talked to Pharmaceutical Representative about how states are faring so far.

PR: In your view, is Medicaid managed care more Medicaid or more managed care at this point?

Hurley: It's more Medicaid than managed care. It's hard for Medicaid to break from its traditional roots of being a low payer and dealing with a limited set of providers. The approach of taking what the market will give them has put Medicaid at a disadvantage.

PR: Some large managed care companies have begun to pull out of the Medicaid program. What message should states take from this development - and what are the consequences ahead if this trend continues?

Hurley: Some managed care companies of predominantly commercial membership are indeed pulling out, but the actual magnitude is hard to get a handle on because it varies from state to state. It has been concluded, though, that the rate structure of Medicaid, the administrative burden of doing Medicaid managed care and the volatility and uncertainty of contracting the Medicaid environment have created a hostile contracting climate.

Our worry is that more Medicaid beneficiaries will end up in Medicaid-only plans, and that they won't have access to mainstream or predominantly commercial plans. We're also concerned that some of these Medicaid-only plans may not be able to deliver state-of-the-art managed care because the reimbursement that they are receiving won't be sufficient to allow them to invest in all the systems and infrastructure they need. The question remains whether more commercial managed care models and companies will write off the Medicaid business or whether state agencies will take steps to make it more attractive. We're uncertain what the next step will be.

PR: How would you rate the ability of state Medicaid agencies to customize their managed care initiatives to meet local market conditions?

Hurley: Practically speaking, states don't have any recourse but to customize their programs. States have either had to slow down their plans to implement managed care until the private market develops or develop lesser forms of managed care. This is also true for states who are predominantly rural and don't have a lot of HMOs, and also for relatively conservative states where the development of managed care has been discouraged. Medicaid agencies have had to modulate their development and implementation strategies until the medical marketplace is ready.

PR: Are states and providers generally prepared to implement managed care for long-term care populations?

Hurley: Not much has happened yet. One area we can look at is populations with chronic disease and disabilities who are just now starting to come into managed care and Medicaid arrangements. Quite often, the institutional and residential services for these persons won't be affected. In other words, only their acute care health services may be covered by managed care and their institutional services will still remain with traditional providers and payment systems.

Persons with chronic disease and disability are challenging for states - and states are moving purposely very slowly in terms of extending managed care models to them. Some states are only doing voluntary enrollment if they are using HMOs. Other states are using primary care case management programs and allowing specialists to be the case managers. Only a few states have gone ahead with mandatory enrollment for people with chronic diseases and disabilities because the health plans themselves don't have a lot of experience with these individuals. Also, many of these persons are reluctant or resistant to being put into managed care plans because many plans don't have experience necessary to handle this population.

PR: How do you see lawmakers changing managed care - and what will this mean for providers?

Hurley: I'm discouraged and disappointed with the level of debate taking place, and I don't really see a lot of what's being done making that much difference for the average managed care enrollee. Some of the things that are being done are already being offered by credible and established managed care companies. What we're going to do is just pass laws that basically ratify what's going on and give some sort of symbolic sense of activity on the part of the politicians. They never seem to want to do anything about the premiums that people are going to pay. I don't feel like we're going to be a whole lot better off as a result of what's going on.

PR: Do you buy the argument that quality of care has suffered from the development of managed care?

Hurley: It's hard to measure quality, but I don't think that we've ignored it. I think we've been unable to establish that there's been a decline in quality, which is good. And if we're paying less for the same outcomes, that's certainly an improvement. But it does underscore a bigger problem - the need to become more capable in our ability to measure quality. I think this will be even more challenging in the long-term care arena. Getting consensus on what are appropriate or desirable outcomes is problematic. Also, the distinction between what is clinical quality and what is amenities is often unclear.

PR: Do you think managed care will be remembered as a temporary experiment that never took root, or a fundamental shift in the nation's health care delivery system?

Hurley: I think we're going to see a lot more managed care in the future, but it won't necessarily be the same managed care as we're seeing right now. Like anything else, it will evolve. PR

Related Content:

News