States looking beyond managed care to value-based models in Medicaid

State spending on Medicaid grew 3.9 percent while enrollment was up by 2.7 percent in fiscal year 2017, both well below the double-digit increases seen in the years immediately following the expansion of Medicaid eligibility under the Affordable Care Act ACA).

The analysis by the Kaiser Family Foundation and the National Association of Medicaid Directors put both Medicaid enrollment and spending growth at their lowest levels since 2013 and down from their 2015 highs of 13.2 percent growth in enrollment and a 10.5 percent jump in spending. For 2018, the report projected enrollment growth will sink again to 1.5 percent, while spending will jump to 5.2 percent.

“We are seeing the delayed effects of the improving economy—enrollment growth is going down … and states are increasing provider [reimbursement] rates and restoring and adding benefits,” said Robin Rudowitz, associate director for the Kaiser Family Foundation’s Program on Medicaid and the Uninsured.

Enrollment may have been higher if several non-expansion states had followed through on their consideration of expanding eligibility, but states like Idaho, Tennessee, Virginia and Wyoming put those plans on hold as the ACA repeal debate put the expansion in doubt. Several states are going in the opposite direction with standards which could restrict eligibility, such as work requirements and elimination of retroactive eligibility.

More states sought to expand benefits in their Medicaid programs than restrict them, the report found. A total of 26 states expanded or enhanced benefits in fiscal 2017, with another 17 set to do so next year, compared to six states that cut back on benefits. The most common category of added benefits was mental health and substance abuse services, which were added to Medicaid coverage in nine states in 2017 and will be added to 10 more in 2018.

Other expanded benefits include Oregon becoming the first Medicaid program to cover oral contraceptives prescribed by a pharmacist and four states—Louisiana, New York, South Dakota and Virginia—which added cancer screening benefits such as paying for genetic testing for the BRCA breast cancer gene mutation. Virginia also added coverage lung cancer screening with low dose computed tomography without prior authorization, and New York will cover digital breast tomosynthesis screening services in 2018.

In terms of care delivery, managed care remains the system of choice, with 39 states having comprehensive, risk-based managed care organizations and 29 states reported 75 percent or more of their Medicaid populations being enrolled in managed care. Additional models will be added in 2018, like patient-centered medical homes (to added in 12 states), ACA health homes (seven states) and statewide accountable care initiatives (six states).

More delivery system restructuring may be explored, the report concluded, as state directors anticipate federal Medicaid funding may be cut in the near future under President Donald Trump and the Republican-controlled Congress.

“Payment and delivery system reform efforts mentioned include value-based purchasing approaches, alternative payment models efforts to integrate physical and behavioral health, managed care expansions and reforms, integrated care partnership initiatives that engage providers at the point of service to improve care for patients, Accountable Care Organization initiatives, and multi-payer quality efforts,” the report said.