Managing Medicaid: A cautionary tale | Arkansas Blog

Managing Medicaid: A cautionary tale

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It's an appealing notion, managing government-financed health care programs like Medicaid to encourage less expensive types of care and turning it over to the ever-so-efficient private sector to get the job done.

Here's a sliver of how those good intentions can have unintended consequences. It's from the New York Times, about a program to direct disabled elderly into adult daycare programs paid from Medicaid money.

Such centers have mushroomed, from storefronts and basements to a new development in the Bronx that recently figured in a corruption scandal. With little regulation and less oversight, they grew in two years from eight tiny programs for people with dementia to at least 192 businesses across the city.

The Times finds that many of the people being served at the centers are perfectly fit and enjoying games, free meals and socializing, while the companies that run them pile up profits.

Centers collected over $25 million from managed care plans in the first nine months of 2012, at roughly $93 per person per session, according to state figures. The managed care companies are paid by Medicaid; in New York City, the rate is about $3,800 a month per member.

“The whole thing is going to end up costing the state much more money,” said Valerie Bogart, a lawyer with New York Legal Assistance Group who specializes in advocacy for frail elderly and disabled people. “It’s really up to the managed care plans to be the watchdogs now, and it’s like the fox watching the chicken coop, because they have an incentive to make money from these centers, too.”

It was not supposed to play out this way. The bold Medicaid overhaul, part of a grand bargain with the state’s most politically powerful health care players, has been promoted as a national model for curbing costs and reversing the incentives for fraud. It transferred tens of thousands of recipients of long-term care from a system in which providers billed Medicaid for each service to managed care, in which a capped monthly rate must cover all services to a company’s enrollees.

With the largest Medicaid budget in the country, $54 billion, New York is trying not only to rein in runaway spending, but also to “rebalance” it, away from costly institutional care, like nursing homes and medical models known for overbilling, to inexpensive supports that keep people safely in their communities.

The price of efficiency is eternal vigilance. And, might I add a local angle: The first way to root out fraud isn't drug-testing Medicaid-eligible disabled and elderly or implanting digital IDs on them. It's watching the vaunted private optioneers like a hawk.

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