‘Little Evidence’ Managed Care Would Reduce CT Medicaid Costs, Report Finds

Connecticut’s Medicaid program boasts lower costs and similar levels of access when compared to peer states, according to a report by independent consultants, leading to the conclusion that employing a model known as managed care would not likely save the state money.

The findings were part of a report, commissioned by Governor Ned Lamont, to explore the possibility of returning the state’s Medicaid program to a managed care model — a proposal that was met with fierce opposition from many advocates and legislators who said the move would increase costs and reduce access.

David Bednarz, a spokesperson for the governor, said the administration is always looking for ways to improve upon government programs, and that’s why Lamont commissioned the study.

“The report highlights that the current operations of Connecticut’s Medicaid program stand out as a model of cost-efficiency,” Bednarz wrote in emailed comments. “That being said, it does highlight some areas where we can make further improvements, particularly when it comes to individuals who have chronic conditions and those with complex needs.”

The state spent $400,000 on the report, which was conducted by two consulting firms, Accenture and Manatt. The report was published late last week on the State Department of Social Services’ website.

Connecticut currently uses what’s known as a managed fee-for-service model for its Medicaid program, where the state pays providers directly for services delivered to Medicaid beneficiaries. In managed care, or a traditional “capitated managed care” model, the state instead pays a set monthly fee per member to insurance companies to manage the Medicaid program, and the insurance companies pay providers.

The state used managed care until 2010 but then transitioned to managed fee for service because of “a loss of confidence” in the managed care organizations running the program, including uncertain cost effectiveness and a lack of transparency.

Today, 45 states use some form of managed care for at least part of their Medicaid programs, but Connecticut is one of five states that do not. States often turn to managed care for increased budget predictability and improvements to quality and access, but according to KFF Health News, its impact on both access and costs is “limited and mixed.”

Overall, the report found that Connecticut Medicaid has a 14% lower per-enrollee spend than peer states in the Northeast. It also only spends 3.8% of Medicaid expenditures on administrative costs versus 9.4% spent on average by states with managed care.

However, the program exhibited some weaknesses in its cost and care delivery to people with more complex needs.

Connecticut’s Medicaid costs for people who are disabled and elderly are 93% and 65% higher than peer states, respectively. The program also performed worse than the median state score for approximately 53% of quality measures focused on acute and chronic conditions.

Representative Jillian Gilchrest, D-West Hartford, co-chair of the Human Services Committee, said, “Those numbers were really helpful,” of the high costs for certain populations. “I just want to now take this information and really dig deeper, understand why that is happening, and how can we potentially improve upon that.”

The report recommended different solutions for lowering those costs, including exploring managed care, among other models, just for long-term care support services. The authors said there’s some evidence that Managed Long-Term Services and Supports, or MLTSS, can improve cost and access, but there is mixed evidence on whether it improves health outcomes.

Sheldon Toubman, an attorney with Disability Rights CT, said he agrees that the Department of Social Services needs to figure out what’s driving up costs for disabled and senior Medicaid enrollees, but that he does not believe managed care is the solution.

“The same reasons why it’s not a good idea to do it at all are the reasons it’s not a good idea to do it for anybody,” said Toubman.

In recommending areas to explore, the authors focused on controlling costs of home and community based services, or HCBS, based on direction by DSS, according to the report.

However, an analysis of Connecticut’s Medicaid spending provided in the report showed that, while HCBS costs remained steady between fiscal years 2019 and 2023, Medicaid spending on hospital services and prescription drugs increased by 24% and 30%, respectively. However, nationally, prescription drug spending rose by 52% over the same period.

DSS spokesperson Christine Stuart, when asked why the report focused on HCBS as opposed to other areas with more extreme cost growth, said, “The report recommended a more comprehensive analysis of Homeand Community Based Services, a way to improve advanced care management for acute and chronic conditions, for example, reducing hospitalizations, and exploration of innovative ways to maximize federal and supplemental rebates for prescription drugs, which is already underway.”

The Newtown Bee is a proud partner and is sharing this story originally appearing at CTMirror.org, the website of The Connecticut Mirror, an independent, nonprofit news organization covering government, politics, and public policy in the state.