One of Gov. Bobby Jindal’s more far-reaching policy initiatives is not yet a legacy accomplishment, but if early indications prove out, it will be enduring: managed care for Medicaid insurance recipients.
If it is saving money for the state, and the administration says it is, there is a reasonable debate about how much. 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 says.
Still, an audit report based on raw data found that 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.
That is good news if true, because of the dimensions of the program. Medicaid is a state-federal partnership for health care for the poor. While the U.S. government picks up more than half the cost, the state match is a considerable portion of the general fund the Legislature has available for other needs.
We’d be interested in seeing what an independent actuary would say about the figures, because Purpera’s office has found flaws with some of the cost-savings reports the state health agency provided the Legislature.
Bending the cost curve of Medicaid increases is likely to be a substantial savings — but there are caveats.
Health care providers argue that just cutting their reimbursements may save money in the short term but doesn’t do anything for long-term results; one of the big recipients of Medicaid is the nursing home industry, which is politically powerful enough to have fought off managed care so far.
We continue to see a key goal here as making the health of recipients the target, instead of pure fee-for-service medicine.
The state managed care program, 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, with the state continuing to pay for the costs of the services.
The latter was ditched: 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.
That’s a lot of money, and the Legislature is right to question if the state is getting any real savings under the new program. The shift in the plans makes it more difficult to calculate savings; health insurance premiums continue to rise generally in the state, public or private. And the provisions for prescription drugs and other components of Medicaid have changed over time.
The state argues that an actuarial study will be expensive, in the hundreds of thousands of dollars, so the administration is not in favor of a new study. But the size and scope of Medicaid make an assessment of managed care reasonable, we think.
Should this managed care initiative prove to be even a slowdown of Medicaid costs, though, we doubt that future governors and lawmakers will want to return to the old fee-for-service arrangement.