Soon, Arkansas lawmakers will convene in a special legislative session that provides a tremendous opportunity to institute real reform in the state's Medicaid program. One critical issue up for debate will be whether Arkansas continues as one of the few states that does not use Managed Care Organizations (MCOs) to help deliver cost containment, quality assurance, accountability and predictable costs for the state Medicaid program.
This is critical because more than 830,000 Arkansans depend on Medicaid, and state taxpayers spend over $5 billion annually to provide this health care. Thirty-nine states and the District of Columbia use MCOs to manage some or all of their Medicaid programs, and it is a proven model that works.
The Stephen Group, an independent and well-respected health-care consulting firm, was commissioned in 2015 to provide an assessment of the state Department of Human Services' management of the Medicaid program. These experts validated that the state has excess utilization of many high-cost services such as ER visits and nursing homes, and has failed to implement proven practices to help manage costs.
The consultants found that Arkansas can save $2.5 billion over the next five years by moving Medicaid participants to MCOs. This would slow cost growth from 5-6 percent annually to about 3 percent. They also found that $1.5 billion would be saved if managed care is applied only to key high-cost populations, like those requiring behavioral health services and the developmentally disabled.
Managed care is a proven, patient-centered approach, and MCOs work directly with providers to ensure the right care is delivered at the right time and in the appropriate setting. As the single contracted point of accountability for a patient's care, MCOs have the unique ability to bring all patient care into a coordinated plan by the timely and effective use of data and care managers. From the start, Arkansas Medicaid participants will have an accountable medical provider, receive the best care, and the state will realize improvements to quality measures.
MCOs would be selected by the state to participate in the new program through a competitive process, and will agree to provide services for a fixed fee per participant, which is determined by the state within a contract that will also include quality-assurance guarantees. MCOs must agree to take the risk and ensure access to high-quality care for their members, or face possible liquidated damages, contract revocation or other sanctions as outlined by the state. If it doesn't perform, the MCO suffers the financial consequences, not Arkansas taxpayers or Medicaid participants. Under the current "fee-for-service" Medicaid system in Arkansas, little is questioned by state bureaucrats, service is not patient-centric, there is virtually no incentive for providers to accept Medicaid patients or to innovate, and, as a result, unnecessary expenses are incurred and taxpayer dollars are wasted.
Are these savings realistic? The state of Louisiana proves they are. In February, the state announced that managed care saved taxpayers almost $440 million in 2015 when compared with what would have been paid under its previous fee-for-service model.
Dr. Rebekah Gee, secretary of Louisiana's Department of Health and Hospitals, explained it this way: "Under Louisiana's old fee-for-service Medicaid system [which is very similar to Arkansas' current system], providers--doctors, hospitals and others--were paid for every service they provided. With managed care, the state pays managed care organizations a set monthly fee. The organizations ... direct members to primary-care options first, offer free or low-cost preventive care, and provide case-management services for patients with chronic conditions such as diabetes. The result is better care for patients and a more efficient use of health-care resources."
Another example is in Texas. Milliman, an actuarial firm, identified that for the past six fiscal years, the Texas MCOs reduced costs by $3.8 billion and projected another $3.3 billion in savings in the coming three years, and $7.1 billion over nine years.
A third state example would be in Georgia, which experienced an actual average annual decrease of over 2 percent a year in the first five years of its MCO program, and 2 percent per year since.
Arkansas spends approximately 20 percent of its taxpayer-funded budget on Medicaid, and spending is projected to grow at more than double the growth of the economy in coming years--that's too much. Bending the cost curve to bring down the growth rate in Medicaid costs to match more closely the growth in Arkansas incomes, GDP and state revenue growth is essential. Moving to managed care also helps lock in predictable budget dynamics, so we can better plan for the future.
Change is always scary. But we can do this right, by adopting proven successful models as studied by the Legislative Health Reform Task Force and closely monitoring the new approach.
Now is the time to join the 39 other states in embracing the benefits of managed care and adopting an affordable, comprehensive and outcome-based Medicaid system.
The taxpayers who are funding the Medicaid program and the citizens who are counting on it to take care of their health needs deserve nothing less.
Rep. Charlie Collins of Fayetteville is co-chairman of the Health Reform Legislative Task Force.
Editorial on 03/17/2016