The Deficit Reduction Act of 2006 (DRA) charged Department of Health and Human Services Secretary Michael Leavitt with creating a bi-partisan commission to recommend short- and long-term reforms to the Medicaid program.1 The commission released its first report in September 2005 and recently released its final recommendations for long-term reforms designed to create sustainability for the Medicaid program.2 The recommendations call for increased flexibility for states to alter program eligibility and benefits. In addition, they encourage increased responsibility for beneficiaries.3 The commission focused its recommendations on five areas: long-term care; benefit design; eligibility; health information technology; and quality and care coordination.
Long-Term Care
Comprising the largest portion of Medicaid costs4, long-term care spending has consistently been the focus of reform efforts. Promotion of individual responsibility by both state and federal government policies was a primary focus of the commission’s recommendations for long-term care reforms. The commission suggested:
* Federal and state tax incentives for individual long-term care insurance, or tax incentives for employers offering long-term care insurance as an employee benefit;
* Tax deductions or credits for those providing informal long-term care;
* Increased awareness of the use of home equity programs, such as reverse mortgages, to finance long-term care services;
* Improved public education about the importance of planning for long-term care, and;
* Increased use of services that allow beneficiaries to stay in the community.
The commission recommends studying alternative insurance models for long-term care services, including “analyses of costs, revenue, and governmental administration,” as well as adoption of legal and regulatory incentives.5
Benefit Design
The commission encouraged state flexibility in benefit design. The recommendations included:
* Providing premium assistance to allow buy-in to employer-sponsored or individual coverage;
* Promotion of beneficiary rights and responsibilities as well as rewards to beneficiaries making healthy lifestyle choices6, and;
* Implementation of state demonstrations through an abbreviated waiver process for initiatives that have been successful for at least two years in another state.
Eligibility
Like the recommendations for benefit design, the commission focused on increased flexibility for states regarding eligibility for Medicaid programs. Its recommendations for eligibility reform include:
* Allowing consolidation or redefinition of eligibility categories without a waiver, provided the outcome would be cost-neutral to the federal government;
* Designing new options for the uninsured to obtain health insurance, and reducing the number of people in Medicaid; and,
* Creating separate eligibility criteria for acute and preventive services, and long-term care.
In addition to these reforms, the commission suggested studying a “scaled match” funding formula for reimbursement. This would gradually reduce reimbursement to states that expand Medicaid benefits to higher-income populations.
Health Information Technology (HIT)
Concurring with President Bush’s executive order regarding health information technology7, the commission promoted rapid expansion of interoperable HIT. This expansion could include:
* Amortization of the cost of investments in HIT over a period of five years during the budget scoring process;
* Creation of an electronic medical record for all Medicaid beneficiaries by 2012;
* Inclusion of HIT interoperability clauses in contracts with insurers or providers to ensure that they meet recognized standards; and,
* Adherence to accessibility requirements with HIT upgrades.
Quality and Care Coordination
The Commission proposed several reforms to improve quality and care coordination for Medicaid beneficiaries. They supported:
* Creating a medical home for all Medicaid beneficiaries without requiring waiver approval;
* Integrating acute and long-term care services through Special Needs Plans (SNPs);
* Operating automatic enrollment care management programs, with the opportunity for dual-eligible beneficiaries to opt-out;
* Authorizing states to implement Medicaid Advantage, an integrated program for dual eligibles modeled on Medicare Advantage;8
* Reforming payment systems to reimburse for quality processes; and,
* Making payments for Medicaid services transparent to beneficiaries.
Likely Impact of the Proposed Reforms
The commission has suggested a number of changes to the Medicaid program focused on flexibility for states. Medicaid program evaluations have been numerous, examining various aspects of the program, and the literature shows varying outcomes in response to changing program parameters and incentives. It is important that research evidence be utilized when changes to the Medicaid program are being considered. HCFO has funded projects that examine a number of changes to Medicaid and may be useful in informing this debate at both the state and federal levels.
Grantee Mark Duggan, Ph.D., found that in California mandating managed care for Medicaid beneficiaries increased state spending by an average of 17 percent, and did not improve the quality of care provided.9 Laurence Baker, Ph.D., found that increasing the number of Medicaid recipients enrolled in HMOs was associated with fewer hospitalizations and less emergency room visits, but lower perceived quality and satisfaction by patients.10
Genevieve Kenney, Ph.D., found that expansions in Medicaid lead to significant improvements in prenatal care utilization among women of low socioeconomic status, however, that increased access to primary care is not adequate if the goal is to narrow the gap in newborn health between poor and nonpoor populations.11 Arnold M. Epstein, M.D., found that health insurance alone may not improve maternal health, however it does increase the rate of cesarean sections. E. Kathleen Adams, Ph.D., found that efforts to extend coverage to pregnant women, along with an expanding economy, did not prevent increases in the uninsured in the latter 1990s.12
HCFO Funded Research
Grant No.: 51304
Title: Surviving the Perfect Storm: Impacts of Benefit Reductions and Increased Cost Sharing in a Medicaid Program
Institution: Office of Oregon Health Policy and Research
Principal Investigator: Jeanene Smith, M.D.
