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Cure for Managed-Care Migraines? Slow Down.

As many states embrace managed care in an effort to provide quality, affordable health care, some are rushing the switch from fee-for-service care and running into problems.

In the never-ending search for ways to deliver quality health care at affordable prices, one of the more appealing ideas is moving those on Medicaid or Medicare—or both—into managed care programs. But as several states are learning, it’s not the panacea they had hoped for.

Kentucky, which is expanding Medicaid under the Affordable Care Act, is just one of many states embracing managed care plans, in which one company oversees all of a patient’s health-care needs and is paid on a per-person basis rather than the traditional fee-for-service model. But since implementing managed care, Kentucky has experienced payment problems, coverage denials, network shortages and plenty of consumer complaints. The problems, says Debra Lipson, a senior researcher for Mathematica Policy Research, can mostly be linked to one specific issue: time.

As states consider whether or not to move into managed care programs, Lipson says, they need to plan on allowing at least two years just to get all their administrative ducks in a row. “Some states have been doing managed care for a long time, but for those that aren’t, enrolling a significant Medicaid population will be a big ramp up.”

Kentucky’s expansion, which a 2012 evaluation by the Urban Institute called “extremely rapid,” is a harbinger of what other states can expect if they don’t devote enough time and resources to strengthen all the pieces that make the Medicaid puzzle come together. “It’s a very complicated process,” Lipson says. “You need time to build up the state’s own administration and management capacity. You need people who know how to write the RFPs and how to review the applications from the plans. You have to do all the preparation to set rates and write contracts. Then you need to make sure the plans have time to establish provider networks and make sure all the data they get is transferred efficiently to the plans and then to their case managers.”

Kentucky had only three to four months to set up provider networks, some of which had never worked in Kentucky before, according to Lipson. “Plus,” she says, “everything gets more complicated with more vulnerable populations.”

California and New York, on the other hand, took their time in implementing managed care plans in their states, largely avoiding the potholes Kentucky and others have hit. “Both New York and California took a good couple of years to think things through,” Lipson says. New York took two years to plan out its approach to expanding managed care for its long-term care population, and California spent time involving the major stakeholders and educating enrollees and providers. “Did it go without any hitches? Absolutely not,” Lipson says. “There are issues common to any new rollout. They both had some bumps along the way. They are trying to intervene as quickly as possible.”

So for those states considering the managed care option, be forewarned. Haste makes waste, plus a lot of angry people. The even bigger question, though, is whether this road leads to better, lower-cost health care. And that’s even trickier to decipher. “States have to think about how they monitor their services and whether they are getting value,” Lipson says. “How do you hold these plans accountable? Do they ultimately cost less than what you were getting before? It requires a lot of data and a lot of cooperation with the plans. It’s an ongoing effort.”

“Paying for value remains the biggest challenge,” she adds, “both for those states expanding into managed care and for those who have been using it for a long time.”

David Levine is a GOVERNING contributor.
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