HomeHealth Care NewsStates Struggle to Pay Bills to Medicaid Managed Care Companies

States Struggle to Pay Bills to Medicaid Managed Care Companies

States are looking to cut Medicaid spending, specifically on private managed care, to curb the financial devastation wrought by COVID-19.

States often contract out their Medicaid programs to be administered by managed care companies. Typically, the companies will get a set fee for every enrollee they manage. Due to declining revenues from the pandemic, states are having to take a serious look at the Medicaid programs, often the biggest cost driver in any state budget.

For example, Ohio, Michigan, and California are already making plans to cut rates to these payers, and more will probably consider this as an option since Centene and Molina—two of the largest managed care enterprises in the United States—have been posting large profits while some members delay treatment.

Ohio Gov. Mike DeWine announced in May he was cutting the state’s $22 billion annual Medicaid budget by $220 million, with most of the cuts to Medicaid managed-care companies.

Kimberly Murnieks, director of Ohio’s Office of Budget and Management, told the Ohio Capital Journal on May 7 that the Ohio Department of Medicaid regularly adjusts the per-member, per-month rates it pays to the five managed-care organizations that serve most of the 2.4 million Ohioans covered under the state’s Medicaid program based on their use of the program. Murnieks stated that many of those services have not been happening due to the pandemic, resulting in a natural adjustment to the rates to the managed-care organizations.

On the other side of the ledger, Centene’s net earnings tripled to $1.2 billion in the second quarter of 2020 due to a decrease in medical claims as members deferred care due to the COVID-19 pandemic.

Manage Medicaid with Patient Power

The bad guy in this story is the federal government for setting up the Medicaid program in a way that gives people few options, says John C. Goodman, president of the Goodman Institute for Public Policy Research, and co-publisher of Health Care News.

“A Medicaid mother can’t go to a ‘MinuteClinic’—we have them in Dallas, and you can get high-quality care at a reasonable price for about $70 to $75,” Goodman said. “Medicaid doesn’t allow Medicaid patients to go to any MinuteClinic, and instead they have to go to the Parkland Hospital emergency room—which serves as a safety net hospital–and then wait five or six hours, and the cost to Medicaid is much higher than what the minute clinic might have charged.”

There are more than 2,000 walk-in clinics in the country, and the studies show they have high-level care and follow standardized procedures just as well or better than traditional primary care physicians’ offices, Goodman says.

“They’re good quality, they’re inexpensive, they’re accessible, and the Medicaid population doesn’t have access to it,” Goodman said. “This is just one example of how we could expand care and reduce spending by just letting patients have access to this market.”


Kenneth Artz (kennethcharlesartz@gmx.com) writes from Dallas, Texas.


Kenneth Artz
Kenneth Artzhttps://www.heartland.org/about-us/who-we-are/kenneth-artz
Artz has more than 20 years’ experience in nonprofit organizations, publishing, newspaper reporting, and public policy advocacy.


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