(The following was written in response to this column.)
Dr. Steven Goldberg, the chief medical officer from WellCare, one of the managed care organizations (MCOs) contracted to take over Iowa’s Medicaid program, paints quite a rosy picture of managed care under companies like his. On behalf of Iowa’s hospitals and the vulnerable Iowans who depend on Medicaid, the Iowa Hospital Association would like to explore these claims a bit further:
- Regarding the studies from the Menges Group and Lewin Group that purport to show savings from managed care: The $2.4 billion in “savings” claimed in the Menges report sounds impressive, until you divide it among the 40 managed care states, which includes nearly all the largest states in the union. California alone has 9 million managed care enrollees – 16 times the potential number in Iowa – so how much of this claimed savings could possibly find its way to Iowa?
- However, that might be a moot question, because the numbers from the Menges report are not actual savings but projections based on assumptions of reducing inpatient admissions (30 percent) and outpatient services (25 percent) due to care coordination, something Iowa providers are already doing.
- The 2009 Lewin Group study also depends on data from as far back as 1995. The relevance of this information is questionable in a post-Affordable Care Act health care world.
- That same study raises serious doubts about Medicaid managed care’s viability in a state like Iowa: “Rural settings pose daunting challenges to the managed care model in Medicaid (as well as for other payers). The limited number of providers can make development of a network problematic, and the market may be unable to provide the economies of scale that are achievable in more metropolitan areas.”
- While Dr. Goldberg is quick to point to savings “up to 20 percent” reported in the Lewin paper, that’s the highest end of the spectrum. Most states reported significantly less savings – as little as one-half of one percent.
- A much more rigorous and recent Medicaid managed care study by the Robert Wood Johnson Foundation (RWJF) found that “any potential savings will not be significant” and that those savings “generally are due to reductions in provider reimbursement rates rather than managed care techniques.”
- It’s also worth noting that both of the studies cited by Dr. Goldberg were not peer-reviewed and were paid for by the health plan industry (companies like WellCare), while the RWJF report was done independently and only included peer-reviewed studies.
- With regard to the health care outcomes results WellCare credits to managed care in Kentucky and Missouri: The managed care industry doesn’t own a patent on coordinated, preventive care. Through existing Accountable Care Organizations, Integrated Health Homes, the State Innovation Model and the Iowa Health and Wellness Plan, these same efforts are underway and creating positive results in Iowa – without the additional cost to taxpayers to cover an out-of-state company’s profit margin.
- In fact, the University of Iowa Public Policy Center released a report just this past March indicating that existing care coordination through Iowa’s Primary Care Health Home Program has generated 20 percent in savings ($11 million) in its first 18 months. With results like this already occurring, why is the state looking to eliminate this and other successful programs for an untested MCO model?
As the media have reported –and in addition to assorted legal and regulatory misdeeds – the four Iowa contractors have a history of making unverifiable claims. But once the MCOs have taken control from a state, these claims take on a life of their own because only the companies have access to the complete information. Meanwhile, the RWJF study, the most current and objective available, found virtually no upside to Medicaid managed care with regard to savings, access to care or quality improvement.
This massive, fast-moving change offers nothing to Iowa. What these health plans claim they can bring is already happening here – led by Iowans, for Iowans.
It’s time to show the MCOs the door.
The Iowa Hospital Association (IHA) opposes the state’s plan because it seeks to reduce Medicaid costs by restricting access to health care services and reducing reimbursement to providers through claims denials and requirements for prior authorization. Merely copying what 40 other states have pursued unsuccessfully is not new or innovative. It simply hands the reins of Iowa’s second largest insurance program to four out-of-state companies, along with a half a billion dollars of Iowa taxpayer funding.
Research of publicly funded managed care in both Medicaid and Medicare clearly demonstrates that minimal to no savings occur through the private management of these programs. In fact, spending for private management actually increases the cost of these programs in markets that are efficient utilizers of public resources. Iowa is such a market, as shown by the state’s low average cost per Medicaid enrollee and its low Medicaid administrative costs (among the lowest in the nation, in fact).
The current administration and Iowa hospitals agree that Iowa has been an innovator in its management of Medicaid. Just this year, the federal Centers for Medicare & Medicaid Services (CMS) approved a $40 million implementation grant for Iowa to continue work on the State Innovation Model (SIM) initiative, a multi-payer Accountable Care Organization (ACO) model that resulted from an 18-month collaborative plan design phase. The plan was approved by CMS and envisioned a long-term goal of advancing the significant progress made after the state expanded Medicaid to create the Iowa Health and Wellness Plan, which provided health insurance to more than 150,000 newly eligible Iowans.
