Medicaid managed care may not be all it’s cracked up to be

Just over a month ago, Christopher Flavelle  published a study on the growth of Medicaid managed care, and how many states are turning to these types of plans in order to address "out of control" Medicaid growth. His study showed that growth in Medicaid was much less that one might expect, given the rhetoric many of us often hear.

Recently, he published the second of his three pieces on this subject, "Evidence Is Limited That Medicaid Managed Care Reduces ER Visits." In it, he examines reports of managed Medicaid performance in the five largest states. His findings:

The largest Medicaid managed-care plans in Florida and Illinois, and some for-profit plans in California and New York, provide health-care access that is significantly and consistently worse than the national median for such plans. Studies suggest that failing to provide some types of care, such as childhood immunizations, may lead to higher medical costs in the future.

Since pediatrics is always of special interest to me, here’s their chart describing how these plans do with respect to vaccinations for kids:

In California, two of the four plans are performing slightly better than the state average with respect to immunization rates. However, Health Net fell below the state average in 2009. Anthem has been well below the average consistently, and falling steadily since 2007. Florida looks better. In Illinois, one plan did better than average, and one plan did worse. And in New York, three of the four plans consistently underperformed the state average. Overall, there’s plenty of reason to be concerned.

Other findings:

The evidence is limited that managed care sustainably reduces emergency-room visits in the five largest states. California had shown some reductions in ER visits among managed-care plan patients, but the gap between them and fee-for-service beneficiaries is shrinking. In New York that gap has almost disappeared, and in Illinois, ER visits are now slightly more common among managed-care beneficiaries. Only in Texas does managed care consistently produce significantly lower ER visits than in fee-for-service, though the cost of those visits is much higher.

It’s surprisingly hard to do this kind of work. Evidently, Flavelle had to get a fair amount of this data through Freedom of Information Act requests. But this finding may be the most significant. This is, as the study contends, the "litmus test" for managed care. After all, actively "managing" care is specifically supposed to reduce the need to emergency room visits. It’s not clear that these plans are providing that expected benefit. Even in Texas, where managed care is succeeding in reducing the number of emergency room visits, the cost for those visits are, on average, more than twice as expensive as emergency visits under fee-for-service plans. Why that is so isn’t clear.

To be fair, this study doesn’t prove that managed care can’t improve or maintain outcomes that are important over fee-for-service plans. It also doesn’t prove that managed care can’t reduce emergency department utilization in its beneficiary population. However, it does show that many plans are performing worse than we’d like and many plans are not reducing ED utilization. The Medicaid Health Plans of America responded to the study here, without ever really questioning any of the findings.

This isn’t concerning just from a quality standpoint. Providing care that is sub-optimal can also lead to increased spending in the long term, especially with respect to care such as childhood vaccinations. That is a problem, as we see more and more states turning towards these plans in an effort to reduce spending. The worst thing we could do in our efforts to reduce Medicaid spending would be to make outcomes worse while also increasing costs. We will need to keep a close eye on this, and, perhaps, find a way to make it easier to do so.