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Connecticut Backs Away from Private Plans in Medicaid

By John Reichard, CQ HealthBeat Editor

June 14, 2011 -- Many in health policy say that paying fixed monthly fees per enrollee to private health plans to deliver Medicaid benefits seems like a powerful tool to manage costs. But the state of Connecticut is revamping its program to move away from such "managed care capitation."

Instead, the state is relying on more of the tools provided in the health care overhaul law (PL 111-148, PL 111-152), such as the use of medical homes to try to deliver care more efficiently, a Connecticut state official told a Washington, D.C. health policy forum.

Mark C. Schaefer, director of Connecticut's Medical Care Administration, said the state is moving in that perhaps surprising direction because managed care plans haven't transformed the delivery of care enough to satisfy the state that it's more efficient.

"With our capitated managed care program there really was not a relationship between the providers who deliver the care and the managed care organizations," Schaefer told the forum, called the National Medicaid Congress. "They basically didn't talk aside from contract negotiations around rates and that sort of thing. . . they were very light in terms of engaging the provider community and thinking together about the best way to solve today's health care problems."

Medical homes are doctor's offices that agree to coordinate health care services to avoid duplication and treatment in needlessly expensive settings. Patients that have a medical home are supposed to be able to more easily schedule appointments and contact their physicians by email. The "home" is supposed to help remind patients of the preventive care they need and to adhere to care regimens.

Connecticut officials hope that this approach, which will take several years to implement across the state, will more fully engage providers. Money made available under the 2009 economic stimulus law (111-5) is helping to pay for the adoption of electronic health records, a key step in getting accredited as a medical home, Schaefer noted.

"More than anything else this new system has to have providers at the table bringing their best thinking about how practice needs to change to address issues of duplication, inefficiency and ineffective care," Schaefer said. But, he said, medical homes and "health homes," a similar concept that entails caring for patients with more complex health care needs, are not likely to provide the ultimate answer.

Medical homes will need to join with other providers such as hospitals, home health agencies and community health centers in local consortia and take on medically complex patients as well as other Medicaid enrollees to truly make care less costly, he suggested.

Connecticut prefers the flexibility it has under the health law to control costs to a block grant approach advocated by a number of governors. Block grants would require a far more hands-on state involvement in managing its Medicaid program—and potentially in having to fund it if there are unexpected spikes in the cost of providing care states are unwilling to see their residents go without.

"We like the security of what we've got now in our partnership with the feds and we feel that we've got the flexibility and the opportunity right now in our relationship with the feds to innovate in health care service delivery in the way that we need to," Schaefer said. "So there's not much we're looking for in a block grant approach and some things that we have to fear from that."

Washington state has also made clear that it does not favor block grants. 

Nancy V. Atkins, commissioner of the Bureau for Medicaid Services in West Virginia, who spoke on the same panel as Schaefer, said her state also does not like block grants in part because it now receives relatively generous federal reimbursement for its Medicaid program.

"It puts a lot of responsibility on the state," she said. "And we have a partnership, a state-federal partnership is the way it's working right now. So we're certainly not in favor of block grants either."

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