Georgia is reshaping its Medicaid program, a complex lifeline for 1.7 million vulnerable people that consumes $21 million in state and federal dollars every single day.
The state is widely expected to announce a plan this summer that would dramatically expand the use of for-profit insurance companies in a new approach to managing Medicaid.
The hope: that the companies would help hold down burgeoning Medicaid costs by emphasizing prevention and better tracking and coordinating care. That should mean fewer poor, disabled and elderly Georgians end up in emergency rooms, that more psychiatric patients remain stable and that doctors share test results instead of ordering duplicates that taxpayers wind up funding.
“The current Medicaid program design cannot be sustained,” said David Cook, commissioner of the Georgia Department of Community Health, who expects an annual Medicaid deficit of more than $600 million within three years. “By acting now, we can save this important safety net program while improving quality care and providing greater value for patients and the public.”
A consultant’s report in January strongly recommended relying on private companies to manage Medicaid. In the months since, the state has quietly convened task forces of key health care providers and advocates to debate the various options, from maintaining the status quo to letting hospitals and doctors manage the care. State health officials are now preparing to decide on details of the new design.
Doctors, hospitals, nursing homes and families who rely on Medicaid have expressed worries about the possible fallout if Georgia moves forward as expected. Georgia already ranks 49th nationally in per-person spending on Medicaid. They wonder if it’s possible for the companies to improve care, spend less and earn a profit on a program that doctors and hospitals say doesn’t pay enough to cover the cost of caring for Medicaid patients.
Among the specific concerns: Would the redesign drive even more doctors to leave Medicaid? Would managed care companies interfere with plans for disabled people that families have spent years arranging? Will patients be turned down for treatments that doctors say they need? Will hospitals make even less money from Medicaid, leading them to charge privately insured Georgians even more?
No legislative approval is needed for the change in Medicaid management. Gov. Nathan Deal said he believes the state Department of Community Health has taken the right approach by analyzing the options and devoting weeks to hearing the concerns of those who rely on Medicaid.
“Unsustainable costs are the driving forces behind the state’s Medicaid redesign,” said Brian Robinson, the governor’s spokesman, “but beyond that, Gov. Deal wants reforms that will focus on higher-quality outcomes for recipients.”
Medicaid, a program that serves low-income Americans of all ages, is funded by both state and federal tax dollars. It is separate from Medicare, the federal health care plan for the elderly.
Georgia has already experimented with using for-profit companies to manage one part of its Medicaid program — the segment that primarily covers children and pregnant women. Many of the state’s hospitals and doctors are strongly critical of the results. Still, Georgia appears ready to fine-tune and extend the concept to the most complicated and costly patient groups: nursing home residents, the mentally ill and the disabled who rely on Medicaid not just for medical treatment but also for the housing and job support they need to live outside of institutions.
If the state proceeds as expected, managed care companies would act as a top-down Medicaid maestro that examines and orchestrates the care of every recipient. That would replace a system where patients essentially run their own care and the state processes individual claims. Where proponents see efficiency and improved quality in such an approach, doctors and hospitals worry about red tape and rejected claims.
Judy Haley-Myers, whose 96-year-old mother is a Medicaid-supported resident at a Cobb County nursing home, said she doesn’t want to pay more in taxes. However, she worries about what the changes could mean for people like her mother. Rita Haley and her husband worked hard, raised three kids and sent them to college. But she exhausted her savings paying for assisted living and nursing home care before she applied for Medicaid.
“We’ve got to think about the individual,” Haley-Myers said. “We have got to be able to let all people have dignity.”
Huge growth on horizon
Medicaid is a plan most Georgians hope they never need. But the truth is, many of us — including many middle class families — eventually turn to this safety net for help.
In addition to its core mission of providing health care to the poor, Medicaid covers 72 percent of the state’s nursing home residents, most of whom must deplete their life savings before resorting to Medicaid to pay the bills. It covers more than half the patients treated at Children’s Healthcare of Atlanta, whether the problem is a broken arm or childhood leukemia. Nearly six in 10 births are covered by the program.