The first five years of ACOs have yielded cost savings in both the private insurance market and the public sector (with Medicare) that have already eclipsed decades of experience with privatized Medicaid managed care. Moving to privatized Medicaid is a divergence that will inhibit, not improve, further opportunities for innovation.
One way Medicaid innovation is at work today is through Integrated Health Homes (IHH), which coordinate care for Iowa adults and children with serious mental health issues. Along with mental illness, these patients typically have three or more chronic health conditions, often leading to trips to the emergency room (ER) and hospitalizations, making their health care very expensive.
Managing care for such complex patients, who interact with many parts of the health care system, is always difficult and often fragmented. However, the health homes’ team-based approach addresses those issues by training providers, tracking patients and sharing information among providers, resulting in fewer ER visits and hospitalizations, reduced cost to Medicaid and a better quality of life for these Iowans.
So what is the future for these forward-looking programs under the state’s Medicaid managed care plan? The truth is, no one seems to know. The state is moving so fast and awarding contracts so quickly, those kinds of questions have been left unanswered. This is why there is grave concern among Iowa hospitals and other health care providers that these innovative and effective programs will simply be run over in the rush to implement privatized managed care.
The vast majority of Iowans are not on Medicaid, but the 560,000 who are in the program are among the state’s most vulnerable and least represented. We should all be concerned about their health care, not to mention what happens to the taxes that pay for it. There is no solid evidence from other states that privatized management will improve the health of Medicaid recipients, provide better access to care or save money.
Those in charge of the state’s fast-track plan for Medicaid privatization seem to rely on no one noticing the perils ahead. Iowans who care about their neighbors and holding our government accountable should prove them wrong.
Medicaid, with 560,000 insured Iowans, is the second largest health plan in the state, providing health insurance to more Iowans than Medicare. Medicaid is a $4.1 billion program (including state and federal contributions) that spends 58 percent of its resources on 168,000 severely disabled individuals. Correspondingly, it spends 42 percent of its resources on the other 392,000 participants.
Two months ago, the Branstad administration announced its intent to contract management of Medicaid to private companies. Medicaid is currently managed by the Iowa Department of Human Services. The initial request for proposals indicates that the administration is willing to pay up to a 15 percent contingency to successful bidders, of which there will be at least four, putting into play $645 million of earnings per year to be divided among these successful bidders. The state also wants its costs reduced by $100 million per year.
At least 18 companies have indicated initial interest in managing Iowa’s Medicaid program; all but one are non-Iowa companies. The timeline for selection of bid winners is July 31.
This timeline and the notion of moving the entire Medicaid program to management by private entities begs many more questions than it answers.
First is the potential impact on private insurance rates in Iowa. Since the adoption and approval of the Iowa Health and Wellness Program by the Iowa Legislature and Branstad administration, charity care and uninsured rates in Iowa hospitals have plummeted. During the first 11 months of 2014, the number of people hospitalized in Iowa without insurance fell by 47 percent compared with the same period in 2013. With more Iowans now insured, hospitals’ charity care losses fell 31.5 percent, yielding a total 11-month improvement of $103.3 million.
Everyone understands there is no free lunch in health care. The $745 million (earnings plus savings) meal price for Medicaid managed care will come at someone’s expense. It most likely will come at the expense of charity care and self-pay cost reductions.
Second are the implications of Medicaid managed care on Iowa’s Medicaid innovation program. In the last three years, health care providers have come to the table with the state and Iowa’s leading private health insurer to design a program that aligns public and private interests in bringing greater value to Iowa health care. This effort recently resulted in Iowa being one of only 18 states awarded $41 million to further improve Medicaid outcomes.
The chief objective of Iowa’s Health and Wellness Program and the State Innovation Model (SIM) for Medicaid is to move Iowa’s health care system to one that rewards care coordination, resulting in higher quality and more efficient outcomes. Achieving this goal of care coordination and community networks is the SIM’s central focus.
The Medicaid managed care initiative also hinges on the establishment of community care networks. But as proposed, these concepts appear to compete with one another. Based on initial interest, the Medicaid managed care proposal presupposes that those in the best position to establish relationships at the community level throughout Iowa are non-Iowa insurance companies. The lack of clarity on how the SIM coordinates with Medicaid managed care threatens the opportunity and possibly the funding for improvement through the SIM.
This is not Iowa’s first rodeo with Medicaid managed care. The state’s first major initiative with managed care was with the introduction of managed behavioral health services 20 years ago. The results of that experiment are written across Iowa’s health care landscape today as hospitals routinely search for inpatient bed placements, community access to sub-acute care remains virtually non-existent and hospital emergency rooms are, for many, the only point of access to Iowa’s mental health care system.
The state should slow down, resolve questions of fundamental competing concepts and set objective benchmarks for those seeking to assist in managing one of Iowa’s most important constituencies. Perhaps then, Iowa can avoid similar access concerns being imposed on Iowa’s entire Medicaid program.
