By Brian Lyman
Alabama will end an ambitious attempt to move Medicaid from a fee-for-service model to one that rewarded health outcomes.
Gov. Kay Ivey and Medicaid Commissioner Stephanie Azar said in separate statements Thursday that conversations with the Trump administration led them to end the state's push for regional care organizations (RCOs).
Instead, Ivey and Azar wrote that they expect the administration to allow them "flexibility" in running the Medicaid program, which covers over 1 million Alabamians and plays a major role in keeping the state's hospitals and primary care providers operational.
"This flexibility brought us to a crossroads where we reconsidered the risks and rewards of RCOs, and decided instead to pursue new reform options which bring less risks and similar outcomes," Ivey said in her statement.
Congress is also considering major changes to Medicaid funding that could slash federal funding for Alabama's program, which Azar acknowledged in her statement.
"While the financial implications could be challenging for our state, the new flexibilities and waiver options that the Trump administration is willing to consider gives our state Medicaid program new options to accomplish similar goals without incurring the same level of increase upfront costs associated with the RCO program," the statement said.
"Flexibility" could mean many different approaches, and some Alabama health care organizations and advocates Thursday feared it could mean people kicked out of the program. Jim Carnes, policy director for Alabama Arise, said flexibility meant "the flexibility to tinker with the fundamental structure of the program."
"It further limits the number of people who can get Medicaid coverage, it further limits the package of benefits they can get coverage for or it further limits the payment we can make to medical providers," he said.
Azar said she was disappointed at the end of the RCO program in an interview Thursday afternoon, but said the agency was looking to apply the lessons of the RCO program. Medicaid may seek a waiver to enroll up to 250,000 people in a version of the agency's current Home Health Program, which provides services to the homebound. That would be less than the estimated 650,000 people who would have participated in the RCOs, but commissioner said she believed they could reach goals of improving health care through it.
"Our goal would be to include benchmarks," she said. "We want to incentivize providers in the system to reach benchmarks that are very important to the state."
Alabama's Medicaid program provides limited benefits and has strict eligibility requirements. Able-bodied childless adults never qualify for the program. Parents of children on Medicaid can only receive benefits if they make 18 percent of the poverty line. That equates to $2,138.40 a year for an individual and $3,628 for a family of three.
As a result, more than half the state's Medicaid recipients are children. The rest are elderly or disabled.
"We don't have a lot of fluff in our program to cut," said Danne Howard, vice president and chief policy officer for the Alabama Hospital Association. "We support any measure that will make Medicaid viable and strong enough to support our health care infrastructure."
Changing Medicaid funding -- as Congress is contemplating -- could also hit Medicaid.
"We do know either a per capita grant or block grant, as barebones as we are and as efficient as we are . . . we're going to be squeezed," Azar said. "It's going to have to drive us to flexibilities like we talked about."
The RCO program aimed to slow down Medicaid cost growth while improving health outcomes for recipients. Under the proposal, Medicaid would divide the state into several regions and give each a share of the state's funding for the program. The RCOs would have enrolled all Medicaid recipients save nursing home residents, and would have aimed to encourage preventative care that would reduce the need for expensive treatments or hospital use.
RCOs would keep any money not spent on health care in a year. Supporters said that would spur them to improve health outcomes for patients.
"It would be keeping them out of emergency rooms for primary care and making resources available for them through primary care visits through physicians' offices," Howard said. "There would be less traffic in emergency departments. And we'd have a healthier population."
The Obama administration approved the proposal and offered the state $328 million to set up the program, and an additional $420 million if the state met health care benchmarks, like reducing Alabama's high infant mortality rate.
But after approving the program in 2013, the Alabama Legislature -- facing budget shortfalls and unwilling or unable to raise taxes -- balked at providing the state's share of the setup costs. That made providers wary of getting into the program.
"They demanded the implementation show cost savings much earlier than they originally planned to do," Carnes said. "They abandoned the long-term goal of slowing growth and began to expect this law would be the magic bullet for the Medicaid budget, which it never was intended to be."
The election of Donald Trump in November also signaled a shift in Washington's health care priorities. Senate Majority Leader Greg Reed, R-Jasper, who sponsored the RCO legislation, said they were a "smart mechanism" for Medicaid delivery but that the "policy ground" had shifted.
"I believe with the new presidential administration we can accomplish the goals of the RCO initiative via a different path and without the upfront costs it would take to fund a transition to the RCOs," the statement said. "Pursuing new options with the Trump administration for Medicaid is the right call for Alabama."
Blue Cross Blue Shield of Alabama, the state's largest insurer, issued a statement Thursday expressing disappointment at the end of the RCO program. BCBS planned to participate and said RCOs could have cut costs and improved outcomes.
"We regret that there will not be an opportunity to move the state toward these goals," the statement said.
Azar said the state was not looking to remove people from the program.
"I don't have any interest to kick people off, but the state has a responsibility to live within our means," she said. "The goal of the Ivey administration is to get better education, and then you get better jobs, and people will be less dependent on it."
(c)2017 the Montgomery Advertiser (Montgomery, Ala.)