Health Expert Urges States To Slow The Move To Medicaid Managed Care

As more states turn to managed care to reduce Medicaid costs, Judy Feder is urging caution.


Feder, a  professor at and former dean of the Georgetown University’s Public Policy Institute , is worried that officials’ enthusiasm for managed care in Medicaid “might get out of hand,” and she is urging them to move slowly when it comes to caring for the nearly 9 million “dual eligibles,”  Medicaid enrollees who also qualify for Medicare. These are some of the poorest and sickest enrollees. About 40 percent of Medicaid spending is on duals.

Medicare, rather than private insurers, should take the lead in improving health care for duals, Feder said at a Friday forum sponsored by the Alliance for Health Reform and the insurer Centene Corp., which operates Medicaid managed care programs in more than a dozen states. Feder, who is also a fellow at the Urban Institute, said Medicare should conduct aggressive oversight of the Medicare Special Needs Plans, which are private insurers in the Medicare Advantage program that care for duals and other beneficiaries with chronic health needs. Medicare must also conduct better oversight of skilled nursing facilities to prevent unnecessary hospitalizations  for nursing home residents, Feder said.

Matt Salo, executive director of the National Association of Medicaid Directors, said that expecting Medicare to manage duals would be a mistake.  “If we’re going to sit around and wait for Medicare to fix this problem, we’re all going to die in that waiting room,” he said.

Salo said more states are using managed care to help reduce costs and improve outcomes for Medicaid beneficiaries, and that the trend was here to stay.  “You can’t hope this budget problem away. It is here, it’s real,” he said. The requirement that states must balance their budgets each year has also influenced more states to use managed care, he said.

According to the Kaiser Commission on Medicaid and the Uninsured, nearly two-thirds of Medicaid beneficiaries nationally are enrolled in comprehensive managed care programs (KHN is an editorially independent program of the Foundation).

Managed care is a better approach for Medicaid beneficiaries than “the wild, wild west of the unregulated, unmanaged, uncoordinated environment of the fee-for-service system,” Salo said, adding that “dysfunctional incentives” in the fee-for-service system have led to overuse of medical services.