As Connecticut chooses to be a contrarian in the world of Medicaid MCOs, don't look for it to spawn any imitators.
The state this year ditched its Medicaid contracts with Aetna and UnitedHealthcare. Beginning this month, nonprofit MCO Community Health Network will run Connecticut's program on an administrative-services-only contract.
This comes at a time when more than half of the almost 60 million Medicaid enrollees in the United States are in MCOs. Eleven states are currently expanding their managed Medicaid programs. Blue Cross Blue Shield plans that have avoided Medicaid in the past, citing inadequate reimbursement, now see potential in the huge Medicaid expansion planned under healthcare reform.
But they won't be looking for opportunity in Connecticut. Both the current Democratic and former Republican governors have supported the switch, saying the state could more efficiently manage the Medicaid and CHIP programs by taking on financial risk, rather than delegating that to MCOs. The Connecticut Health Policy Project, an advocacy group, had long argued that the state could save money by using a primary-care case-management alternative to MCOs.
Other states have reached the exact opposite conclusion. Although Georgia failed at its first attempt to have Medicaid HMOs in the 1990s, it returned to MCOs several years ago in an effort to cut costs. Ohio, Florida and Texas are also expanding their Medicaid MCO programs.
The Lewin Group, the healthcare consulting group (and subsidiary of UnitedHealth Group), has published several reports indicating that managed care reduces costs for state Medicaid programs -- and improves beneficiaries access to services. In fact, in its most recent report, The Lewin Group concluded that pharmacy costs per member, per month were 10 percent to 15 percent lower for Medicaid MCOs compared to fee-for-service programs.
Meanwhile, Connecticut is going the route of North Carolina, which rejected Medicaid HMOs years ago in favor of a primary-care medical home system. North Carolina says it saved almost a billion dollars from 2007 to 2010 by taking the medical home approach. (North Carolina was also a non-managed care friendly state that tried Medicaid MCOs on a very limited pilot basis in the 1990s.)
Every state will be challenged to handle the 20 million expected to come onto the Medicaid rolls beginning in 2014. Faced with strained budgets and expanding Medicaid populations, states will try to cut costs by limiting benefits for the expansion population. They will also be hard pressed to manage expenses for the aged, blind and disabled, the most costly part of Medicaid. States that have contracts with insurers will let MCOs do the heavy lifting; Connecticut has decided to take on that responsibility itself, and shift more responsibility to primary-care providers to manage the Medicaid population.