Medicaid Managed Care - U.S. Senate Special Committee on Aging

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Although technical advice for calculating and adjusting rates based on these new
factors is beyond the scope of this publication there are a number of publications
available to those interested in these subjects. Three of particular interest are:
* Richard Kronick and Tony Dreyfus, The Challenge of Risk Adjustment
for People with Disabilities: Health Based Payment for <strong>Medicaid</strong>
Programs, (Princeton, NJ: The Center for Health <strong>Care</strong> Strategies, 1997).
* Tony Dreyfus, Using Payment to Promote Better <strong>Medicaid</strong> <strong>Managed</strong>
<strong>Care</strong> for People with AIDS , (Washington DC: The Henry J. Kaiser
Family Foundation, 1997). This publication was produced for The
Kaiser Family Foundation Workgroup on <strong>Medicaid</strong> for Persons with
AIDS, which was convened by The National Academy for State Health
Policy.
* Issues specific to financing and payment for dual eligibles are discussed
in The National Academy for State Health Policy's publication,
Integration of Acute and Long Term <strong>Care</strong>, due to be released in early
September, 1997.
Sharing Risk
States may wish to consider sharing risk with plans that serve special populations.
As previously discussed, there is significant variation in cost among members of
special populations. Until states implement and test systems for calculating and
varying payment rates that better accommodate the wide variation in cost they may
wish to share risk with plans. This could help ensure that neither the plans nor the
state are harmed financially during the implementation of <strong>Medicaid</strong> managed care
for elderly persons or persons with disabilities. This will in turn help reassure
beneficiaries and their advocates that plans will not inappropriately deny care due to
insufficient funds to cover the cost of care.
Even after states develop rate payment methods that work for persons with
disabilities and the elderly, some states may want to consider continuing to share
risk with contractors for some subpopulations. For example, the accepted treatment
protocols for treating persons with HIV has changed rapidly in the past. Sharing
risk is one way of providing protection to plans concerned that changing treatments
may create significant increases in the cost of caring for some subgroups. Some
models of risk-sharing, such as risk-corridors, may also provide states an
opportunity to recoup any excessive profits plans could make if changes in
technology actually lowered the over-all cost of caring for <strong>Medicaid</strong> beneficiaries.
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