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The Health and Human Services Budget Subcommittee heard from national experts on managed care last week - Laura Tobler from the National Council on State Legislatures and Dr. Art Jones from Health Management Associates.  They were asked to highlight what other states have done with managed care, so legislators could learn what to do (and what not to do) as they make this transition.  It should be noted, legislators have very little say over this change.  The Governor's office can do this without legislative authority, so legislators are trying to figure out their role in this transition.  You can see the presentation materials from the speakers at the links below:

Laura Tobler of the National Council on State Legislatures said that managed care has been around a long time, with 39 states having some type of managed care arrangement.  "Managed care is very much the way services are delivered in Medicaid," said Tobler.   The biggest trend in managed care now is in the addition of more populations, most significantly the long term services and supports area.  In 2004, only 8 states included long term care in their managed care plans. By 2012, that numbered had doubled to 16.  As of last year (2014), the number of states moving these services to managed care was 26. If Iowa's plan moves forward, it would be added to this list.
Dr. Art Jones of Health Management Associates said states always set "savings" as their first goal when moving to managed care, but cautioned lawmakers to put equal emphasis on access, quality, innovation, and practice transformation.  "Some of the most innovative changes are happening in Medicaid managed care," said Dr. Jones.  "But part of the (legislative) oversight is making sure that focus is maintained."   
Dr. Jones said that states should focus on three objectives: savings, access, and quality.   Dr. Jones said that provider rates cannot be squeezed much more.  He cited a Robert Wood Johnson Foundation study from 2012, which found only modest savings in Medicaid managed care. The study showed there were several reasons why its difficult to expect big savings in managed care:

  • Medicaid rates are already too low to start with (you've already squeezed out the savings)
  • It's unlawful to impose patient cost-sharing or increase patient incentives
  • It's not permissible to indiscriminately cut rates (CMS must find them actuarially sound).
  • You can't cut state administration entirely, because you still have to provide oversight.
  • Not much population savings except in long term care services and supports.

 Dr. Jones said legislators and the state need to make sure they are continually asking "what is this doing to our delivery system in Iowa?" Overall advice for the state:

  • Invest and develop capacity to manage care.
  • Do not be a passive purchaser - you need to manage your managed care.
  • Involve stakeholders in implementation process, and in an ongoing and meaningful way.
  • Legislative oversight crucial to making sure MCOs are responsible, responsive, and achieve the results expected.
  • Clearly define your expectations up front.
  • Have a readiness plan, and decide what you will do if organizations are not ready to go live.
  • Make sure you have a solid member enrollment process that gives people choice.
  • Make sure contractors have a good grievance process in place.
  • Have financial consequences for member discrimination, selective marketing, or failure to meet expectations.
  • Have good quality metrics that go beyond prevention.
  • Make sure your rates are actuarially sound, and make sure your baseline costs are realistic.
  • Care coordination should be at practice level, not internal to the MCO (call center).