Shifting Louisiana's Medicaid system to coordinated care networks will save the state money, improve patient outcomes and may draw national insurers, according to a report by HealthLeaders-Interstudy.

 

The networks will be made up of insurance companies and provider groups, the report said. The coordinated care networks may be paid a capitated fee for primary care services or as fee-for-service primary care case management groups that could earn "shared savings" payments by reducing costs.

 

Alan Levine, secretary of the state Department of Health and Hospitals, said the move to a coordinated network model is critical.

 

"This year alone, even though we've made a series of three provider cuts, we're still spending $200 million more than what we budgeted," Levine said. "It's a program that's growing faster than the state's ability to pay for it."

 

And even as the Medicaid program's costs have grown, nobody can argue that the outcomes are what's desired, Levine said. Ideally, if the state is going to pay more one would expect better outcomes but that's not the case.

 

"We consistently rank at the bottom of health rankings," Levine said. "This year we're at the highest we've ever been ranked, 47."

 

The improvement was largely the result of the state's immunization incentive program, he said.The state ranked No. 49 in America's Health Rankings; the rankings are published by United Health Foundation, the American Public Health Association and Partnership for Prevention.

 

Medicaid now covers around 1.2 million Louisiana residents. Federal health insurance reforms will change the Medicaid eligibility level from 26 percent of the federal poverty level to 133 percent. As a result, DHH expects Medicaid enrollment to soar to 1.6 million to 1.8 million by 2014, with annual costs of more than $2 billion.

 

"Given the huge, huge increase that states are going to face in Medicaid enrollment, most states are grappling with that by expanding their managed care," Levine said.

 

More than 40 states already use managed care in their Medicaid programs, Levine said. The states that do not are moving to managed care.

 

Louisiana's Medicaid program is now a fee-for-service model. Critics say the current system does little to prevent patients' health problems and results in more visits to emergency rooms and more hospitalizations and higher costs.

 

"We've got to fundamentally change the model," Levine said. "Otherwise we just keep doing the same thing we've been doing, and ask ourselves why we keep getting the same outcomes."

 

Moving so many people into Medicaid – as much as 40 percent of the state's population – will make Louisiana a very unattractive place for physicians to practice, Levine said. Doctors would much rather practice in a state where a higher percentage of the population is covered by private insurance.

 

That puts Louisiana at a disadvantage when it comes to attracting new physicians, Levine said.

 

The coordinated care model won't entirely fix that but it will align the financial incentives with healthcare goals, Levine said.

 

In a fee-for-service system, no one is really accountable for the ultimate care of a patient, Levine said. In a coordinated care network, there are rational assignments of patients to primary care physicians, and one entity is ultimately responsible for the care that's provided.

 

For example, suppose Louisiana decides it wants to increase the percentage of children getting well child checkups from 30 percent to 70 percent, Levine said. The state can offer incentives to the networks that achieve that goal.

 

Now Louisiana has aligned the financial incentives with health policy, Levine said. The state could also take similar steps to get smokers into smoking cessation programs or obese people into programs to reduce their weight and the likelihood of developing Type II diabetes.

 

"As you do these things and we can measure these things, then we're going to give you financial incentives," Levine said. "We've now converted Medicaid from just being an open checkbook, pay and chase system, to a rational system that's focused on improving outcomes, and at the same time reducing the cost to taxpayers."

 

Levine said he's encouraged but not surprised that national insurers and major hospital systems want to be part of a coordinated care network.

 

Our Lady of the Lake Regional Medical Center and the LSU charity system have agreed to do a coordinated care network together, Levine said. Willis Knighton Hospital in Shreveport and Hammond-based North Oaks Medical Center have also said they're interested in forming networks.

 

Hospitals are attracted to the coordinated care networks because all the patients who are failed by the lack of an integrated healthcare system wind up in the hospitals, Levine said.

 

"The hospitals want to see a system that's more organized, that reduces the number of admissions for people that don't need to be hospitalized," Levine said. "And frankly, as you get control of the utilization side, then you can actually afford to pay better rates for the services that we are getting."

 

National insurance companies pay specialists a higher reimbursement rate than the state's Medicaid program, Levine said. The reason insurers can do that is they have a more rational approach to managing utilization.

 

"People get the services they need in the right place as opposed to people bouncing around in a fee-for-service system until they end up in the hospital," Levine said.