Managed-Care Medicaid in New York

A New York Times article this week took a look at the consequences of a Medicaid change engineered by Governor Cuomo in the hopes of saving money: switching to “managed-care” for NY Medicaid programs.

The basic idea is straightforward: switch from paying providers a “fee for service” and instead make a specific payment to provide proper care–whatever that care might be. The logic goes that when medical care providers receive a fee for specific actions performed, they are incentivized to provide more services, even if they aren’t needed. By switching to a set payment amount, those providers will be incentivized to simply provide the most efficient care possible. They will also be more competitive, trying to increase quality of care to attract more Medicaid participants.

The Reality
That argument has intuitive sense, and many policymakers have touted the benefits of managed care both in New York and throughout the country. But, as observers found here, the reality is far more complex. That is because medical care providers discovered that with the managed-care program they can increase profits merely by signing up more seniors in need of care–not necessarily changing past practices.

In other words, instead of focusing on cost-effectiveness, many providers have focused on attracting new low-income seniors for various programs. This all has resulted in an increase in Medicaid participants, increasing the overall costs of the program.

As a Slate article on the situation explained, “[I]t is a total failure from the standpoint of Cuomo’s fiscal policy objective.”

But that is not to say that signing up under-served seniors in the state is necessarily a bad thing. There are many good reasons why it is helpful for these individuals to receive certain assistance or participate in programs that they otherwise did not know about. For one thing, providing access to these helpful tools early-on is one way to stave off the development of more serious accidents or deterioration in health that require more extensive care or moves into New York nursing homes.

What Does This Mean for the Future of the NY Medicaid System?

Discussion about the perverse effects of the switch to managed-care is simply one more part of the larger issue of financial management of the NY Medicaid system. It will provide more ammunition for those hoping to change eligibility rules or otherwise alter how New Yorkers sign up for the program while preserving assets. It remains important to follow along with state lawmakers to see if any real legal changes are on the horizon.

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