The emergence of the Ebola virus in the U.S. has heightened awareness of all hospitals and health care workers about the importance of following strict infection control procedures. Throughout both Iowa and the nation, now is the time to share collective wisdom to stop Ebola from spreading further.
The health and safety of every patient and visitor to Iowa’s hospitals are of utmost importance. Indeed, the very reason hospitals exist is to heal patients and make sure they stay healthy. Iowa hospitals are deeply committed to maintaining the highest standards and most current protocols and training, to minimize the risk of anyone contracting an infectious disease like Ebola.
All of Iowa’s hospitals are convening regularly so that hospital infection specialists and emergency services leaders receive the latest updates on Ebola management and treatment and can learn from one another. Hospital leaders are continuously examining and refining best practices and protocols from an amalgamation of resources including academic research, day-to-day learning and media coverage, in addition to shared information from state, federal and international health agencies.
Hospital professionals are trained to provide treatment to patients with infectious diseases and each hospital has infection control procedures in place. Hospital officials are in contact with experts from the Iowa Department of Public Health and Centers for Disease Control and Prevention to stay abreast of the latest developments on procedures related to the treatment of an Ebola patient. Education is also being provided to hospital personnel in the event that a known or suspected Ebola patient would seek treatment locally.
Collaboration and communication within Iowa’s health care community are key to the state’s readiness efforts. From Fort Madison to Rock Valley, Iowa hospitals are working closely with local, state and federal health agencies to ensure each hospital and every employee are well-prepared should they have to care for an Ebola patient.
This is a rapidly changing situation and Iowa hospitals are doing everything they can with guidance from national, state and local partners. Across the state, hospitals are committed to the safety of their health care workforce and to working together to ensure they are ready and capable of providing care should a case of Ebola develop in our state.
At a recent Citibank conference in New York City, large and not-so-large non-profit health systems presented their business strategies and financial statistics to Wall Street types responsible for financing much of the debt used to propel health systems forward. Common themes emerging during the presentations were growth strategies largely dependent upon acquisitions in expanding health care markets coupled with significant planned reduction of expense, including debt in the next three to five years. Also apparent was the pivotal role that public insurance exchanges are playing in the creation of new markets.
Other strategies included focusing on primary care with a strong emphasis on integration of behavioral services as well as focusing on building partnerships with for-profit entities to enhance quality and drive more value into services offered. Most proffered long-standing views that care delivered closest to the patient was key to enhancing patient experience, lowering cost and providing optimum outcomes.
Interestingly, a key strategy to improve population health was premised on the need for success in the perceived growth area of Medicaid.
A couple of reports issued just this week add support to the premise of the role that Medicaid will play going forward. First, the Centers for Medicare & Medicaid Services issued a report detailing that six million more people are insured by Medicaid and the Children’s Health Insurance Program (CHIP) in the first quarter of 2014 compared to the July to September time frame for 2013, a 10 percent increase. Among states that adopted Medicaid expansion and whose expansions were in effect in April, Medicaid and CHIP enrollments increased by 15.3 percent compared to the July-September 2013. Iowa’s increase exceeded 18 percent. All told, 65 million people (or more than 20 percent of the nation’s population) are now enrolled in Medicaid and CHIP.
The implications of this growth are detailed in a second report issued by the Colorado Center for Health Information. Absent study, common sense dictates that revenue growth results when the volume of insured patients rises substantially, regardless of the source of insurance. Believed, but undocumented until now, is the corresponding decrease in self-pay and charity care.
Certainly, these results are early, but the analysis included 465 hospitals across 30 states (including Iowa) with equal numbers (15) of states that have and have not expanded Medicaid. Specifically, in the states that expanded Medicaid, the proportion of Medicaid charges increased nearly 23 percent (from 15.3 percent to 18.8 percent) while self-pay charges dropped 34 percent (from 4.7 percent to 3.1 percent). In Iowa, Medicaid increased 12.6 percent (from 11.9 percent to 13.4 percent) and self-pay decreased 19.5 percent (from 4.6 percent to 3.7 percent).
In addition to these hospital data trends, a June 4 Des Moines Register article by Dr. Barry Engebretsen, medical director for the Polk County Federal Qualified Health Center (FQHC), points toward similar trends among FQHCs.
If one considers the Affordable Care Act as two parts insurance reform (the public exchanges and Medicaid expansion) and one part payment reform, (non-payment for re-admissions, bundled payment and Accountable Care Organizations), it’s increasingly clear from sources like the Citibank conference and the Colorado study that intended objectives are beginning to jell, if not solidify.
Is there any doubt where the “Wall Streeters” will place their smart money?