Gov. Bobby Jindal’s signature Medicaid privatization program may be saving the state money, but it’s hard to tell for sure, the legislative auditor said Monday.
The true savings are difficult to calculate because no baseline was established beforehand to use for a comparison with traditional Medicaid, Legislative Auditor Daryl Purpera said.
The auditor said that based on raw data, total Medicaid spending during the period scrutinized increased by more than $1.2 billion, or 19 percent, from $6.35 billion to $7.57 billion. The privatized Bayou Health component of Medicaid grew by 13 percent, indicating the program “may be saving the state money by curbing cost growth,” the auditor said.
The auditor recommended that the state health agency work with the Legislature to determine whether an independent actuary should be hired to determine if Bayou Health is saving the state money when compared with traditional Medicaid.
Purpera’s office found flaws in some of the cost-savings reports the state health agency provided the Legislature.
Medicaid privatization is a hallmark of Jindal’s administration which pushed the move as a way to both save taxpayer money and improve health by better managing care. Medicaid is a joint state and federal program that provides health care to the poor.
The audit looked at cost savings since February 2012, when the state launched Bayou Health. The privatized Bayou Health insurance program serves two-thirds, or about 900,000, of Louisiana’s Medicaid recipients — mainly children and pregnant women.
Department of Health and Hospitals Undersecretary Jeff Reynolds said the agency is generally pleased with the auditor’s report.
“They say, in auditor speak, there may be savings there,” Reynolds said. “At the end of the day, they can’t quite be sure what that is.”
Overall, he said, the audit reinforces the fact that Bayou Health is controlling Medicaid spending growth. Reynolds said DHH will work with the auditor to continue to refine calculations.
Legislators have questioned cost savings in the past. The legislative auditor also has been critical of the information the health agency has provided, including an initial report largely based on data provided by the insurance companies involved in Bayou Health.
Traditional Medicaid pays doctors, hospitals and other health care providers on a fee-for-service basis.
Bayou Health began with Medicaid recipients choosing between two private insurance models — a prepaid plan and a shared-savings plan. Under the prepaid plan, the state pays a premium for health insurance coverage and the insurer pays the medical bills. Under shared savings, the state paid a small amount per member, per month to a company for managing the Medicaid recipient’s care. The state paid health care costs for the services delivered.
As of Feb. 1, Bayou Health shifted to a totally prepaid, premium-based managed care program. Five companies have contracts that run through January 2018, each worth $1.96 billion.