Medicaid Reform Plan

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BW note: Alabama legislators adjourned their 2016 session Wednesday night (May 4) without appropriating new money to begin this Medicaid reform plan.    

There’s a new player in town for the 2016 Alabama Medicaid budget battle. It brings to the table a game plan, years of friendly relations with the other players and a multi-million-dollar stake.

The question is whether a reform idea, even backed with that history and funding, is enough to influence the entrenched model of politicians and advocates arguing over too little money, too much need and no fundamental change.

The player is Alabama Medicaid’s regional care organization plan, a managed care-style approach intended to deal with illnesses before they are emergencies and designed to both slow the growth in costs and improve health outcomes.

The RCO plan has been years in the making.  In 2012, Gov. Robert Bentley appointed an Alabama Medicaid Advisory Commission; in 2013 the commission delivered a report recommending the reforms; in 2013 and 2014 the Legislature passed bills adopting the plan.  In February of this year, the national Centers for Medicare and Medicaid Services approved the experiment and agreed to provide up to $328 million in federal money over three years to help the startup.  The agreement was to begin April 1. The Legislature on March 23 adopted a General Fund budget that Bentley and Medicaid Commissioner Stephanie Azar say can’t support health services at their current level or implement the reform.

Bentley – enmeshed in personal scandal, ethics investigations and calls for his impeachment – is a damaged advocate for the Medicaid reform he brought to the table. Last week he stepped back from immediately confronting the Legislature in a special session devoted to Medicaid’s budget, saying he’d give cuts in the program a test run first.

But he, along with Azar, quickly offered a dire picture of what cuts could mean to a million patients in the state. Azar told The Montgomery Advertiser she’d look at cutting outpatient dialysis treatment, drug coverage and eyeglasses for adults – plus lowering physician pay, a move that could lead to doctors leaving the state.

The Medicaid discussion is not finished in the Legislature, either. The Legislature enacted – and overrode Bentley’s veto of – the $1.8 billion General Fund budget that includes $700 million for the Alabama Medicaid Agency, almost $100 million shy of what the agency asked. It rejected Bentley’s idea of taking money from education coffers for Medicaid.  Still, the House and Senate budget committees are planning joint sessions to discuss Medicaid, tentatively to begin on Wednesday, April 20.

As things now stand, the Medicaid regional care organization plan would die as it was beginning, Bentley and Azar say.

The Public Affairs Research Council of Alabama, which does non-partisan research on questions of government performance, looked at what that likely means for Alabama budgets and health outcomes going forward.

In a report published in early 2015, PARCA found the current Medicaid approach lacks incentives to reduce expensive options – long hospital stays, emergency room care – or to encourage less expensive care that can mean better health outcomes – outpatient visits and coordinated care.

PARCA’s full report deals with Medicaid’s role in Alabama’s health care economy, the strain funding Medicaid puts on the state’s general fund budget, difficulties in controlling costs, how Alabama Medicaid services compare nationally, and examples of results from current use of managed care. You can read it here.

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