States turn to private insurance companies for managed care

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States turn to private insurance companies for managed care

By Phil Galewitz Kaiser Health News

MADISON, Tenn. — Two years after Holly Hawthorne was severely brain damaged when

her motorcycle was hit by a bus in India, she passed a huge milestone in

January: She moved out of a nursing home here and into the house where she grew

up.

Her mother, Diane , credits Hawthorne's managed care health plan for

making the move possible. The insurer installed a mechanical chair lift in

's two-story house, in nearby Antioch, and assigned an aide to visit

Hawthorne every day to help her eat, bathe and get dressed. " I'm just so

grateful, " says , a nurse who recently retired and now cares for her

daughter.

Hawthorne, a 33-year-old former dancer, is on Medicaid, the state-federal

program for the poor and disabled that covers 48 million people across the

country. She's also part of an emerging trend: She gets her long-term care and

other benefits through a private managed care plan that works for the state.

Desperate to rein in rising Medicaid costs, Tennessee last year became the sixth

state to require its frailest and costliest patients — the elderly and disabled

who need long-term care — to enroll in managed care plans.

At least 10 other states, including Florida, land, New Jersey and Rhode

Island, are considering introducing or expanding the use of managed long-term

care. The trend is sparking opposition from the nursing home industry and

raising some concerns from AARP and other patient advocates.

Traditionally, states pay Medicaid providers, such as doctors and nursing homes,

directly for individual services. But many officials say that system makes it

hard for them to predict and control Medicaid spending. Under managed care,

states pay health insurers a fixed monthly fee for each Medicaid patient. The

lump sum is used for all the patient's costs, including physician and nursing

home care.

Managed care companies, including UnitedHealthcare and Wellcare Health Plans,

say they can save money for states by keeping Medicaid patients who need

long-term care at home, whenever possible, rather than in more-expensive nursing

homes. They use care coordinators to monitor patients to help ensure they're

getting the right care in the most appropriate setting.

Hawthorne's health insurer, Amerigroup, estimates that it will spend about

$37,000 a year for her care at home, compared with $55,000 for a year in a

nursing home. Over time, those kinds of savings should help hold down Medicaid

costs, benefiting both the state and taxpayers, says Patti Killingsworth,

Tennessee's chief of Medicaid long-term care.

Tennessee pays its Medicaid health plans — UnitedHealthcare (UNH) and Blue Cross

and Blue Shield of Tennessee, in addition to Amerigroup (AGP)— an average of

$4,400 per member per month.

AARP and some other advocates worry that, because of the incentives to restrain

costs, managed care plans might make it harder for patients to get the services

they need. The nursing home industry, which gets about two-thirds of its revenue

from Medicaid, is complaining as well. " Managed care is not a panacea, " says Joe

DeMattos, president of the land Health Facilities Association, the state's

nursing home lobby.

But state officials around the country say they have little choice but to make

more aggressive use of managed care. The long-term-care population makes up 25%

of Medicaid enrollees but accounts for more than two-thirds of total program

spending. Moreover, the system is headed for even more strains as Baby Boomers

age.

More states getting on board

Seventeen states already require other Medicaid enrollees — poor children and

pregnant women, among others — to sign up for managed care. As for

long-term-care patients:

•Texas, which already requires Medicaid recipients in Houston, San and

Austin to use managed long-term care, began mandating it this month for

enrollees in the Dallas/Fort Worth area, as well.

•Illinois last year awarded contracts to two insurers, Aetna and Centene, to

provide care, including long-term-care services, for 40,000 recipients in the

Chicago area.

•California plans to require its Medicaid long-term-care enrollees to sign up

for managed care plans later this year.

Given states' drive to save money, nursing home officials concede they can no

longer block managed care outright. " The train is coming down the road, " says

Nina Willingham, president of the Florida Health Care Association, the nursing

home lobby.

But the nursing home industry has had some success in affecting how the health

insurers do business. In Tennessee, for example, nursing homes successfully

lobbied the state to prohibit health plans from lowering their payment rates to

nursing homes or dropping facilities from their networks.

About 28,000 long-term-care patients are now enrolled in health plans in

Tennessee. " It's gone remarkably smoothly, " says the state's Killingsworth. She

says 345 recipients have been moved out of nursing homes and into their own

homes.

One was Roland, 73, a retired truck driver who lost both legs to diabetes

and entered a nursing home last July, " I thought I would never get out, " he

says.

But then Del rio, a care coordinator at UnitedHealthcare, arranged for

an aide to help him bathe and get dressed, and got a mechanical lift to help him

get in and out of bed. That allowed him to move home just before last

Thanksgiving.

Some positives and negatives

Even wary patient advocates, such as Gordon Bonnyman, executive director of the

Tennessee Justice Center, say managed care offers some pluses: Any money saved

can be used to expand long-term-care services outside of nursing homes.

In 2009, about 90% of Tennessee's Medicaid long-term-care funding went to

nursing homes, according to TennCare, the state's Medicaid agency. As a result,

there were long waiting lists for enrollees who wanted home- and community-based

services. But after Tennessee awarded long-term care contracts to three Medicaid

health plans, those waiting lists shrank sharply.

The move to managed care has some complications. For example, most of the

long-term-care enrollees also are on Medicare, the federal health program for

the elderly and disabled. Since Medicare provides primary coverage for doctor,

hospital and pharmaceutical services, that limits the Medicaid plan's ability to

coordinate care; it might not know, for example, when a member is admitted to a

hospital.

Diane , Hawthorne's mother, says she is thankful for the way her

daughter's health plan has handled her care. The care coordinator, Mudry,

spent months planning Hawthorne's move home. A former home health nurse, she

lined up aides to provide home care and arranged for the special van to take

Holly home. In addition, she has arranged for home care aides to occasionally

work additional hours so Holly's mother can get some rest.

Now, says , Holly " seems very content and happy, and I know she is

getting more rest. "

Kaiser HealthNews (www.kaiserhealthnews.org) is an editorially independent news

service and a program of the Kaiser Family Foundation, a nonpartisan health care

policy organization that isn't affiliated with Kaiser Permanente.

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