Unfortunately, that is not the case with Alabama
Medicaid. The state’s Medicaid program provides few services not mandated by
the federal government and has some of the strictest eligibility requirements
in the country.
According to State Health Officer Don Williamson,
Alabama’s Medicaid program was on the brink of collapse if it did not receive
funding from last year’s September 18th transfer from the Alabama Trust fund.
This year, even with the benefit from the transfer, Williamson claims Medicaid
will face a $100 million budget shortfall. He also predicts that “after 2014,
there is no money left” for Medicaid. So what is causing Alabama’s Medicaid
woes?
First, Alabama Medicaid is essentially designed to
provide health care on a fee-for-service basis. When a Medicaid beneficiary
seeks health services, frequently at hospitals or emergency rooms, the care
provider sends the bill to Alabama Medicaid, according to an approved payment
schedule. While the current system provides “on demand” access to health
services, it merely treats individual health symptoms rather than developing a
comprehensive approach to long-term beneficiary care.
The second critical problem is that Medicaid’s
current model is unpredictable and unsustainable from a cost standpoint. Dr.
Williamson’s budgetary comments provide ample evidence that Alabama has serious
challenges in both budgeting for and controlling the cost of the current
Medicaid model. Because the state pays for services as they are billed and
utilization rates vary significantly, Alabama Medicaid has a particularly
challenging time planning for future health costs. Not only is Medicaid
unpredictable, but the current model lends itself to higher medical bills.
According to the Kaiser Family Foundation, Alabama’s
general population utilizes emergency room visits and hospital admissions 17%
more than the national average. These types of care represent a significantly
higher cost for both health care providers and Medicaid than front-end care
involving primary care physicians. Developing a Medicaid system where
beneficiaries are treated as people with life histories and habits rather than
isolated points of service is crucial to detecting medical problems before they
become acute and more costly.
There are two primary solutions that make sense:
require accountability from providers for beneficiary outcomes and shift the
risk of financial loss away from the state. Alabama’s neighbors in Florida and
Louisiana, as well as many states around the nation, have discovered that some
care providers and commercial managed care groups are willing to
comprehensively administer Medicaid for a set amount per-patient, also known as
a “capitated payment.” The state benefits because it no longer bears the risk
of unexpected cost increases in the state’s Medicaid budget, and it is able to
hold providers accountable according to care management agreements focused on
beneficiary health outcomes.
At the same time, Medicaid beneficiaries are
healthier because the care providers’ economic viability is contingent on their
ability to produce positive health outcomes from front-end health investments
rather than expensive acute treatments further down the road.
More importantly, changing the way Alabama
administers Medicaid is the right thing to do for Alabama’s most vulnerable.
Medicaid beneficiaries use the emergency room or delay seeking treatment
largely because nobody has helped them find a primary care doctor. A care management
system would ensure that Alabamians with the greatest need are able to more
effectively develop relationships with their doctors. As a result, doctors will
be able to improve health outcomes through better patient histories,
communication and follow-up while being supported by a system designed to
facilitate ongoing patient care regimens and ensure that Medicaid patients keep
their scheduled appointments.
Beneficiary care coordination and risk protection
for Alabama must work in tandem. Care management without simultaneous
risk-shifting fails to maximize the state’s ability to control volatile
Medicaid costs. Commercial managed care groups and provider networks vying for
the opportunity to serve Alabama’s Medicaid population must also be willing to
immediately take on the risk of Medicaid cost fluctuations to provide budget
stability for the state.
Alabama must develop better health care options for
its Medicaid community. If Dr. Williamson is right, the state literally cannot
afford to wait any longer.
About the author: Cameron Smith is General Counsel
and Policy Director for the Alabama Policy Institute, a non-partisan,
non-profit research and education organization dedicated to the preservation of
free markets, limited government and strong families, which are indispensable
to a prosperous society.
This article was published by the Alabama Policy
Institute.
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