Legislation that would make significant changes to the delivery of Medicaid — changes aimed at improving outcomes and reducing costs — is headed to Gov. Robert Bentley for signature.
The House of Representatives Tuesday approved legislation sponsored by Sen. Greg Reed, R-Jasper, that would divide the state into regions, served by groups called regional care organizations, which would contract with the Medicaid Agency to deliver services to clients. Those organizations would gradually assume the risk of treating Medicaid patients, which supporters hope will lower the per-patient cost to the Medicaid Agency.
In the long-term, supporters hope that more case management would be introduced into the system, reducing utilization of emergency room services, improve the overall health of Medicaid recipients and save the program money.
“What you end up doing is reduce expenditures in the system overall, but more importantly, you get better outcomes, and if you get better outcomes, cost per patient will go down,” said Dr. Don Williamson, Alabama’s State Health Officer and chairman of Bentley’s Alabama Medicaid Advisory Commission, which proposed the changes in a report last January.
Jennifer Ardis, a spokeswoman for Bentley, said Thursday the governor “looks forward” to signing the legislation.
“This is monumental legislation,” she said. “The governor is highly supportive of legislation and the reforms it seeks to accomplish. He looks forward to signing this bill.”
The program is expected to be fully implemented by 2016. The Medicaid Agency would have to draw up regions by October.
The immediate savings would be relatively modest. According to Optumas, an actuary hired by the Alabama Medicaid Agency, average state savings would range from $49 million a year to $71 million, a reduction of spending from 2.6 percent to 3.7 percent. Medicaid currently makes up more than a third of the state’s $1.7 billion General Fund budget. The program costs have accelerated in recent years as the poor economy has increased eligibility for the program.
The agency could contract with the individual RCOs to give them lump sum payments that, ideally, would incentivize those organizations to deliver services at a lower cost.
There was relatively little debate over the measure in the House, which passed a virtually identical piece of legislation sponsored by Rep. Jim McClendon, R-Springville, on April 23. McClendon, who carried the Senate legislation in the House, said he hoped the changes would allow Medicaid recipients to make better health care choices.
“There will be funding present to provide guidance to allow them to choose the right entry into the Medicaid system, appropriate for their life,” he said. “An earache may not be appropriate for an emergency room visit, but it does happen, and it’s extremely expensive.”
Rep. John Knight, D-Montgomery, who has advocated for expanding Medicaid services, said he disagreed with those who rated the state’s Medicaid program as to how “conservative” it was.
“I’m not satisfied with the present Medicaid program, in terms of the optional programs we do not offer,” he said. “I don’t think that’s way you evaluate Medicaid program.”
Any savings that could be found in the Medicaid program would be unlikely to be seen before the 2015 fiscal year, which could be problematic for the program: Williamson said Medicaid faces a shortfall of between $120 and $130 million in that year’s budget, which begins on Oct. 1, 2014, due to rising expenses, the loss of carryover money and a settlement with the federal government requiring the payback of money drawn down by the state program from 2006 to 2008.
However, Williamson said he hoped the changes would bend the costs of the program.
“This is about reforming the growth of Medicaid, when it’s fully implemented beginning in 2016,” Williamson said. “We have to get to 2016.”
– posted by Brian Lyman