Managed Care Planned for Georgia Medicaid

Published September 1, 2003

Georgia state lawmakers have begun reviewing proposals for a major overhaul of the state Medicaid program, seeking to control costs while continuing to provide health care coverage for roughly 1.2 million poor, elderly, and disabled citizens.

Forty-two companies and organizations, including some of the biggest names in the private-sector Medicaid HMO and home health care field, are vying for a chance to help Georgia overhaul its crumbling Medicaid system. As Medicaid HMOs continue to multiply and prosper nationally, many view Georgia as the next hot market, ripe for managed care, Medicaid-style.

Managed Care Comes to Medicaid

“Everything is on the table right now and worth some consideration,” said Tim Burgess, commissioner of the state’s Department of Community Health (DCH).

According to DCH records, the cost of the state’s Medicaid program rose 16 percent between 2001 and 2002, while enrollment increased only 7 percent. The program’s costs–expected to reach more than $1 billion in 2004–have consistently outpaced the tax revenues allocated to it.

First-term Governor Sonny Perdue (R), faced with making deep and unpopular budget cuts as tax revenues come up short, has requested a new approach to fixing the health care entitlement plan.

Part of the solution, according to an Associated Press report, will likely be a new managed care system for some Medicaid recipients.

Many states have turned to managed care in combination with or as a replacement for the fee-for-service model that has characterized Medicaid in the past. Managed care offers potential for cost containment, although at the price of limiting patient choices and requiring a larger bureaucracy to monitor and restrict access to care.

Georgia is the tenth most populous state in the country, with both urban and rural areas. With a robust and competitive private-sector health care market already in place, the state could be prime territory for managed care, analysts say. “Its pure size” makes the state attractive for managed care, said former insurance regulator Brent Layton of consulting firm Layton & Associates. “When you have a large state with a large Medicaid population, any company would be interested in Georgia.”

How it Works

Instead of fee-for-service benefits, Medicaid recipients under a managed care model are directed toward a specific network of doctors and hospitals and, as is the case with consumers in the non-Medicaid population, must comply with various deductibles, co-payments, restrictions on treatment options, and prescription drug formularies.

Such change does not come easy for Medicaid stakeholders. “The transition from more traditional Medicaid to managed-care Medicaid has always had rough spots,” said Dr. William Custer, a health care policy expert at Georgia State University. “It’s a shift for providers, it’s a shift for enrollees and for the state, and any transition has rough spots.”

Custer also noted Medicaid recipients present unique challenges not present in the standard health insurance market. Less easy access to transportation and a lower level of education are among those challenges.

“Georgia has an advantage in that companies getting into this [Medicaid managed care] business today understand it better and there are lessons to be learned from the experiences of other states that have made the transition,” Custer said.

According to a report published by the Atlanta Business Chronicle, California-based Molina Healthcare Inc., AmeriChoice Health Services Inc., Virginia-based Amerigroup Corp., AmeriHealth Mercy Health Plan, APS Healthcare Inc., Centene Corp., Evercare, and WellPoint Health Networks Inc. have all presented reorganization plans to the state.

WellPoint, the parent company of Blue Cross and Blue Shield of Georgia, offered to run a pilot Medicaid managed care program for the state while the proposals were being reviewed. That offer was rejected, however, because obtaining the required federal waivers from the Centers for Medicare and Medicaid Services necessary would have been time-consuming, according to a statement issued by Blue Cross spokesman Charlie Harman. WellPoint’s state Medicaid HMO business includes more than 1 million members in the United States and 580,000 members in Puerto Rico.

Package Deal

Ultimately, the state will need a mix of programs, including long-term care options and disease management to help with prescription drug cost containment. (See “Florida Renews Disease Management Program,” Health Care News, August 2003.)

More than half of the companies and organizations responding to the state’s request for proposals–including Amedisys, one of the country’s largest home health nursing care providers–operate in these niche areas.

According to a DCH spokesperson, a team from the department will review all proposals and recommendations before bringing them before the state Office of Planning and Budget, and ultimately to Governor Perdue. Once a model has been chosen for the state, a new request will be issued and vendors selected by next summer.

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].