Managed care Medicaid merits a look

When the Beshear administration on Monday announced its plan to bring more of Kentucky's Medicaid under a managed care plan, the timing was a bit of a problem — to say the least.

Just a few days before Gov. Steve Beshear and Cabinet for Health and Family Services Secretary Janie Miller unveiled their proposal, state Auditor Crit Luallen's office released a report blistering Passport Health Plan for wasteful spending by its top executives and questionable distribution of tens of millions of dollars.

Passport, which serves Jefferson County and 15 nearby counties, just happens to be the state's sole existing managed care plan for Medicaid services.

To the casual observer, then, Monday's announcement might have seemed like an endorsement of a wasteful approach to managing the state's $6 billion Medicaid budget. But the scathing report from the auditor's office was directed at the actions of Passport officials and the lack of proper oversight of the agency — not at the managed care approach Passport uses.

Beshear has ordered a full examination of Passport's finances, which should settle the question of whether Passport itself saved the state any money.

On Thursday, after the Passport board decided to replace Dr. Larry Cook with a new chief executive officer, the governor called for a more thorough housecleaning and a "top to bottom" restructuring of the agency. Passport needs to heed his words.

However, there is evidence suggesting the managed care model, properly operated, can produce Medicaid savings. A 2009 report from the Lewin Group, a health care policy research and consulting firm, said its analysis of 24 studies strongly suggested managed care plans have resulted in savings ranging from relatively small amounts up to 20 percent.

Kentucky desperately needs to get better control of its Medicaid spending — and soon. The expansion of managed care the administration announced Monday is part of a plan to fill a $142 million hole in the Medicaid budget in the current biennium.

For much of the ongoing recession, Kentucky's Medicaid rolls have expanded at a rate of about 3,000 a month. If the health care reform legislation passed by Congress survives, tens of thousands of additional uninsured Kentuckians will become eligible for Medicaid as its provisions take effect.

For now, with the exception of issuing a request for proposal for a vendor to manage radiology and imaging services, the Beshear administration is just gathering information on the benefits of the various forms of managed care.

And re-creating Passport — basically a consortium of Louisville-area health care providers led by the University of Louisville — elsewhere in the state isn't the only option. Some private companies exist solely to administer Medicaid managed care plans.

So, as problematic as the timing of the announcement may have been, the Beshear administration's interest in better managing the care of Kentucky's Medicaid patients is well justified. Any savings to be had from the move can't come too soon.