1015 15 Street, N.W., Suite 950 | Washington, DC 20005 Tel. 202.204.7508 | Fax 202.204.7517 | www.communityplans.

net Bob Thompson, Chairman | Margaret A. Murray, Chief Executive Officer

th

Deficit Reduction Must Protect and Improve Care Coordination and Quality for Medicaid Enrollees
Request ACAP urges Members of Congress to protect and improve the vital safety net role of Medicaid as part of the Budget Control Acts deficit reduction process. ACAP asks Congress to: 1. Encourage states expansion of capitated care management systems for all Medicaid populations. Federal savings of $40 billion over ten years are possible. 2. Reform Medicaids funding mechanism automatically to increase Federal matching rates when the State or Federal economy is in recession. 3. Allow states to provide financial incentives and disincentives for enrollees to seek care in appropriate settings, including the use of co-pays for higher-income enrollees who seek nonemergency care in an emergency room. 4. Maintain Medicaid and CHIP maintenance of effort (MOE) requirements through 2014. 5. Preserve the Federal/State Medicaid partnership by maintaining the federal entitlement and opposing a Medicaid block grant as proposed by the House of Representatives. 6. Maintain federal protections that guarantee access to care, including requirements that health plans be paid in an actuarially-sound manner. Background Medicaid serves 53 million Americans. It is a vital safety net for seniors, people with disabilities, pregnant women, and children. Far from being welfare, Medicaid directly or indirectly impacts the lives of 150 million Americans. According to the Kaiser Family Foundation, more than one-half of all Americans received health coverage, longterm care, or assistance with paying Medicare premiums from Medicaid (20 percent), or had a friend or family member who has received such assistance (31 percent). Medicaid is a smart investment. It protects public and private resources, and helps local and state economies. Without Medicaid, the uninsured poor would place an even greater burden on an alreadystrained health care system, particularly emergency rooms. Likewise, Medicaid supports valuable prevention, immunization and screening efforts that preserve public health and prevent costlier ailments down the road. Medicaid supports hospitals, nursing homes and health care professionals, all of

whom are vital components of the economic stability of local communities.

Congress and the Administration must not allow state flexibility to become a euphemism for deep Medicaid cuts that will eliminate needed benefits or indiscriminately throw the elderly, persons with disabilities, pregnant women, and children off the program. Giving states some true flexibility in designing and operating Medicaid is desirable, but flexibility must not undermine the basic commitment that America has made to care for its most vulnerable citizens. The deliberations of the Joint Select Committee on Deficit Reduction present a unique opportunity to reduce spending while improving and protecting the Medicaid program and the health of its enrollees.

ACAP Proposals for the Joint Select Committee on Deficit Reduction ACAP has solutions to contain Medicaid spending while improving care coordination for enrollees. To that end, the following proposals can be used by Congress and the Joint Select Committee: 1) Encourage states expansion of capitated care management systems for all non-dual eligible Medicaid populations. a) Encourage Greater Use of Capitation in Medicaid. Less than half of all non-dually eligible Medicaid enrollees receive care through a capitated managed care organization. Studies i show that Medicaid managed care (1) generates savings while protecting access to care, (2) improves access to providers and (3) creates the greatest opportunity to measure and improve quality of care compared to fee-for-service. According to a study by The Lewin Group, the federal government could save nearly $40 billion over ten years if the capitation model were immediately expanded to the majority of non-dual Medicaid populations. States could be incentivized to undertake more managed care through a temporary increase in the FMAP for expenditures on newly-capitated populations, or through technical assistance grants to help states work through expansion of capitation. With the strong patient protections that exist in Medicaid law and regulation, expanding capitated managed care will not only protect patient access to health care services, it will also help to reduce unnecessary spending associated with fee-for-service Medicaid. b) Reduce Bureaucratic Barriers to a States Use of Managed Care. Currently, states may not move children with special health care needs or those that are dually eligible for Medicaid and Medicare from fee-for-service to managed care without going through a cumbersome federal waiver process. Capitated managed care has demonstrated its capacity to control costs compared to fee-for-service while maintaining access and improving quality. Using the standard State Plan Amendment process for these populations, in addition to the other populations that are already allowed to use this process, should be sufficient to make such changes. 2) Automatically Adjust the Medicaid FMAP During Economic Downturns. Medicaid is a countercyclical program. As the economy slows down, more people lose their jobs and health care coverage, meaning they turn to Medicaid. But state revenues fall during a recession, making it harder to fund the program at a time when more people need it. Increasing the FMAP automatically during times of economic distress would ensure access to Medicaid and would not leave states to make drastic cuts to benefits and eligibility to meet budget requirements. A counter-cyclical FMAP would also promote economic stability by maintaining the states ability to pay doctors, hospitals, clinics, and health plans. 3) Enhance State Flexibility in Co-payment Levels Subject to Community Norms. ACAP does not support enrollee cost-sharing as a way for states to create barriers to services. However, states should be given flexibility, in certain circumstances, to impose co-payments and premiums on the highestincome Medicaid enrollees. Higher co-payments or utilization limits should be allowed for services with inappropriately high utilization rates, such as the use of emergency rooms for non-emergency services.
i

Constituent studies available at http://communityplans.net.dnnmax.com/ResourceCenter/BibliographyMedicaidManagedCare/tabid/208/Default.aspx