consumer directed medicaid an overview jon blum june 14 2007 n.
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Consumer-Directed Medicaid: An Overview Jon Blum June 14, 2007. Consumer-Directed Models Are A Departure from Traditional Medicaid. Increasing consumer control, and therefore risk, of Medicaid services diverges from the “defined benefits” Medicaid model

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consumer directed models are a departure from traditional medicaid
Consumer-Directed Models Are A Departure from Traditional Medicaid
  • Increasing consumer control, and therefore risk, of Medicaid services diverges from the “defined benefits” Medicaid model
  • Objectives include containing Medicaid expenditure growth, creating incentives for beneficiary use of preventive and lower-cost services, and promoting personal responsibility
  • States have several tools and options available to develop consumer choice initiatives
    • Health savings accounts and Health Opportunity Accounts
    • Section 1115 waiver authority
    • Deficit Reduction Act (DRA) benchmark plans
  • Various models are emerging, i.e. the direct services model, the insurance model, or a combination thereof
    • State examples include Florida, Kentucky, South Carolina, West Virginia
florida consumer directed managed care

Services

Funding

Cost-Sharing

Florida: Consumer-Directed Managed Care

Catastrophic coverage for all services above established spending threshold – up to maximum benefit limit

Catastrophic Care

Managed Care Organization*

Risk-Adjusted Premium**

Varied Benefit Packages

All Beneficiaries

State

Comprehensive Care

Nominal co-pays (varies by plan)

Co-pays

Other health care services

(e.g. OTCs, vitamins)

Enhanced Benefits

Enhanced Benefits Account

$ for participating in wellness activities

Employer-Sponsored Insurance

*In some circumstances (e.g. rural areas), MCOs may elect not to manage the catastrophic care for beneficiaries. Instead, the state will retain a portion of the premium to provide catastrophic coverage.

**Risk-adjustment will be based on eligibility group, age, gender, and health status.

west virginia dra benchmark and healthy rewards accounts

Services

Funding

Cost-Sharing

West Virginia: DRA Benchmark and Healthy Rewards Accounts

All mandatory and some optional services*

Fee-for-Service

Provider

Basic Plan

Nominal cost-sharing

Parents & Children

Basic benefits plus additional prescription drugs, mental health services, and diabetes care

Enhanced Plan

Fee-for-Service

Medical Home

Nominal cost-sharing

State

Member agreement

Physician verifies compliance

Medicaid covered services

All Others

Fee-for-Service

Provider

Nominal cost-sharing

* Services will be more limited than the state’s current benefits.

policy considerations research findings
Policy Considerations/Research Findings
  • Private health plans appear to respond to incentives
  • Higher cost sharing tends to discourage use of some needed services
  • Mixed evidence that financial incentives will encourage low-income beneficiaries to obtain more preventive services
    • Mercy Health plan reported that immunizations increased when parents offered gift coupons1
    • California Medicaid managed care plans found that few beneficiaries redeemed gift cards1
  • State of risk adjustment does not perfectly predict future healthcare costs
  • Physician associations argue that access declines under consumer directed managed care

1 Center on Budget and Policy Priorites

questions for consideration
Questions for Consideration
  • Will managed care plans continue to participate if budget/reimbursement environment becomes more constrained?
  • Will mix of cost-sharing and financial incentives encourage the “correct” mix of health care services?
  • Will state bureaucratic systems respond fast enough to adjust benefits to respond to changing healthcare situations
  • How can policy encourage provider participation under consumer-directed models?
  • Will risk adjustors prove sufficiently robust?