Examining Medicaid Managed Long-Term Service and Support Programs: Key Issues To Consider – Say Ahhh! A Children’s Health Policy Blog

By Laura Summer, Georgetown University Health Policy Institute

(Editor’s Note:  Given the increasing interest in Medicaid managed care among states eager to achieve cost-savings, we asked our colleague Laura Summer to blog for us on her latest report on managed care. Her report focused on long-term care services but it provides some helpful insights into broader managed care proposals.)

Currently, a number of states are contemplating a shift
to covering new populations and long-term service and support benefits through
capitated payments to traditional risk-based managed care organizations (MCOs).
Particularly in light of pressures to balance state budgets, the approach is
touted as a means to deliver services in a more cost-effective manner. Other
advantages cited include the potential to change the balance of care in favor
of community-based services and to promote better service coordination and
integration as compared to the traditional fee-for-service delivery model. A
managed care approach may be one means of providing higher quality care in a
more efficient less costly manner, but before embracing the approach, states
should take time to evaluate the likely outcome of program changes.
Establishing a high quality program is a complex process that requires initial
investments to ensure that new arrangements will be effective and viable over
the long term.

Experience with and evidence about the impact of Medicaid
managed long-term service and support programs (MLTSS) is limited.  Relatively few states currently use
capitated models to manage care for the elderly or individuals with
disabilities, the populations most likely to require LTSS.  Research to date indicates that
relative to fee-for-service programs, MLTSS programs reduce the use of
institutional services and increase access to home and community-based
services, but there is little definitive evidence about whether the model saves
money or about how it affects outcomes for consumers.

Program design is an important component of state MLTSS
initiatives. The extent to which MLTSS programs cover institutional services,
medical care, or behavioral health services, in addition to community-based
LTSS, affects MCOs’ ability to coordinate services and manage costs
effectively. Other significant program features to consider are whether
enrollment in Medicaid MLTSS plans is mandatory or voluntary and whether the
MCO is sponsored by a commercial, non-profit, or governmental entity.  In light of budget shortfalls, and
particularly if government downsizing is occurring, states may have diminished
capacity to develop, implement, and monitor new MLTSS initiatives. Planning and
start-up periods should be long enough to allow state agencies to collaborate
to make complex program design choices, to work with CMS to obtain the
authority to operate new programs, and to consult with stakeholders, including
consumers, providers, and MCOs.

Community-based organizations play a vital role in
ensuring an adequate supply of long-term services and supports, and it is
important to consider their role in a managed long-term care system.  These entities often have long-standing
ties with consumers by making LTSS referrals or providing services.  In a managed care environment,
community-based organizations in some states function as MCOs or participate in
MCO provider networks. 

Strong state oversight of MCOs is essential, and quality
measures are needed.  When states
delegate functions to MCOs, they cannot cede responsibility for management and
guidance, especially for the very vulnerable populations that require LTSS.
Significant components of effective oversight include explicit contract
language about plans’ responsibilities, early attention on the part of states
to determining how performance will be measured, and ongoing feedback from
consumers and providers to help monitor program operations.  A major challenge is that few quality
measures for LTSS have been developed or tested.

Certain program features promote a shift to more
community-based and better-coordinated services.  The array of services for which MCOs are responsible and at
risk may affect their ability to coordinate services effectively or achieve
diversions from institutions or transitions from institutions back to the
community. The switch to managed care also raises questions about who bears
responsibility for and has the capacity to address the lack of affordable
accessible housing alternatives and inadequate pools of qualified formal
caregivers, which continue to be significant barriers to keeping people who
need LTSS in the community.  

Efforts to improve the quality of services and deliver
them in a more efficient manner are worthy goals, but if MLTSS programs are to
succeed, careful design should be based on a thorough understanding of the
strengths and needs of the various populations that use them. It is important
also to retain aspects of current home and community-based service programs
that are considered effective. The vision and responsibility for Medicaid MLTSS
programs rests with states. It is essential for states to have time, expertise,
and financial resources to consult with stakeholders, shape programs, attend to
administrative details, clarify expectations, and monitor program operations so
that they can strike the right balance between managing care and managing

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