Grant Duration: June, 2004 – August, 2006
Paragraph Summary: How have benefit reductions and increased cost sharing impacted the Oregon Health Plan (OHP)? The researchers are examining: (1) impacts on economic viability, including whether cost savings accrue to Medicaid or whether additional costs will be incurred as beneficiaries shift from one benefit to another; (2) impacts on access, including whether access and continuity of care will be compromised as a result of cost sharing and benefit reduction strategies; and (3) impacts on coverage, including the degree to which Medicaid beneficiaries leave the program due to these changes. The objective of this study is to inform state decision makers who continue to seek efficient cost-saving strategies and consider competing approaches for maintaining and rebuilding benefits following reductions in Medicaid and reshaping publicly financed health care.
Grant No.: 50954
Title: Market-Level Effects of Medicaid HMOs on Physician Participation, Enrollee Access, and Program Costs
Institution: Emory University
Principal Investigator: Bradley Herring, Ph.D.
Grant Duration: May, 2004 – April, 2006
Paragraph Summary: What does capitated Medicaid managed care buy? States have markedly increased their use of capitated Medicaid managed care during the 1990s in the hope of either increasing enrollee access or decreasing costs, or both. Early research found that this delivery system did shift the site of ambulatory care but did not necessarily increase preventive care or reduce hospitalizations. This project uses the Community Tracking Study physician and household surveys to examine the effects of increased Medicaid HMO penetration on physician participation, enrollee access, and cost savings achieved by changing service mix. The objective of this study is to provide policymakers with a more up-to-date and comprehensive look at what capitated Medicaid managed care “buys,” which would be especially useful in the current climate of fiscal constraint.
Grant No.: 49919
Title: Meeting the Future Long-Term Care Needs of the Baby Boomers: How the Changing Structure of Families Will Affect Paid Helpers and Institutions
Institution: The Urban Institute
Principal Investigator: Richard W. Johnson, Ph.D.
Grant Duration: December, 2003 – February, 2007
Paragraph Summary: How do families choose among types of long-term care services for older adults and what will be the demand for these services over the next 40 years? The researchers will estimate a model of informal family care, nursing home care, paid home care, and residence in assisted living settings. The model will show the impact of health status, financial resources, family networks, and relative prices, determined in part by family characteristics and in part by public policy. They will then use the model to simulate the effects of potential changes in public policy on long-term care decisions, including the impact of an expansion of Medicaid eligibility or of expansions in Medicare coverage of long-term care services. The objective of the project is to better understand how competing social, demographic, and economic trends combine to determine future demand for long-term care services
Grant No.: 49006
Title: The Effects of Managed Care Organizations on Government Spending and Health Care Quality: Evidence from California’s Medicaid Mandates
Institution: University of Maryland
Principal Investigator: Mark Duggan, Ph.D.
Grant Duration: October, 2002 – March, 2004
Paragraph Summary: How does mandatory Medicaid managed care affect cost and outcomes? The researchers evaluated how county-level mandates that require most Medicaid recipients to enroll in a managed care plan affect spending and health outcomes in California. Specifically, they estimated the effect of switching recipients from fee-for-service (FFS) to managed care in twenty counties on government spending, medical care treatments, and health outcomes. Work done by the researchers showed that the switch from FFS Medicaid to Medicaid managed care among people eligible through welfare was associated with a significant increase in Medicaid spending and a decrease in avoidable hospitalizations. In this study, the researchers built on that work to examine differences across the three types of managed care used, estimate the effect for eligibility categories other than welfare, assess differences in the results based on age, race, gender, ethnicity, and urban/rural location. The objective of the study was to provide policymakers with more information about the effects of transitioning from FFS Medicaid to Medicaid managed care in terms of spending and quality.
Grantee Publications
Title: Does Contracting Out Increase the Efficiency of Government Programs? Evidence from Medicaid HMOs
Author: Mark Duggan, Ph.D.
Journal: NBER Working Paper No. 9091
Date: August 2002
Grant No.: 44196
Title: Medicaid Managed Care and Health Care Access, Use, and Quality
Institution: Stanford University School of Medicine
Principal Investigator: Laurence Baker, Ph.D.
Grant Duration: May, 2002 – August, 2003
Paragraph Summary: What are the effects of recent expansions in Medicaid managed care on children’s ability to access and use care? Using longitudinal data from the National Survey of America’s Families and the Community Tracking Study, the researchers identified effects of managed care by looking at the changes in health care access and utilization over time. They examined the relationship between these changes and changes of the size of the Medicaid population covered by managed care. The objective of the project was to inform policymakers about how Medicaid managed care might affect health care access and use among children.
