Idaho looks to restructure Medicaid funding. But clear answers are hard to find.

Idaho is looking at restructuring how it pays for Medicaid, a free health insurance program that insures about 458,000 Idahoans, costing state taxpayers more than $4 billion last fiscal year.

But there’s mixed evidence that the funding structure that’s used by 41 state Medicaid programs, called managed care, leads to less spending on health expenses or better health care outcomes for patients, a panel of Idaho legislators on the Medicaid Managed Care Task Force heard in presentations Monday at the Idaho Statehouse in Boise.

Idaho’s Medicaid program is currently spread out between a mix of funding structures. 

Dental care, mental health care and substance abuse treatment are under a managed care structure, where a business contracts with the state to manage patient treatment. Under that system, the state pays a managed care organization a per member, per month fee for all people anticipated to receive Medicaid by the state that financial specialists predict before as a contract is negotiated. 

That contrasts from a fee for service program, which can involve the state health department directly managing patient care, approving individual fees for individual health care services. But experts note that systems with these titles can vary.

What are the differences between managed care and fee for service programs?

One key difference between those systems is who has the risk if health care becomes more expensive. 

Idaho Medicaid Division Director Juliet Charron told the task force  a managed care system shifts risk from the state to a contractor which, in turn, can help make budgets more predictable.

“Managed care is not the silver bullet for cost containment,” Charron said.

She added that a managed care system that involves an outside organization being paid a per member, per rate month for a contract term — called a capitation model — gives the state a better idea of what Medicaid expenses. That service, she said, involves budgeting the costs out up front to pay another organization, rather than the state paying each individual health care bill, like it does under the fee for service model.

Another option for funding Medicaid payment is having a value care organization, such as a group of doctors or clinics, network together to manage patient care, still operating under a per-member, per-month system. Idaho Medicaid has some care contracted through value care organizations started recently, but Charron said data on whether those contracts have saved costs are still preliminary. She said she expects to have that data in August or September.

Information on cost savings, budget predictability, health care quality and accessibility from managed care is mixed, Kathryn Costanza, program principal for the National Conference of State Legislators, told the task force.

“When you’ve seen one Medicaid program, you’ve seen one Medicaid program,” Costanza said, underscoring the difficulty of comparing the ways states structure their programs. 

Does managed care save costs?

A report commissioned by the state from Sellers Dorsey, a research firm based in Pennsylvania, recommended Idaho pursue a managed care organization to run its Medicaid program, suggesting that it would save money over time. The final report was released in April and presented at the meeting Monday.

Sellers Dorsey Director Michael Heifetz, answering questions from lawmakers, said cost savings usually take several years after switching to a managed care organization. 

Rep. Josh Tanner, R-Eagle, said he didn’t see actual data in the report that showed cost savings, and that “the article alludes to a lot of different things.”

“How are we going to reduce costs? What mechanisms have you seen that do that?” Tanner asked.

Heifetz agreed with Charron, saying “there’s no silver bullet.”

“There isn’t one, or else we would have used that a long time ago,” Heifetz said. “… But managed care is still the better mechanism to look inside the curtain.” 

“Managed care at its basic function is still looking at what is and what isn’t working,” he said.

Heifetz also said that a managed care program “is largely meant to inherit the risk on the financial side, while also being responsible on the (care) quality side.”

Charron said she frequently tells people that with Idaho Medicaid’s limited staff resources spread across handling different funding structures, that “we are masters of none.”

Idaho’s costs for Medicaid have ballooned since the state’s Medicaid program expanded to allow more of the working poor to access free health insurance, which began in January 2020. State lawmakers voted earlier this year to create a special working group of legislators called the Medicaid Managed Care Task Force. The group is tasked with studying existing managed care programs in Idaho and other states to find the “most successful and cost effective means of implementing managed care.”

The panel meets next July 25 and in August, when the committee plans to host roundtable discussions with people and organizations. Idahoans can submit public comment to committee secretary Grace King at [email protected].