Medicaid Beneficiary Fluctuations are Leading to More Costs

Cheryl Clark, for HealthLeaders Media , July 14, 2009

Medicaid's "cumbersome" policies often lead to patients not getting or filling their prescriptions, receiving important diagnostic tests, or managing their chronic disease, which will lead to more costs down the road, according to a new report released by the Association for Community Affiliated Plans.

The Medicaid system, which varies by state, requires beneficiaries to show proof more than once a year that they and their children are still eligible for the public program. This leads to many falling off the rolls, which is a cycle that interrupts their continuity of care and jeopardizes their health.

Additionally, with so many people "churning," which means dropping out and back in to the Medicaid rolls every few months, the federal goal of measuring the quality of the patient care has become extremely problematic if not impossible, according to the group, which represents 42 nonprofit safety-net health plans serving six million beneficiaries in 23 states.

The Association for Community Affiliated Plans proposes that Congress pass a "Medicaid Continuous Quality Act," which would establish 12-month continuous eligibility, similar to most private health plans throughout the country.

While such a policy change would be more expensive, it would have economies of scale, the report said. For example, an adult enrolled for just one month in 2006 had an estimated average expenditure of $625 that month; someone enrolled six months had expenditures per month at $469; and an individual enrolled for a year had a monthly cost of $333.

One reason for the reduction, the report said, is that with more continuous coverage, patients receive more preventive and primary medical care reducing the need for more expensive hospitalization. Another reason is that some uninsured people join Medicaid at their most needy time, because they are ill, but their need for care "becomes less acute after those initial needs are addressed," the report said.

The 30-page study, "Improving Medicaid's Continuity of Coverage and Quality of Care," was prepared by Leighton Ku and colleagues from the George Washington University Department of Health Policy. It was based on statistics from the 2006 Medical Expenditure Panel Survey conducted by the federal Agency for Healthcare Research and Quality.

Under current practice, the report estimated, Medicaid will cover 68 million people during the course of this year, but 13 million will not be enrolled in any given month mainly because their eligibility expired and they did not have a chance or the means to renew it. That results in lowered payments from the state and federal government to the providers and plans, whose officials say that administratively, getting those people eventually re-enrolled becomes an even bigger administrative and costly headache.

Officials from several health plans said creating policies that provoke churning is a common practice in states that are trying to reduce costs. "States use the redetermination process to save money in times of tight budgets," says Elaine Batchlor, MD, chief medical officer for LA Care, a Medicaid plan that has 750,000 members. "They tend to increase the frequency of redetermination; that's one way to decrease the number of people covered."

Even some states that have a 12-month continuous eligibility policy may throw roadblocks into the process by requiring periodic reporting of income, residency or other data, on a more frequent basis, "so the person may lose coverage after, say, three months if she fails to submit a periodic report in time," the report said.

The renewal process, originally designed to prevent welfare fraud, has become too complicated and difficult, the report said. For example, some states require in-person renewal rather than recertification online, by e-mail, regular mail, or over the phone.  Requirements may include documentation of income, assets, and residency. Often, low-income people have difficulties meeting these requirements additionally because they have unstable living situations and don't receive renewal notices on time, have unstable unemployment, or limited literacy or English comprehension, the report said.

Margaret Murray, chief executive officer for ACAP, notes that the process may cost providers and plans another $180 for each enrollee who temporarily falls off the rolls. The amount may seem small, but can add up quickly. "This is an issue that is integral to the health reform debate," she says.

"Because of the complex administrative processes, families often do not know when their Medicaid certification periods expire, maybe dropped without knowing it, and do not know why they lost coverage," the report says.

Georganne Chapin, president and CEO of Hudson Health Plan of New York, with 90,000 Medicaid enrollees, gave an example. "Even one month of missed eligibility can be devastating," she says. For example, a patient who is in Medicare for nine months, but doesn't renew and misses one month "doesn't take her blood pressure medication. She has a stroke, one she's never coming back from."

The report lists those with the best coverage continuity policies as Arkansas, Connecticut, the District of Columbia, Hawaii, and Louisiana, while the worst were Florida, Georgia, Kansas, Montana, and Nevada.

Continuity of coverage also depends on other factors. The average Medicaid enrollee was covered about 78% of the year, but those who are blind and disabled were covered at 90%, and those who were disabled were covered at 82%, presumably because they were on a fixed income. Children were covered at 80%. But non-elderly, non-disabled adults had the worst coverage period, about 68%, according to the report.

Serious health problems can result from even brief interruptions in care for people with diabetes, asthma, and chronic obstructive pulmonary disease, which require regular use of medications, such as steroid inhalers. Without those drugs, patients may need acute hospitalization.

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