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LESSONS IN MEDICAID MANAGED CARE FROM ARIZONA

Volume 29, Issue 506                                                        January 7, 2008

Matthew Gever

Arizona believes it has figured out the right strategy to make managed care work in Medicaid.  At NCSL's Fall Forum, held in November 2007, the state with the longest-running, best-known Medicaid managed-care program in the country offered some lessons to other states.

Known as the Arizona Health Care Cost Containment System (AHCCCS), the Grand Canyon State's program was established in 1982 under an 1115 waiver—the first—ever statewide Medicaid managed-care system.

The system is typical in that it contracts with health plans and other providers, paying them a monthly capitation amount prospectively for each enrolled member. Multiple evaluations over the years have found that Arizona's system helps to control costs in areas such as pharmacy and long-term care.

Currently, Arizona has the third lowest average annual payment per member, spending $3,035 per patient, with only California and Tennessee spending less. Additionally, managed care has helped the state reign in the growth of Medicaid costs while simultaneously increasing enrollment. An analysis from the Lewin group found that Arizona's Medicaid expenditures grew by an average of 6.8 percent per year under managed care. By comparison, the group estimates that expenditures would have grown by 9.9 percent per year under the traditional fee-for-service model.

Below are some of the points made by Anthony Rodgers, director of the AHCCCS.

Providers: Provider networks should meet the specific needs of the different problems faced by patients within the system, thereby improving access to care and allowing for easier  navigation of the system. "One of the reasons the disabled population is so anti-managed care is often times there is no network designed around them," said Rodgers.

Having a network in place also helps to reduce costs. Case managers can direct beneficiaries to appropriate care providers within the network, keeping patients out of the emergency room and containing costs.

Employee Retention: Reducing staff turnover is also an essential piece of cost containment and improved health-care delivery. "The staff, and their core competency over time, is what makes managed care work," said Rodgers.

Agencies need staff who are competent and able to interpret the myriad of regulations and legislation. Additionally, staff longevity allows employees to get to know the patients and the community better, whereas continually new staff have to learn from the beginning about the community. Agencies can accomplish reduced turnover rates by providing a flexible work environment and through information technology. One example from AHCCCS is a  program called ‘Virtual Office,’ which allows staff who perform certain functions, such as eligibility determination and claims processing, to work full-time from home. An evaluation of the program found that employee turnover and absenteeism were reduced as a result this program
 
Data Collection and Reporting: Having proper data collection and reporting also is essential. Any Medicaid agency without a data warehouse and with no capacity for producing data to scrutinize the effectiveness of a program is "really driving blind," said Rodgers. This also allows agencies to compare the cost and quality of competing providers, a critical component of market competition.

Timely Reimbursement: States can actually save money through accurate and timely payments to providers. More important than how much a provider is paid is whether or not they get their payment with minimal fuss, Rodger said. When this is the case, providers are more open to negotiating rates and fees. "If you pay them on time and accurately, they will take less in terms of dollars."

© Copyright 2008, State Health Notes