For people with disabilities and mental illness, Medicaid pays for social services that can extend a bridge to a life outside of an institution.
Care for Georgians covered by Medicaid and PeachCare for Kids, a health plan for children in low-income families, costs about $7.8 billion a year. The federal government pays the majority; Georgia’s share is about $2.3 billion. The state projects a $350 million Medicaid deficit for the fiscal year that begins in July. It estimates the annual deficit will exceed $600 million within three years.
“While it’s often portrayed as wasteful government expense, in reality Medicaid is the lifeblood for many Georgia citizens with disabilities and our children,” said Talley Wells, an attorney with the Atlanta Legal Aid Society.
“It is the ventilator and trache that enable a young college student with muscular dystrophy to breathe, it is the respite an exhausted mom in Decatur needs to continue providing a 12-hour feeding tube for her daughter with a developmental disability, and it is the assistance a young woman with Down syndrome needs to live and work in her community.”
Looming in the background of the state’s decision: If the U.S. Supreme Court upholds the federal health law and its massive Medicaid expansion, another 650,000 Georgians are expected to join the program. That would mean more than a fifth of Georgians would be covered by Medicaid.
The program’s sheer size means virtually every doctor, hospital, nursing home and social service provider in the state will be affected by the state’s redesign, not to mention all the people covered.
Even families who will never need Medicaid can be affected by how it works. What Medicaid pays can influence the care everyone gets in a nursing home, since it covers the majority of residents in most facilities. The program’s low payments — lower than those paid by both private insurance and Medicare — increase the cost of private insurance since doctors and hospitals charge more to make up for what they lose servicing Medicaid patients.
Doctors in specialties dominated by Medicaid patients already complain that the program’s low payments and administrative headaches mean their offices spend more time dealing with claims issues and less with patients. They worry that if the state expands its use of for-profit care managers and tries to do more to cut spending, that will put more pressure on what doctors make for delivering care, forcing them to change the way they practice.
Dr. Sandra Reed, an ob-gyn from Thomasville who is president of the Medical Association of Georgia, said her practice is about half Medicaid. To stay afloat in recent years, Reed said, she has added profitable cosmetic services such as laser treatment for veins and hair removal.
“We just can’t keep our doors open if all we do is run our practice on what we make from practicing medicine,” Reed said.
Turning to managed care
Many other states are turning to managed care as a solution to rising Medicaid costs. The Medicaid expansion ordered by the federal health care law to extend coverage to low-income people without insurance is also fueling state action.
Roughly 70 percent of Medicaid enrollees nationwide are now in some form of managed care, though not all are overseen by private insurers, said Matt Salo, executive director of the nonprofit National Association of Medicaid Directors. Some states hire outside, for-profit companies to run their programs. Others pay medical providers directly to act as case managers who shepherd people through a confusing, complicated health care system, he said.
“You’re not just leaving people to fend for themselves,” Salo said.
Managed care programs across the country have shown some promising results.
In New York, 76 percent of managed care enrollees received a test for diabetes, compared with 39 percent of fee-for-service enrollees, according to a report by consulting firm Navigant. The rate of hospitalizations in California was 33 percent lower in managed care compared with fee-for-service, the study shows. Experts say managed care, at its best, saves money by emphasizing preventive care that can avert a health crisis, whether by monitoring proper use of medications or closely following patients after hospital stays to ensure they do not quickly return.
Talk to doctors and hospitals about Georgia’s limited experience with managed care in Medicaid, however, and they are unlikely to offer a glowing review.
“We feel like the managed care model has done a wonderful job of ratcheting down costs to health care providers but has done a very poor job in managing the health care needs of patients,” said Kevin Bloye, a spokesman for the Georgia Hospital Association. Among the criticisms: the for-profit companies that manage care for children and pregnant women had not succeeded in meeting standards that included reducing rates of unnecessary ER visits and providing preventive care for children.