Grantee Publications
Title: Medicaid Managed Care and Health Care for Children
Author: Laurence C. Baker and Christopher Afendulis
Journal: Health Services Research
Date: October 2005
Grant No.: 44974
Title: Quality Assessment of South Carolina Medicaid Managed Care
Institution: Medical University of South Carolina
Principal Investigator: William B. Pittard, M.D.
Grant Duration: March, 2002 – February, 2003
Paragraph Summary: What amount of preventive care is provided to urban and rural South Carolina preschool Medicaid children in two voluntary primary case management (PCCM) managed care programs? The hypothesis tested was that there are significant differences between the proportion of one year old Medicaid children who receive the American Academy of Pediatrics recommended number of Early and Periodic Screening Diagnosis and Treatment evaluations enrolled in the state's two PCCM programs and that these differences vary based on rural versus urban residence. The objective of this work was to produce results that will suggest future alterations in public health-care financing to facilitate further improvement in cost, access and quality of care for children.
Grant No.: 38155
Title: Evaluating Florida's Medicaid Provider Service Network Demonstration Project
Institution: Florida Agency for Health Care Administration
Principal Investigator: Bob Sharpe, Ph.D.
Grant Duration: April, 2000 - June, 2004
Paragraph Summary: What effect will enrollment in Provider Service Networks (PSNs) have on Medicaid providers, costs to the program, and care quality and outcomes for beneficiaries? Researchers at the University of Florida (with support from Florida’s Agency for Health Care Administration) evaluated a demonstration project in Florida whereby Medicaid beneficiaries had the opportunity to enroll in PSNs for their health care. Currently, these beneficiaries have the choice of two other products: a Medicaid HMO or a fee-for-service model with primary care case-management. The demonstration was mandated via a state legislative order and was designed and implemented through a Medicaid 1915 waiver. The goals of the PSN demonstration were to slow the growth in healthcare costs by reducing the role of the insurance middle-man; to offer incentives to providers to share risk (unlike in Medicaid managed care models where providers may share risk but would not have incentive for doing so); and to improve coordination and collaboration between Medicaid administrators and providers to improve client outcomes. The evaluation included three distinct, yet overlapping phases: a qualitative study of how the demonstration affected organizations that applied for PSN status; a utilization and reimbursement analysis to assess the PSNs’ cost-effectiveness; and a quality and outcomes analysis, examining quality of care, patient satisfaction, and patient health outcomes of beneficiaries in PSNs. The objective of this evaluation was to understand in what ways the design and implementation of this unique financing/delivery model affects patients and providers, so that policymakers in and outside of Florida may weigh its merits for adoption.
Grant No.: 38702
Title: Impact of Medicaid Managed Care on Access to Care and Service Use
Institution: The Urban Institute
Principal Investigator: Stephen Zuckerman, Ph.D.
Grant Duration: April, 2000 – December, 2002
Paragraph Summary: What impact do the different types of Medicaid managed care (MMC) configurations have on access to care and use of health care services by Medicaid beneficiaries? Researchers at the Urban Institute have analyzed data from the nationally representative National Survey of America’s Families Round 1 (data for 1997). They have also conducted a special follow-up survey of states that collected detailed information on their approaches to Medicaid managed care and the capitation rates they pay at the state and county levels. The investigators compared the characteristics of nonelderly Medicaid beneficiaries enrolled in MMC programs relative to those in fee-for-service Medicaid, and examine outcomes related to access and utilization of services, controlling for other factors. They also developed a model that attempts to correct for selection bias into managed care programs. Finally, they used National Survey of America’s Families Round 2 (data for 1999) data to examine changes in access and utilization for Medicaid beneficiaries between 1997 and 1999. The study examined whether Medicaid managed care programs have improved, or impeded, access to care for a national sample of Medicaid beneficiaries.
Grantee Publications
Title: Medicaid Managed Care Payment Methods and Capitation Rates in 2001
Author: John Holahan and Shinobu Suzuki
Journal: Health Affairs
Date: January 2003
Grant No.: 32105
Title: The Impact of Medicaid Managed Care on Prenatal Use and Birth Outcomes
Institution: The Urban Institute
Principal Investigator: Genevieve Kenney, Ph.D.
