Message from the State Health Officer
Donald E. Williamson, M.D.
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Regional Medicaid managed-care bill could save money, provide better care
Op Ed by Donald E. Williamson, M.D., State Health Officer and Chair, Alabama Medicaid Advisory Commission
Medicaid reform proposals now in the Alabama Legislature could help save hundreds of millions of taxpayersí dollars and improve medical care that the agency provides to about 940,000 lower-income and disabled Alabamians. Medicaid is vital to meet the health-care needs of our citizens.
Roughly one in five Alabamians received services from Medicaid last year. Alabama Medicaid covers about 53 percent of births, 47 percent of our children, and almost two-thirds of nursing-home residents. However, Medicaidís huge costs must be controlled.
Medicaid in 2009 accounted for an estimated 16 percent of all health-care spending in Alabama. The agency is budgeted to spend $5.98 billion in this fiscal year, about 22 percent of all state, local, and federal dollars appropriated by the Legislature for 2013.
Medicaid is taking growing portions of the stateís General Fund for non-education services, from 25 percent in the 2008 fiscal year to a budgeted 35 percent this year. Many factors driving this growth are beyond our control. For instance, the number of people served by Medicaid grew from about 750,000 people in 2008 to 938,000 last year, probably because of the recession.
But we can take steps to improve care and save money. Alabamaís Medicaid agency now has little managed care, in which a case worker, doctor, or other professional oversees and coordinates the care of a Medicaid patient to find his or her best and most efficient treatment.
Legislation sponsored by state Sen. Greg Reed, R-Jasper, and state Rep. Jim McClendon, R-Springville, would open the door to locally controlled managed care. It would let hospitals, doctors, and other Alabama health providers form groups called regional care organizations that could sign contracts to provide medical care to Medicaid beneficiaries on the stateís behalf in return for negotiated payments per beneficiary.
If a regional care organization could provide care that met Medicaidís quality standards for less money than it was getting from Medicaid, it would make money. If it couldnít, it would lose money.
Each organization would have an incentive to oversee and improve patient care to reduce costs: A patient who isnít readmitted to the hospital because she had regular follow-up checks with her doctor likely is a less-costly patient and a healthier person.
The near-identical Medicaid managed-care bills, Senate Bill 340 by Sen. Reed and House Bill 454 by Rep. McClendon, say that Alabamaís Medicaid agency could sign a contract with a regional care organization only if it judged that care of Medicaid beneficiaries would be better, more efficient, and less costly than existing care.
Medicaidís actuary estimates that a managed-care system created by either bill would reduce projected Medicaid spending in Alabama by $750 million to $1 billion in total Medicaid spending from fiscal year 2015 - 2019. This would save Alabama taxpayers $250 to $350 million over that time period compared to what would have been necessary if no changes were made.
A 33-member advisory committee formed by Gov. Robert Bentley, which the Governor asked me to chair, recommended in January that Alabama be divided into regions, and that a community-led network coordinate the health care of Medicaid patients in each region, with networks bearing the risks of contracting with Alabama to provide that care.
The legislation sponsored by Sen. Reed and Rep. McClendon and endorsed by the Governor and me would help bring those recommendations to life. The Medicaid agency would have to draw regions by October 1. Regional care organizations would have to be ready to sign contracts no later than October 1, 2016.
Sen. Reed and Rep. McClendon have worked long hours, talking with other lawmakers and with dozens of people representing hospitals, doctors, civic coalitions, and other groups, in an effort to pass a law that would protect Medicaid patients, health-care providers, and Alabama taxpayers. Both SB 340 and HB 454 will do that.
I want to thank them and Governor Bentley for their leadership on this legislation. This legislation is the start of a journey which will result in Medicaid transformation in Alabama.
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