Four Medicaid Trends to Watch in the Next Twelve Months

September 26, 2018 Bill Lucia

If you work with Medicaid you know it’s always been a moving target, and the last year has not brought much clarity. Here are four topics to keep an eye on in the next twelve months.

Improving the Patient Experience

Medicaid providers and payers have a renewed focus on providing better customer service to patients, and this trend is likely to continue.

Patients on both Medicaid and commercial insurance plans now pay more out-of-pocket for their care, and as a result, have higher expectations from providers and payers. They are more willing to shop around until they receive satisfactory service.

Another driver of this shift is the expanding competitive landscape. Big Tech players such as Apple, Amazon and Google sister companies Verily and Cityblock are gearing up for some serious disruption, and one thing these companies know is the importance of great customer service. For traditional healthcare companies to compete, they’re going to have to match increased levels of customer satisfaction.

Rethinking Value-Based Purchasing

At its simplest, Value-Based Purchasing (VBP) pays providers based upon patient outcomes and shared financial risk. It’s had its growing pains, but don’t expect to see a move back to the Fee-for-Service (FFS) model any time soon.

Among the issues with VBP:

  • Provider’s tight budgets and a lack of funding make building a solid foundation for VBP challenging
  • Inertia due to payment models, practices and habits that have been ingrained over decades
  • Providers with already thin margins are reluctant to increase financial exposure through shared risk
  • Providers and HHS told Congress in July 2018 that there needs to be protections in the Stark Law for providers who inadvertently violate its anti-kickback regulations under VBP models

In order to realize the benefits from VBP, providers will need to:

  • Rethink old operation and payment models
  • Identify and reward cost-saving innovators
  • Implement effective tracking of quality measures
  • Use technology to utilize resources more efficiently

There will be some choppy waters ahead as this transition takes place, but eventually, VBP may well provide a path to a more effective and efficient patient-centric healthcare system.

Slowing enrollment yet increased spending

Medicaid enrollment and spending peaked in 2015 due to the passage of the Affordable Care Act (ACA) and associated Medicaid expansion. Since then, as might be expected, enrollment has decreased while spending has flattened.

However, according to a Kaiser Family Foundation (KFF) study conducted mid-2017, states forecast 2018 enrollment to dip to only 1.5 percent growth, while spending is expected to increase by 5.2 percent. Spending grew 2.4 percent in FY 2016 and 3.5 percent in FY 2017 (the rise in 2017 was due to those states that implemented expansion beginning to pay five percent of new enrollee costs in January 2017).

Spending growth is attributed to high-cost prescription drugs, increased long-term care services, and increased payment rates to most providers.

Expect these factors, along with the uncertainty of funding for programs such as the Children’s Health Insurance Program (CHIP) to bring increased pressure to bear on Medicaid agencies and managed care plans, requiring novel approaches to cost containment.

Increased focus on social determinants to improve care and outcomes

Social determinants of health (SDOH) such as hunger, homelessness, poverty, lack of transportation, access to clean water and lack of information about the healthcare system have an enormous effect on patient outcomes. Studies estimate SDOH can be responsible for as much as 80 percent of an outcome.

Most agree that this is a hugely important factor in effective patient care, but providers already suffering from administrative burnout may not see addressing these social issues as part of their duty of care. The current administration is also unlikely to increase spending on social programs in these areas, so what’s the solution?

State Medicaid programs may provide the conduit for using SDOH in care plans. Some state Medicaid agencies such as California and Washington are employing Section 1115 waivers to set up innovative “whole health” programs that improve coordination between health providers and agencies that address patients social, behavioral and physical needs. And earlier this year North Carolina released an interactive map showing social determinants health factors, and the State’s Medicaid agency included SDOH components in their Managed Care Request for Proposals. Expect to see more of these initiatives from states, and others from the private sector as startups enter the marketplace looking to disrupt the status quo.

These issues are going to challenge providers, payers, social services and patients in the coming months. Understanding and implementing solutions that address these trends will be paramount for Medicaid stakeholders in the coming year.

About the Author

Bill Lucia

Bill Lucia is chairman, president and CEO of HMS. He was appointed CEO and elected to the board of directors in 2009. In July 2015, Bill was named chairman of the board. From May 2005 to March 2009, Bill served as HMS’ president and chief operating officer. Under Bill’s leadership, HMS has become a leading healthcare analytics and technology organization, providing payment accuracy and population health management solutions to more than 500 payers and 50 government agencies. Prior to joining HMS, Bill was a senior vice president of operations and chief information officer for Celtic Life Insurance Company and senior vice president of Insurance Operations for North American Company for Life and Health Insurance. Outside of HMS, Bill serves on the board of directors for AllyAlign Health and Australia’s Digital Health Cooperative Research Centre, the largest of its kind in the world. In addition, Bill is a fellow of the Life Management Institute program through LOMA, an international association of insurance and financial services companies engaging in research and educational activities to improve operations

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