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The headlong rush of state governments to turn their Medicaid services over to managed care companies experienced a rare detour recently when health officials in Washington state decided their version of that experiment was not working as they had intended and terminated the program.
Implemented early in 1997 in several counties in eastern Washington and abandoned on January 1, state officials had hoped - as have their counterparts in states throughout the country - to realize substantial fiscal savings from having the care of chronically ill and seriously disabled recipients of Supplemental Security Income (SSI) managed by private-sector insurers rather than state agencies.
In spite of optimistic predictions for it, the program did not turn out to be the panacea for Washington’s escalating Medicaid budgets once the state and the managed care insurers realized that they markedly underestimated the cost of providing the extensive and often intensive array of services that this population requires.
First-year costs for treating this population were running 30 percent to 35 percent above the premiums the state had agreed to pay the insurance companies to manage the care. These premiums had been set to reflect what the patients’ care had cost the state under Medicaid’s traditional fee-for-service payment system.
With the end of the Medicaid managed care program, known as Healthy Options SSI, Washington state’s chronically ill and disabled citizens "will be back on their own in the medical world," commented Tom Bedell, the state Medicaid agency’s finance director.
Bedell attributed the unexpectedly high costs to SSI recipients taking advantage of the easier access to services that was introduced as a hallmark of the new program. A major element of the experiment was the insurance companies’ hiring of a cadre of exceptional needs care coordinators (ENCC’s). They were responsible for outreach to chronically ill Medicaid beneficiaries who could benefit from the services available through the managed care companies under the new contracts.
But none of the parties had sufficient data to provide a clear portrait of the cost of delivering services to this more impaired and economically disadvantaged population, especially when these people are able to gain access to services far more easily than they historically could.
Now that the jobs of the ENCC’s have been terminated along with the managed care contracts, Bedell predicted that fewer Medicaid clients will be using the more comprehensive services. He said he hoped, however, that despite the expected dropoff in service usage, it would not return to previous levels where many seriously ill or disabled poor people never bothered to pursue help that was available.
Seattle psychiatrist Charles Huffine, M.D., told Psychiatric News that most of his psychiatrist colleagues "were very enthused" about the plan to include chronically ill and disabled SSI recipients - about 40 percent of whom are mentally ill - in the Healthy Options program. He noted that the patients would have gained improved access to care and at long last had "a point of accountability for their general health care."
Huffine, who is the Washington State Psychiatric Association’s liaison to a committee of the state medical society that reviewed the new Medicaid plan, confirmed that the level of service needs this population presented "was far beyond projections . . .and the plans simply could not absorb the financial risk."
Unfortunately, said Huffine, who is also medical director for child and adolescent programs at the King County Mental Health Division in Seattle, "we are in the terrible position of having to stop a program that was about to uncover a pocket of unmet medical need not seen since the initiation of Medicaid and Medicare in the 1960’s."
One lesson the Washington state experience clearly teaches is that "there are certain patient groups for whom managed care just doesn’t work," observed Katherine Becker, J.D., deputy director for state affairs in APA’s Division of Government Relations.
"For chronically ill or seriously disabled people, one-size-fits-all programs are not feasible," she told Psychiatric News. "Not only are their service needs different from those of other populations, but they often need extra help just to navigate the system. When you add to these problems that Medicaid is seriously underfunded anyway, it is easy to see why forcing these people into managed care just to save money is a recipe for failure."