A prescription pill to cure Medicaid’s fiscal and physical symptoms exists, if only it will be swallowed. It is known as consumer-driven Medicaid reform.
Consumer-driven Medicaid turns upside down Medicaid’s uniform list of defined benefits and instead emphasizes three important principles for patients and providers: choice, competition, and fiscal responsibility.
Choice: Patients may choose from a broad menu of services and products that best meet their health needs. Insurers and providers also embrace the principle of choice, since they can offer to consumers whichever enhanced services and benefits they wish.
Competition: At the same time, competition arises among insurers and providers as they offer a variety of medical services. Multiple health coverage plans inevitably generate lower rates and more affordable, quality coverage for patients.
Fiscal Responsibility: Patients gain access to quality care with "defined contributions," or block grants distributed by a fixed state fund. When an allotted amount of money is placed in the hands of a patient, it is more likely to be spent wisely, especially when patients must pay for certain health services out-of-pocket. This encourages fiscal responsibility.
Fiscal responsibility must also be developed within Managed Care Organizations (MCOs), since Medicaid benefits are often offered through these entities. If properly run, MCOs allow their contracted networks of providers to offer quality preventative health services to patients, yielding positive health outcomes and cost-effectiveness.
Let’s take a look at how certain states have capitalized on consumer-driven Medicaid via multiple health organizations.
Pill #1: Indiana’s Healthy Indiana Plan
Indiana’s Healthy Indiana Plan (HIP) was initiated in 2008 under Republican Governor Mitch Daniels. Essentially, HIP modifies a state-run Health Savings Account (HSA), or a block grant designated for discretionary use by recipients in need. Eligible citizens who qualify for HIP must be between ages 19-64 with household income between 22-200% of the Federal Poverty Level (FPL). While North Carolina should not expand its medical assistance eligibility to 200% of the Federal Poverty Level (FPL) like Indiana, choice and responsibility encouraged by health savings accounts should be replicated.
In HIP, patients receive an upfront contribution of $1,100 from the state in a POWER (Personal Wellness and Responsibility) account; may choose one of three commercial plans; and must contribute a monthly sum to the account, not to exceed 5% of their total income, based on a sliding-scale. Leftover amounts also roll over to renewed POWER accounts, just like in any HSA.
Overall, HIP forces patients to have "skin in the game." The POWER account encourages beneficiaries to make conscious choices about their health care because costs become transparent. Participants are exposed to the full cost of health care services and forced to decide if the care is appropriate. Also, if one fails to make a timely payment, his coverage terminates.
Pill #2: Florida’s Medicaid Cure
Further South, the Sunshine State will expand its five-county Medicaid pilot program, Medicaid Cure, statewide from August 2013. Medicaid Cure operates through the state paying a fixed monthly amount to 13 different private health plans with up to 31 customized benefit packages. Medicaid beneficiaries may "vote with their feet," choosing a plan and enhanced benefits that best meet their needs.
Medicaid Cure even allows medical providers to develop their own provider networks, known as Provider Service Networks (PSNs). Like all Medicaid Cure provider networks, PSNs are fiscally solvent, risk-based managed care organizations (MCOs) that are either provider-owned or provider-run.
If North Carolina were to implement a program simulating Medicaid Cure, its savings could total up to $2.6 billion. This would equate to a 48% saving on related Medicaid spending.
The National Committee for Quality Assurance’s Health Effectiveness Data and Information Set (HEDIS) is known as the most universal measure of health plan enrollee outcomes. Analysis by HEDIS illustrates Medicaid Cure counties’ outperformance over non-reform pilot counties in the following four health measures: diabetes, mental health, preventative-child, and preventative adult measures.
North Carolina Medicaid Monopoly
Many praise North Carolina’s current and only Medicaid MCO, Community Care of North Carolina (CCNC), as an ideal framework. But having just one statewide MCO providing Medicaid services simply does not work. CCNC is a monopoly. It prevents choice for patients, and it cannot balance a checkbook, for its costs per enrollee significantly surpass those of its southeastern neighbors and exceed the national average.
North Carolina’s Medicaid program continues to run a shortfall of more than $250 million in FY 2012-2013. Until North Carolina applies consumer-driven Medicaid principles in its ongoing Medicaid reform, the system cannot be fixed.
