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Jury Is Still Out On Medicaid Managed Care

In 2008, Centene Corp. took on a contract to manage health care for 30,000 foster children in Texas — a tough new challenge for the Clayton-based Medicaid contractor.

Texas state caregivers had been prescribing a lot of psychotropic drugs to these children and adolescents. As these youngsters were shuttled from one house to another, Centene executives said, state authorities often lost track of which medications the children were taking.

“I think the state understood that their ability to manage this population was limited,” said Keith Williamson, Centene’s general counsel.

Within a year of winning the contract, Williamson and other Centene executives said, the Texas foster care program was being more effectively managed: The state budget for foster children had declined, and the number of psychotropic drug prescriptions was reduced significantly.

One key: Centene created a “health passport” for the children, an electronic medical record that follows them from county to county and into adulthood.

Centene executives cite their success with the foster care program as an example of how a managed care company can provide quality care while saving money.

But in Texas and other states, managed care of Medicaid continues to spark debate.

“There are some cost savings — the Texas Legislature wouldn’t do it otherwise. (But) with the rollout of any managed care in a state, there are always concerns about quality of care,” said Clayton Travis, a health coverage policy analyst at Texans Care for Children.

F. Scott McCowan, a clinical professor at University of Texas School of Law and director of the Children’s Rights Clinic, agreed that Centene has significantly reduced the number of psychotropic medications for foster kids through a “retrospective review” of children’s medications.

But McCowan says it may take years before the state realizes significant cost savings in the foster care program. And managed care has yet to solve the problem of recruiting enough physicians willing to accept Medicaid rates of pay, he adds.

While trends have favored managed care of Medicaid — about 35 states and the District of Columbia now contract with for-profit companies to manage their Medicaid population — there have been some high-profile stumbles along the way.

In Kentucky, litigation continues over Centene’s early termination of its Medicaid contract. Centene executives say that Kentucky’s contract rates were based on misleading information regarding its Medicaid population.

In Texas, state officials last month canceled a managed care contract with a Xerox subsidiary. The move came after the attorney general’s office sued to recover hundreds of millions of dollars that the company allegedly paid for Medicaid claims that were not properly reviewed. Xerox, which denies any wrongdoing, blamed unscrupulous dentists for taking advantage of the program.

In 2012, Connecticut jettisoned its Medicaid contractors, saying it preferred to use the millions that went to administrative costs and profits to instead boost pay for primary care doctors and improve care. The head of the Medicaid program said the state lost confidence in the managed care contractors. “Their measured performance is not impressive,” Mark Schaefer told Kaiser Health News.


In Missouri, where lawmakers again turned down federal money to expand Medicaid eligibility, there also was reluctance to expand managed care.

Currently, three managed care companies provide services in about 54 of the state’s 114 counties, covering less than half of the state’s 823,761 Medicaid participants.

Legislative committees this year recommended a Centene-backed bill that would have shifted more children and parents into managed care policies run by private insurance companies.

“I believe it’s a way to give the state some cost-certainty and better health outcomes,” said the sponsor of one of the bills, Rep. Todd Richardson, R-Poplar Bluff.

But the House shelved the bill, and a similar proposal stalled in the Senate.

Sen. Rob Schaaf, R-St. Joseph, a physician, led the opposition.

“It’s not been shown that managed care for sure saves money,” Schaaf said. “There’s mixed research on that. We do know that it tends to limit the care of some people, especially the ABD (aged, blind and disabled) population, who are less able to navigate their way through it.”

A study commissioned by the Missouri Medicaid program and performed by Mercer and Associates reported 2.7 percent annual savings for the current Medicaid managed care groups in Missouri.

But Schaaf said that savings was wiped out by the study’s margin of error. And critics also contended that any savings stemmed from inadequate provider networks and denial of medically necessary services.

In the end, the managed care bills died when the Missouri Legislature’s session ended May 16.

“I would rather not just do stuff to make managed care companies wealthy but rather, to take better care of the recipients or save the taxpayers money, or both,” Schaaf said.

The Missouri Medicaid Coalition, which is seeking to expand Medicaid coverage in the state, has not taken a position on whether these services are better provided by a state agency or a contractor.

Bill Scheffel, Centene’s chief financial officer, insists managed care is focused on improving health care while saving tax dollars.

“We provide quality health care, we save states money and we give them budget predictability,” Scheffel told the Post-Dispatch, adding that profit margins for the managed care industry are comparatively narrow.

To measure the quality of health care, the company uses various metrics, such as rate of receiving immunizations, prenatal checkups, dental care for children, and follow-up appointments after discharge from a hospital. They also include hospital readmission rates and polls that show “member satisfaction” among Medicaid enrollees.

One of Centene’s goals is to make certain patients receive proper care and don’t unnecessarily drive up their health care costs. For example, too many Medicaid patients use emergency rooms for routine care, rather than visit primary care physicians, said Holly Benson, chief executive of Healthcare Enterprises LLC, a Centene holding company that oversees four subsidiaries

“If you invest in primary care and preventive care, it means they’re getting the right care in the right setting,” she said.

So far, managed care companies in Missouri appear to be meeting patients’ expectations.

“I haven’t heard a lot of complaints about any of the managed care companies, and usually I do if someone is a bad actor in the health marketplace,” said Andrea Routh, executive director of the Jefferson City-based Missouri Health Advocacy Alliance, a watchdog organization for patients.

But the jury is still out regarding the industry’s track record in delivering quality health care.

“Based on the data provided by managed care companies, we’ve seen some modest increases in quality of care and some cost savings,” said Dr. Karen Edison, director of the Center for Health Policy at the University of Missouri.

But it’s not clear if expanding managed care would yield similar results, she said.

“The Medicaid managed care population is largely women and children, and they’re healthier and less costly than the older patients with multiple, chronic conditions like diabetes, heart disease and cancer,” Edison said.

“It’s hard to imagine that you can translate the cost savings seen from managed care of women and children to the sickest Medicaid patients,” she said.

Tim McBride, a health economist at Washington University, serves on a health policy advisory committee for Centene.

Yet even he thinks Centene and other managed care companies need to provide more data to determine the effectiveness of these programs.

“We as taxpayers give a check to these companies,” said McBride, “and we don’t get as much evidence or information back as I would like to see.”

Related Topics

Cost and Quality Health Industry Medicaid States Uninsured