Feds Approve Alabama's Switch to Medicaid Managed Care
By Brian Lyman
The federal government gave Alabama the go-ahead to change the delivery of Medicaid and move to a managed care system advocates hope will control cost growth and lead to better outcomes.
Gov. Robert Bentley, flanked by Medicaid Commissioner Stephanie Azar and legislative leaders Tuesday, said the state had received an 1115 waiver from the Centers for Medicare and Medicaid, which administers the Medicaid program. The waiver will allow the state to create 11 regional care organizations (RCOs), which will enroll Medicaid patients with the goal of encouraging preventive care and cutting costs.
"The cost is becoming unsustainable," Bentley said at the press conference. "We have to work to do that. We have to deliver quality health care to our patients."
Despite strict eligibility -- childless adults almost never qualify for the program -- Alabama's Medicaid costs began a rapid rise after the Great Recession increased eligibility. Since 2007, the program has grown by about 300,000 people. Last June, more than 1 million Alabamians qualified for the program.
The state could receive up to $748 million from the federal government over the next five years to implement the program. At least $328 million will go to set up the RCOs over three years. Azar said that money could only be used to create the RCOs, and not to supplement existing health services.
The rest of the money could be made available if the state reaches certain benchmarks.
"We want to reduce the infant mortality rate," Azar said. "We want to shift care to more appropriate settings ... the entire goal and overall structure of the program is to make healthier lives."
The RCOs goals are twofold. The RCOs will bear risk and contribute cash to their functions. The RCOs, in turn, will receive a share of Medicaid money with a goal of shifting the delivery system from a fee-for-service model to one that would award money based on health outcomes. RCOs that managed patients' cases to promote health and prevent expensive treatments could keep any share of the funding left over at the end of the year.
Supporters have said the program will not necessarily cut costs in Medicaid, which now takes up 38 percent of the state's General Fund budget. Senate President Pro Tem Del Marsh, R-Anniston, said it was a start to bringing Medicaid under control. Marsh also repeated his opposition to moving money from the Education Trust Fund budget to the General Fund budget.
"This waiver is breathing room for us," he said "This problem is not over. We've got to find a way to bring it under control and I'm committed to doing that but we can't rob Peter to pay Paul."
The program should enroll 630,000 Medicaid patients. Nursing home patients are excluded. Danne Howard, executive vice president and chief policy officer for the Alabama Hospital Association, said the biggest patient pool into the RCOs would be children, the blind and the disabled.
"For some of it it's not advantageous for us," she said. "If you have less patients coming to the hospital, our revenues will likely go down. But then our resources are better used elsewhere."
Jim Carnes, policy director for Alabama Arise, which works on poverty issues, called the approval "a huge step forward."
"This changes Medicaid from a big monolithic statewide program to a regionally based, more consumer-oriented, patient-friendly structure that will help patients manage their own health care much more effectively than they have before," he said.
The RCOs are scheduled to go into place on Oct. 1. Bentley said he hoped to see economic gains that would reduce the need for Medicaid in the state.
"I have a goal in Alabama and that's not to have a single person on Medicaid," he said. "I know that's a goal that's maybe unattainable right now. But if we make people healthier, that will help them become more educated, allow them to get a job and have no one on Medicaid."
Carnes said Medicaid enrollment was a reflection of the state's conditions.
"We often hear our leaders say Medicaid is the biggest problem in the budget," he said. "Medicaid is a measure of the biggest problem in Alabama, and that's poverty."
(c)2016 the Montgomery Advertiser (Montgomery, Ala.)