Joe Paduda hosts the latest excellent edition of the Health Wonk Review. This one’s all about PPACA–the Affordable Care Act, Obamacare, or whatever else you call it. Check it out here.
Monthly Archives: April 2015
Note: The following post was submitted to the blog by Matthew Nattinger. Matt is a doctoral student in the Department of Health Management and Policy at the University of Iowa. This is his first contribution to the blog, so if you like it, let him know in the comments and maybe we can encourage him to contribute more regularly–as long as it doesn’t detract from his studies!
Pending federal approval, Iowa Medicaid will change from a primarily fee-for-service (FFS) model into a risk-based managed care model beginning in January 2016 to reduce Medicaid expenditures. Under the current FFS model, Iowa directly pays providers about $2 billion annually for services provided to an estimated 564,000 Medicaid beneficiaries, but under the proposed managed care model, Iowa will contract with between 2 and 4 managed care organizations (MCOs) to operate Medicaid. According to Governor Terry Branstad’s (R) administration, Iowa will save an estimated $51 million within the first six months of the change. However, there are concerns in Iowa that the state is primarily focused on reducing program costs without considering the effects moving Medicaid from FFS to risk-based managed care may have on healthcare quality and access.
Iowa will pay each MCO a “per member per month” (PMPM) capitated rate to provide coverage for Medicaid beneficiaries. The MCOs profit if they provide the coverage for less than the capitated rate and take a loss if they are unable to do so. Thus, the state reduces costs by shifting the financial risk to MCOs. The change would mark a significant expansion of Medicaid managed care in Iowa. Since 1990, Iowa Medicaid has operated a primary care case management program, where primary care providers act as “care managers” for Medicaid beneficiaries, but still receive FFS. In 2012, Iowa first contracted with MCOs (Meridian and Magellan) to provide Medicaid coverage in 19 counties. Currently, Medicaid beneficiaries who live in those 19 counties are given the option to enroll in the MCO or stay in traditional FFS Medicaid. However, beginning in 2016, at least one Medicaid MCO will be available in every Iowa county and enrollment via MCO will be mandatory for all Medicaid beneficiaries who are not also enrolled in Medicare (i.e., dual-eligibles).
Iowa is not the only state that contracts with Medicaid MCOs. According to a Kaiser Family Foundation survey, 39 states and the District of Columbia contract with MCOs to provide coverage for over 26 million Medicaid beneficiaries, with many states having moved towards mandatory MCO enrollment in recent years. In 2010, 9 states reported that MCOs covered over 80% of their Medicaid populations. Moreover, as Medicaid expansion under the Affordable Care Act (ACA) moves forward, states are expected to rely more heavily on MCOs.
Thus far, there doesn’t appear to be a downside to Medicaid MCOs for states, but you may be wondering how Iowa can save $51 million with the MCOs simultaneously turning profits? Well, since MCOs only profit if they are able to provide coverage for less than the capitated rate, they must do an excellent job of controlling costs. Traditionally, Medicaid MCOs have controlled costs by implementing service review policies (e.g., prior authorization), developing narrow provider networks, reducing unnecessary services, improving care coordination between providers, and incentivizing preventive services (e.g., flu vaccinations) for beneficiaries.
While Medicaid MCOs can successfully reduce costs, there are concerns that their methods of cost control adversely affect healthcare access and quality for Medicaid beneficiaries. A study by the Robert Wood Johnson Foundation found that the available research is inadequate to determine how Medicaid MCOs affect the quality of healthcare, but found mixed results for how healthcare access has been affected. Thus, it’s difficult to say one way or another how contracting with MCOs will affect healthcare access and quality for Iowa Medicaid beneficiaries. As a result, advocacy groups, such as the Child and Family Policy Center, and Iowa state senators are calling for better state oversight of MCOs to ensure the quality of and access to healthcare are not adversely affected by the move. Since little is known about how risk-based managed care in Medicaid affects healthcare quality in other states, Medicaid officials in Iowa should carefully monitor how the change affects both healthcare access and quality for beneficiaries.
When I was a young violin student I had to change violin sizes at various times as I grew. Each time felt funny, and each time my teacher would say “You’ll get used to it”. The Affordable Care Act, i.e ACA, i.e Obamacare, is now hated by fewer people. Only 43% of Americans oppose it, down from 53%. Pundits are saying this is because the recent open enrollment period went smoothly. That may be true, but if we take a lesson from history we can see that slow acceptance of the ACA is to be expected. We’ve gotten used to it.
Take, for example, the New Deal. The New Deal was a set of laws enacted in the wake of the Great Depression. These laws resulted in policies and institutions such as the FDIC, the criminalization of child labor, the Fair Labor Standards Act that established the 40 hour work week, and Social Security. Most people today would consider much of the New Deal to have been a pretty good idea. But that was not the case in the 1930s when these laws were passed. Rich people didn’t like it. Republicans didn’t like it (they thought the Social Security Act smacked of socialism. Funny, huh?). Conservatives thought there was too much infringement on individual rights. A third of the public didn’t like it, as judged from the 1936 election. Doomsday predictions claimed that the legislation would take away human rights, create too much big government, and ruin the constitution. Some would still argue that these predictions came true to some extent, but no one wants a repeal of child labor laws, and Social Security is now a political third rail.
In the case of the ACA, the opposition has been remarkably similar. Infringement on individual rights, states rights, big government, socialism, unconstitutionality, all these accusations have been thrown at the ACA. Additionally we have been told that the ACA would bankrupt the government, limit physician choice, and establish death panels. Some of these claims are still under review. But health care spending has gone down, more people have access to health care, and no death panels have materialized.
Parts of both the New Deal and the ACA either didn’t work or were deemed unconstitutional. But some parts stayed, and eventually became part of life in America. People got used to it. Just as people are getting used to the ACA.
As Congressional Republicans are acutely aware, it is much easier to prevent something from happening than it is to take it away once it has happened. This fact is based in the human tendency to give much more weight to loss than gain. We see this in end-of-life discussions, where doctors find it is more painful for families to decide to remove life support than to decide not to institute it. Such tendencies can be positive or negative. At work it is well known that once a new rule gets instituted we’re stuck with it; a rule, once made, is virtually impossible to get rid of, even if it doesn’t have the desired effect. Standardized testing in public schools is here to stay too, even though such testing has been shown to be a poor measure of real learning. On the other hand, a rule that works and makes sense, like a seat belt law, will also never go away, and eventually people get used to it and lives are saved. Once people got used to Social Security it became impossible to take it away. Once people get used to having insurance it will eventually become impossible to take it away.
Once something becomes status quo people tend to forget what they were so worried about.