Grant Duration: August, 1997 – January, 2003
Paragraph Summary: What are the impacts of the movement to Medicaid managed care on prenatal care and birth outcomes? The project was comprised of two distinct components. In the first component, researchers at the Urban Institute conducted case studies of two states (Texas and Missouri) regarding the implementation of 1115 or 1915(b) waivers that focus on pregnancy related services, to assess how managed care systems affect birth outcomes. They also characterized each Medicaid managed care plan and identified the type of managed care arrangement under which each pregnant woman was enrolled. In the second component, they built on a previous RWJF funded project and conducted a national cross-sectional time series analysis of natality data. Data came from the National Natality files, HCFA managed care reports, other Urban Institute surveys, secondary data files such as the Area Resource File, US Census data, and state natality and other data files. They also conducted substantial primary data collection, through case studies, and a survey of managed care plans in the two selected case study states. The objective of the study was to assess how the move to managed care under the Medicaid program affects birth outcomes.
Grantee Publications
Title: Changes in Prenatal Care Timing and Low Birth Weight by Race and Socioeconomic Status: Implications for the Medicaid Expansions for Pregnant Women
Authors: Lisa Dubay, Ted Joyce, Robert Kaestner, and Genevieve Kenney
Journal: HSR
Date: June 2001
Grant No.: 40612
Title: Insurance Coverage, Use of Prenatal Care, and the Financing of Birth Outcomes in Nine States Pre and Post Welfare Reform
Institution: Emory University
Principal Investigator: E. Kathleen Adams, Ph.D.
Grant Duration: January, 2000 – January, 2002
Paragraph Summary: How does the Personal Responsibility and Work Opportunity Reconciliation Act's (PRWORA) de-coupling of cash assistance from Medicaid affect insurance status and access to and utilization of prenatal care for low-income pregnant and childbearing women? Researchers at Emory University tested two hypotheses: 1) low-income women are less likely to be insured prior to and during pregnancy as a result of PRWORA; and, 2) decreased enrollment in Medicaid due to PRWORA will make it more likely that low-income women delay prenatal care, resulting in poor birth outcomes and increased need for financial resources following birth. They speculated that even if the rate of Medicaid-funded births remains steady, the costs of caring for high-risk infants rises because of the increase in uninsurance prior to delivery. The objective of this project was to inform state and federal policymakers about the effects of welfare reform on having insurance, accessing care, and costs of care for both women and infants.
Grantee Publications
Title: Transitions in Insurance Coverage from Before Pregnancy through Delivery in Nine States, 1996-1999
Authors: E. Kathleen Adams, Norma I. Gavin, Arden Handler, Will Manning and Cheryl Raskind-Hood
Journal: Health Affairs
Date: January 2003
1 U.S. Senate. “Deficit Reduction Act of 2005.” S. 1932. January 2006.
2 Medicaid Commission. “Final Recommendations.” U.S. Department of Health and Human Services. November 2006. http://aspe.hhs.gov/medicaid/nov06/Recommendations.pdf. Accessed November 30, 2006.
3 Ibid.
4 Medicaid beneficiaries who use long-term care services account for 52 percent of all Medicaid spending. Sommers, A., M. Cohen, and M. O’Malley. “Medicaid’s Long-Term Care Beneficiaries: An Analysis of Spending Patterns.” The Henry J. Kaiser Family Foundation. November 2006.
5 Ibid.
6 West Virginia has recently adopted a plan that offers extended benefits to beneficiaries who accomplish healthy lifestyle goals, such as smoking cessation, weight loss, and medication adherence. Eckholm, E. “Medicaid Plan Prods Patients Toward Health.” The New York Times. http://www.nytimes.com/2006/12/01/us/01medicaid.html?hp&ex=1165035600&en=f85476122a478646&ei=5094&partner=homepage. Accessed: December 4, 2006.
7 The White House. “Executive Order: Incentives for the Use of Health Information Technology and Establishing the Position of the National Health Information Technology Coordinator.” Office of the Press Secretary. April 2004. http://www.whitehouse.gov/news/releases/2004/04/20040427-4.html. Accessed: December 4, 2006.
8 Turner, G.M. and R. B. Helms. “Medicaid Advantage: A medical home for dual-eligibles.” Galen Institute. November 2006. http://www.galen.org/statehealth.asp?docID=935. Accessed: December 4, 2006.
9 Duggan, M. “Does Contracting Out Increase the Efficiency of Government Programs? Evidence from Medicaid HMOs.” NBER Working Paper No. 9091: August 2002.
10 Baker, L.C. and C. Afendulis. “Medicaid Managed Care and Health Care for Children.” HSR Vol. 40, No. 5: October 2005.
11 Dubay, L, et al. “Changes in Prenatal Care Timing and Low Birth Weight by Race and Socioeconomic Status: Implications for the Medicaid Expansions for Pregnant Women.” HSR Vol. 36, No. 2: June 2001.
12 Adams, E.K., et al. “Transitions in Insurance Coverage from Before Pregnancy through Delivery in Nine States, 1996-1999.” Health Affairs Vol. 22, No. 1: January 2003.
