Medicaid Managed Care - U.S. Senate Special Committee on Aging
Medicaid Managed Care - U.S. Senate Special Committee on Aging Medicaid Managed Care - U.S. Senate Special Committee on Aging
125 If we develop them now around existing measures, we are going to come back in 5 years, when we have conceptually better measures, and say, gee, it is too expensive to implement those. We need to think about information systems today that are flexible enough in providing encounter information that they will support the better conceptual measures that we have in the future. Ms. SMITH. If I could just elaborate on one point in terms of the lack of consensus about what are the key performance measures, what are the standard procedures, one ofthe recommendations of the study that we did was that there needs to be a forum where the different players-the States, the consumers, and the providers come together and attempt to come to some consensus about what kinds of measures and standards work best in this environment, at least in the preliminary stage, so that we will then know what to measure. Ms. CHRISTENSEN. Funny you should all mention guidelines and standards. Senator Grassley has an amendment in the Finance
126 er than a judgmental context, but I think that we are really looking at that state of the continuum, and I don't think we have seen a lot of improvement in that in, say, the last 4 or 5 years. It has improved somewhat, but it has not improved hugely in that amount of time our ability to nail down a methodology. There are things that you can do to compensate for the lack of risk adjustment. For example, a lot of States have stop-loss coverage, basically, for the plans-people that incur costs over $50,000, for example, the State will cover their costs in the fee-forservice system and will pay the plan on a fee-for-service basis. So there are all kinds of things you can do to cushion the lack of an adequate risk adjuster, but I think that we are still looking at something which is relatively primitive in its development. Mr. SCANLON. I would agree. I think there are two components here. One is the conceptual model that you use for risk adjustment, and while there has been progress made in that dimension, as Barbara indicated, it is there, but it has been relatively static for a while. Certainly, I think there is the issue of the administration or the implementation of one of those conceptual models. But the conceptual models have been built off data that have been available to the existing fee-for-service system. We have not turned around and said how we will administer these models in a managed care environment, when the world is predominantly managed care. How is information going to flow well so that we can risk-adjust and additionally set rates in the future? Today, we are very happy setting managed care rates based on fee-for-service experience and saying, gee, we are doing well, we got a discount. What if we have predominantly managed care, and we don't have this fee-for-service benchmark anymore to guide us in terms of rate-setting? Ms. CHRISTENSEN. One more question, and then we'll close. Go ahead. QUESTION. [Inaudible.] But I wonder how well we analyze the DRG system, which was [inaudible]. Mr. SCANLON. We don't want to wait until we have the perfect risk adjusters. We don't need the perfect risk adjusters to move forward. What we need to do is recognize the limitations of the risk adjusters we do have and to compensate for them appropriately. The reinsurance, or what Barbara referred to as the stop-loss provisions, and the risk corridors that I talked about are ways of compensating for the lack of a good risk adjuster. If you think about it, by using a pure capitation payment, you are betting that you were right in saying this is the amount we should pay. If you want to cover your bets and say we weren't necessarily right, we could be a little bit high, or we could be a little bit low, and you adopt reinsurance or a risk corridor, you have covered your bets in some respects. The other thing to do is to be very sensitive about maintaining or continuing the process of learning, to make sure that you are collecting data to understand your experience, and you will be able to, in some respects, relax your reinsurance, relax your risk corridors in the future if you are able to better risk-adjust in the future. i
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125<br />
If we develop them now around existing measures, we are going to<br />
come back in 5 years, when we have c<strong>on</strong>ceptually better measures,<br />
and say, gee, it is too expensive to implement those.<br />
We need to think about informati<strong>on</strong> systems today that are flexible<br />
enough in providing encounter informati<strong>on</strong> that they will support<br />
the better c<strong>on</strong>ceptual measures that we have in the future.<br />
Ms. SMITH. If I could just elaborate <strong>on</strong> <strong>on</strong>e point in terms of the<br />
lack of c<strong>on</strong>sensus about what are the key performance measures,<br />
what are the standard procedures, <strong>on</strong>e ofthe recommendati<strong>on</strong>s of<br />
the study that we did was that there needs to be a forum where<br />
the different players-the States, the c<strong>on</strong>sumers, and the providers<br />
come together and attempt to come to some c<strong>on</strong>sensus about what<br />
kinds of measures and standards work best in this envir<strong>on</strong>ment, at<br />
least in the preliminary stage, so that we will then know what to<br />
measure.<br />
Ms. CHRISTENSEN. Funny you should all menti<strong>on</strong> guidelines and<br />
standards. Senator Grassley has an amendment in the Finance<br />
<str<strong>on</strong>g>Committee</str<strong>on</strong>g> bill requiring HCFA to pull together a group to develop<br />
some guidelines and standards for people with special needs being<br />
served by managed care plans, and we are very, very hopeful that<br />
it makes it through rec<strong>on</strong>ciliati<strong>on</strong>, looking at a lot of the issues that<br />
have been talked about today-the medical necessity definiti<strong>on</strong>, the<br />
risk adjustment, the adequacy of provider networks and all those<br />
kinds of issues. So I think we are all talking about the same kinds<br />
of needs here.<br />
Related to the questi<strong>on</strong> of mandatory managed care, somebody<br />
asks, Isn't it true that it's difficult to compute cost savings for managed<br />
care in the l<strong>on</strong>g run, so that if the incentive is to go into managed<br />
care for folks because they are high-cost folks, can we really<br />
compute any cost savings?<br />
Anybody.<br />
Mr. SCANLON. Well, we are questi<strong>on</strong>ing today whether or not<br />
there are cost savings for managed care in the l<strong>on</strong>ger term because<br />
we have limited experience with managed care for different populati<strong>on</strong>s<br />
as well as <strong>on</strong> a broad scale.<br />
There are some that are resp<strong>on</strong>ding to the noti<strong>on</strong> that some of<br />
the slowdown in health spending that we have seen is really not<br />
cost savings that are going to c<strong>on</strong>tinue over time, but a substituti<strong>on</strong>,<br />
that we have substituted managed care for the fee-for-service<br />
provisi<strong>on</strong> of care.<br />
<str<strong>on</strong>g>Managed</str<strong>on</strong>g> care is effective in terms of eliminating some of the unnecessary<br />
services. It is effective in terms of getting some discounts<br />
from providers. Now, when faced with new technologies that individuals<br />
want, will it be able to make judicious decisi<strong>on</strong>s that everybody<br />
is happy with? I think that that is the questi<strong>on</strong> that we are<br />
facing for the future, and that is what may determine the overall<br />
growth of costs for managed care in the future.<br />
Ms. CHRISTENSEN. Are there any more questi<strong>on</strong>s?<br />
QUESTION. Questi<strong>on</strong> regarding where the managed care industry<br />
is <strong>on</strong> a scale of 1-10 in the area of risk adjustment.<br />
Ms. SMITH. I d<strong>on</strong>'t want to put the <str<strong>on</strong>g>Medicaid</str<strong>on</strong>g> agencies in a different<br />
positi<strong>on</strong> than the world at-large. I think that we are looking<br />
at risk adjustment being anywhere between about a 1 and a 2½2.<br />
I like the way you developing put it in the c<strong>on</strong>tinuum c<strong>on</strong>text rath-