Connecticut Medicaid Prospers Post Capitated Managed Care

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      n early 2011, Governor Malloy announced that he was going to show the door to the MCOs and adopt some form of Primary Care Case Management, using primary care providers to coordinate care, and also contract with a non-risk Administrative Service Organization (ASO) … Connecticut chose a non-profit entity, Community Health Network of Connecticut, to take on that role …. [Specialized ASOs were contracted with for dental and behavioral health services.]

      [F]ast forward to where we are today. … Connecticut Medicaid member per month costs are down 14% from $706 in the first quarter of 2012 to $610 in the first quarter of 2018. So, that’s six years, and the costs went down. As a result, Connecticut, which is one of the highest health care cost states in the country — our per-enrollment costs had been the 9th highest, now they’re 22nd. …

      The other question is, how much of those total costs are actually going to health care? As we all know, there are huge administrative costs that go into the private risk-based insurance system. When we had managed care companies, it was hard to get the data, but we found routinely 20%, even 25% or higher administrative overhead. We actually saw about 40% at one point for administrative costs for one of the plans, under the CHIP program. Based upon the data that has been available now for a few years, we have done really well on both the total costs and the medical loss ratio, which is now about 96.5% [97% as of 2021]. Only 3.5 cents on the dollar goes to administrative costs, paying for the ASO and the state’s own administrative costs. The rest is all going to health care. So it’s a win-win in terms of the cost and where the money goes.

      We really care about quality, about access to care. The data there is pretty good as well. Some really basic stuff like significant increases in preventive care, 16.3% from 2015 to 2017, hospital admissions per thousand down 6.29%, readmissions down 3.52%.

      Comment by Jim Kahn of PNHP: The transformation of Connecticut Medicaid from the main implementation model (capitated for-profit managed care plans) to fee-for-service with enhanced support for care coordination is incredibly important. It demonstrates the greater efficiency (14% drop in per-person costs 2012-18 while Medicaid as a whole rose 10%) and higher quality of care achieved with payment directly to providers. Strong performance continued through the latest data (FY 2020).

      This experience demolishes the myth that commercial insurers can magically reduce costs and raise quality while extracting huge profits. And it serves as an object lesson in how committed and resourceful advocates can overcome the influence of corporate money in order to advance the proper purposes of public funds for health care.

      Two evaluations favorably review this experience – from Harvard Law School and the Connecticut Health Policy Project. For more information, contact Sheldon Toubman

      Recently I complained about “Medicaid News Noise”. This isn’t more noise – it’s revelatory. The truly impressive Connecticut Medicaid story should inspire similar broad reforms in other states, and ultimately inform provider payment under single payer.

      Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction

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