Targeting inefficiencies
Georgia contracted with the three companies — Peach State Health Plan, WellCare and Amerigroup — in 2006. Today they manage the care of 1.2 million recipients, mostly childrens in low-income families.
Here’s how it works: The state pays the companies a set fee for each recipient and the companies then pay for whatever care is needed, like a traditional insurance company. They set up networks of hospitals and doctors and contract with them to provide care, and they report quality measures to the state. While many hospitals and doctors aren’t fans of the “Care Management Organizations,” some say they have been effective.
Medicaid officials say that use of the three CMOs saved Georgia at least $402 million between 2007 and 2011.
“I think we have done a great job with the low-income Medicaid population and managing that care,” said Cook, the Community Health commissioner. “I think the data is showing that we’ve improved quality and reduced costs.”
Peach State Health Plan said improvements in care for its members are clear. Hospital admissions have fallen by 16 percent. Their management, they say, means pre-term births are less common and children with asthma are less likely to go to the hospital. Simply doing more to make sure kids with asthma keep their condition under control and pregnant women are monitored before a crisis hits makes all the difference. Meanwhile, they say they have improved rates of cancer screenings for adults and immunizations for children.
Tactics as simple as using computer software to identify problems — like unfilled prescriptions and missed doctors’ appointments — can avert a hospital stay, they say, especially for complex patients.
Broad measures of performance for all three of the companies, however, suggest mixed results. For 40 of 47 key measures of quality analyzed in 2009, Georgia’s CMOs performed at or below the 50th percentile compared to other state Medicaid managed care programs, according to a massive consulting report ordered up by the state.
It’s these numbers that concern advocates for the elderly and disabled. If the CMOs can’t post strong results for managing the relatively uncomplicated care of pregnant women and children, they question whether they can handle the vastly more complex elderly and disabled population.
Ellyn Jeager, director of public policy and advocacy at the nonprofit Mental Health America of Georgia, said she worries companies looking to make a profit will cut services for mental health. Treatments for mental illness are often more complex and expensive than dealing with a medical diagnosis, such as diabetes.
“Mental health is not a money maker,” Jeager said. “These companies didn’t go into business to lose money.”
The state is expected to continue to set minimum care expectations for companies that get management contracts. Those requirements would balance the pressure to turn a profit.
Financial reports show that the companies currently managing Medicaid recipients in Georgia all made strong profits in 2011. Profits aren’t guaranteed and some losses were reported in the early years of the arrangement.
“I don’t think there is anything wrong with people making money — that is how this country has been built,” said Russ Toal, a former director of Georgia’s Medicaid program who is now a health policy expert at Georgia Southern University. “If it’s an inappropriate percentage or a matter of sending all the profits out of state instead of keeping them in Georgia, that’s another matter. I would rather see more of our money paid for care than going to administrative costs or profits.”
The human factor
Judy Haley-Myers sees her vested interest in the redesign every time she looks at her mother.
At 96, Rita Haley has lost her ability to walk and may not remember what happened yesterday as well as she remembers what happened in the 1950s. Haley-Myers makes many of her mother’s decisions for her.
She knows she is lucky to have found a place for her mother at A.G. Rhodes Health & Rehab in Cobb County. The staff is caring. The facility is beautiful. Activities are plentiful — whether it’s a bingo game or a Hawaiian-theme celebration. The home is operated as a nonprofit, which Haley-Myers thinks makes a difference. She knows that to keep her mother at A.G. Rhodes, she needs Medicaid, and that rising costs must be addressed.
Turning over management of Medicaid to a private company may not be a bad idea, Haley-Myers said. She just wants state leaders to make sure that it doesn’t diminish the care given to Georgia’s most vulnerable people.
“We need to continue to take care of the elderly with respect,” she said.
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Coming Monday
Officials redesigning the state’s $7.8 billion Medicaid program face an especially tricky task in dealing with Georgians with developmental disabilities, mental illnesses and myriad other conditions and needs.
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