JLF’s Jordan Roberts was recently quoted in a Leader’s Edge article on innovative models in health care. The article detailed the experimental health care models being tested in five states: Maryland, Wisconsin, Colorado, Oregon, and North Carolina. The article mentions the federal waiver North Carolina received to transition the state’s Medicaid program into a managed care program. Medicaid.gov defines Medicaid managed care as:

Medicaid managed care provides for the delivery of Medicaid health benefits and additional services through contracted arrangements between state Medicaid agencies and managed care organizations (MCOs) that accept a set per member per month (capitation) payment for these services.

The NC Medicaid program used to be centralized. The state gave out insurance cards, Medicaid members went to hospitals, the hospitals billed the state, and the state paid the hospitals. Now, North Carolina has contracted out its insurance program to private insurers. This means Medicaid members now will be given an insurance card from a private insurer, the patient will go to the hospital, the hospital will bill the insurer, and the insurer will pay.

The state pays these insurers a set amount of money per member per month. This means, if the patient uses more health care than the state pays the insurance company per month, the insurer eats the cost, but if the patient uses less health care than the state pays the insurer per month, the insurer gets to keep that money. This gives insurers an incentive to lower the cost of care for these patients, as the insurer will get to pocket the money it saves.

The article quotes Roberts, writing:

The contracts are effectively shifting Medicaid payment models from traditional fee-for-service toward value-based care, he says. Major healthcare systems are also participating in advanced Medicare accountable care organizations for various payment arrangements, with the idea of lowering healthcare spending, Roberts says.

“North Carolina has been a pioneer in the transition to value-based care in the public and private sectors, focusing on alternative payment models for a substantial portion of the state’s population,” he says.

Roberts also commented:

“Given all the new ventures in North Carolina focused on value and health outcomes, I’d say this is as an exciting time as ever for the state’s insurers and providers because there is so much innovation in the effort to make the healthcare system as efficient as possible with an emphasis on lower costs and improved health outcomes.”

Read the full piece here. Learn more about the managed care here.