Reform might not produce much savings in Medicaid
by Tim Lockette
Dec 12, 2012 | 3500 views |  0 comments | 16 16 recommendations | email to a friend | print
MONTGOMERY — The man in charge of filling Alabama’s massive Medicaid funding gap says it’s important to “set expectations that are reasonable” about what the state can actually save by reforming the health care program.

“I don’t think we should be expecting to get $100 million in savings,” Don Williamson, Alabama’s state health officer, said Wednesday.

Williamson is chairman of the Medicaid Advisory Commission, a temporary state board with a January deadline to suggest ways to trim Alabama’s Medicaid budget — a source of growing woes for the state’s budget writers.

Medicaid is a joint state and federal program that provides health care to more than 900,000 Alabamians living below the poverty level. While the federal government picks up most of the tab, the state outlay for the program has been ballooning in recent years. Voters on Sept. 18 approved a three-year measure to take $146 million per year from a state trust fund, largely to patch a hole in the state’s $603 million Medicaid obligation.

The commission has been considering two options to save the program: a switch to commercial managed care or a switch to “community” or “accountable” care, which is essentially managed care through local, nonprofit networks. In a commission meeting Wednesday, Williamson said there was also a third option, involving a mixture of the two.

Commission members still don’t know how much money Medicaid reform would actually save. A committee spent weeks listening to presentations from Medicaid agencies in other states, which described how they made the switch, but the savings estimates provided by those states were all over the map. Kentucky reported more than $1 billion in savings over a period of more than two years. Oklahoma officials said they’d saved about $40 million per year.

Members of the commission called the numbers a “fruit salad” of estimates and voted to ask potential managed care contractors for dollar estimates of how much they believed they could save the state.

“I just want to know if it’s $10 million or $150 million,” Williamson said.

The commission also asked for numbers on the cost of expanding the state’s patient care networks — nonprofit networks that manage care for Medicaid clients with multiple or chronic health care problems. Currently, patient care networks cover only the most costly clients in a few metropolitan areas.

Sylvia Brown, director of the Tuscaloosa-based patient care network MedNet West, said her program cut costs by coordinating the efforts of doctors. Without that coordination, she said, costly problems can arise. She cited a case in which a patient got a prescription for prednisone from two different doctors and wound up in the emergency room with high blood sugar caused by overmedication.

Medicaid officials estimate that programs like Brown’s have shaved six to seven percent off the cost of care. But it’s not clear whether those savings would extend to the entire state if the program were expanded — and it’s not clear whether those savings would be enough to the Medicaid gap. The state’s cost for Medicaid has nearly doubled since 2010.

Alabama’s options are limited, Williamson said, because it isn’t a rise in per-patient costs that is driving the Medicaid budget. Inflation in Alabama’s per-patient expenditures is below the national average, he said. Alabama is among the most restrictive states in determining Medicaid eligibility and its per-patient costs are lower than most states, Williamson said.

But the boom in Medicaid enrollment — from 750,000 people at the start of the recession to more than 900,000 now — has strained the system, and the loss of stimulus dollars has increased the demand for state money.

At Wednesday’s meeting, commission members asked if a decline in the state’s unemployment rate would help ease the pain by getting people off the Medicaid rolls. Williamson said he wasn’t sure, because of potential changes in federal funding formulas.

Williamson said he was prepared to report smaller-than-expected savings estimates to Gov. Robert Bentley, if that’s what the commission’s studies find.

“Here’s my rule: I’m going to tell the truth,” he said.

So far, the commission hasn’t requested a report from Sarrell Dental Centers, an Anniston-based nonprofit that provides dental care to people on Medicaid. Sarrell’s reputation for providing service at low cost to Medicaid patients has earned the clinic wide recognition outside the state.

Sarrell CEO Jeffrey Parker, who is a member of the Medicaid Advisory Commission, said he wasn’t surprised the commission hasn’t looked more deeply into the Sarrell model.

“We’re a small player,” he said. Plus, Parker said, he wasn’t sure the clinic’s approach could be replicated in all the institutions Medicaid is funding.

The Alabama Legislature is expected to take up the commission’s final recommendation when it convenes in February.

Capitol & statewide correspondent: 256-294-4193. On Twitter @TLockette_Star.

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