Environmental Scan to Identify the Major Research Questions and Metrics for Monitoring the Effects of the Affordable Care Act on Safety Net Hospitals. c. Collaboration and Experience with Medicaid Managed Care

06/01/2013

The ACA also includes a number of provisions intended to accelerate the movement toward more integrated delivery systems and other reforms intended to improve efficiency, bend the cost curve, and improve quality of care for patients. These provisions are likely to have a profound impact, because historically the safety net has been fragmented in most communities, similar to the health care system in general. The safety net has often been referred to as a “patchwork of providers, funding, and programs” that varies substantially across states and communities—and one where safety net providers compete with each other at least as often as they cooperate (IOM 2000). Over the past decade, various forms of collaboration and coordination between safety net providers in many communities have increased as a way to respond to increasing demand for care by the uninsured, address gaps in access and quality of care, and stretch decreasing resources and funding. These collaboration efforts include fairly modest efforts to establish centralized referral networks for specialty care and also more comprehensive, community-wide coordination involving safety net hospitals, community health centers, and local government health departments (Cunningham et al. 2012; Hall et al. 2011).

At the same time—and largely separate from efforts by safety net providers to integrate—Medicaid has long experimented with managed care through either risk-based managed care or Primary Care Case Management programs. The proportion of Medicaid beneficiaries enrolled in some type of managed care continues to increase nationally—to 74 percent as of 2011 (Kaiser State Health Facts). Along with the expansions of Medicaid coverage in the ACA, enrollment in Medicaid managed care is likely to expand greatly. And although most of the managed care enrollees continue to be relatively low-cost children and families, many states are seeking to expand managed care to the sickest and highest-cost beneficiaries—the aged, blind, and disabled—who previously have been excluded from Medicaid managed care (MACPAC 2013). States realize that controlling the costs of their sickest beneficiaries is essential to controlling program costs, although questions remain as to whether managed care will be able to control the costs of these populations without harming medical care access and quality (Sparer 2012).

For safety net hospitals, it will be crucial to participate in Medicaid managed care networks in order to retain existing patients and attract newly insured patients covered by Medicaid. Although safety net hospitals feared that the movement to Medicaid managed care in the 1990s would create more competition for Medicaid patients, safety net hospitals have generally maintained or increased their volume of Medicaid patients; many safety net hospitals operate Medicaid managed care plans themselves, such as Denver Health and Wishard Health Services in Indianapolis (Rawlings-Sekunda and Kaye 2001). Although it was intended that Medicaid managed care would lead to decreases in hospital emergency department and inpatient care use, because beneficiaries are required to have a primary care provider who manages and coordinates their care needs, research on the effects of Medicaid managed care on hospital utilization is mixed (Sparer 2012). Some state Medicaid managed care plans have been able to reduce costs and hospital use by improving access to primary care, but in other cases health plans lack the clout to fundamentally change delivery systems used by poor people, which are often fragmented and lack coordination between primary and specialty care as well as between outpatient and inpatient care.

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