Managed Care Organizations and Medicaid Performance

I recently authored an Issue Brief on the role data plays in Ohio’s Medicaid program. In developing that piece, I tried to approach data as a tool in business infrastructure development for the government “as an insurance organization,” which, for all intents and purposes, is what Medicaid is. If the mission of this insurance organization is to promote higher value care, the state would need to develop data systems to better manage those efforts and quickly enact policy in broad, comprehensive ways. The essential business functions of Medicaid are benefit administration, enrollment and reimbursement. I focused on the newer data management systems of claims, eligibility and auditing. However, it is important to realize that most of the administration is actually not conducted directly by the state. In fact, the majority of the program has been privatized and the responsibility of data collection and management have been outsourced to Managed Care Organizations (MCOs). So that leaves the question: what role do MCOs play in the intersection of data and Medicaid?

Most of the administration is actually not conducted directly by the state. In fact, the majority of the program has been privatized

MCOs, like the state, adjudicate claims and ensure benefits are delivered. However, unlike the state, they have the ability to negotiate contracts with providers and leverage the use of controls like prior authorization. The fundamental concept of this outsourcing, economically, is to create a profit incentive for MCOs by enabling them to retain that which is not spent (i.e.: if you save us money, you can keep it). The state does not just hand this responsibility over casually, however. MCOs have a contractual arrangement with the state in which the government is able to establish expectations around a whole host of activities, including quality.

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As is discussed in the Issue Brief, plans are measured against one another and across state lines on a whole host of metrics. These metrics are then used to enact the federally required quality strategy of the state, which was presented at the Medical Care Advisory Committee on June 21. It is clear in the state’s presentation that an essential tenet of the state’s quality efforts is to leverage the contractual process with the MCOs to reform the practices of providers that are engaged in delivering services to Medicaid-insured populations. In practical terms, this is what the value-based reforms of the state center around: identify high-cost areas/high-need populations, figure out clinical measures that impact that cost, and incent the plans to carry out the mission of that work through an agreement with the state and their subsequent contracts with providers.

There is strong evidence from the state shows that these efforts are working. But, overall, Ohio remains pedestrian in its achievement in quality benchmarks. For example, in looking at children’s health, in access to primary care for children 12-24 months, immunizations, HPV vaccinations, BMI documentation and nutrition counseling. In fact, for all the minimum standards of performance for the healthy children population, no managed care organization achieved the highest possible ranking.

There is strong evidence from the state shows that these efforts are working.

MCOs are not singularly responsible for quality achievement. They are not delivering medical care directly. The delivery system is incredibly complex and there are a myriad of non-insurance reasons why, for example, a child cannot make an appointment to receive a vaccination. The state, however, is not limited to using the common measures of performance (data) we have traditionally seen in Ohio’s MCO program. Moreover, it is not bound to maintain the MCO benefit as it exists today. Indeed, some states have mandated the inclusion of additional measures and activities of MCOs to address social determinants of health, taking advantage of policy tools such as the medical loss ratio (driven by data) and payment for specific types of non-clinical coordination. Other states have also fundamentally disrupted the Medicaid insurance industry, allowing hospital systems to offer insurance products directly (think accountable care organizations), which then simultaneously allow for systems to control the entirety of data related to claims, coordination, health outcomes and finance. Given the state’s recent experience with pharmacy benefit managers in Medicaid by MCOs, this reconsideration of roles may be a worthwhile endeavor.

These value-based policy efforts in Medicaid take time and money to implement. Good policy design must also consider the financial realities of “premium slide” for providers and MCOs (when less money is made because people are healthier, thus using fewer services). Ohio is already on the path to articulating this system through the value-based efforts of the state in working with MCOs. Regardless of who becomes governor next, it would be wise for their administration to build upon this work and figure out just what data will articulate the policy the new governor wants to see.