On August 3rd, representatives from AARP and prominent figures in health care convened a meeting to discuss the results and conclusions from the AARP Public Policy Institute’s recently released report, “Keeping Watch: Building State Capacity to Oversee Medicaid Managed Long-Term Services and Supports”.

The goal of the report is to evaluate the oversight of long-term services and supports (LTSS) managed through Medicaid – a model that has state Medicaid agencies pay a flat monthly risk-based rate to care for a patient, rather than the traditional pay-for-service model.  The Medicaid managed approach to LTSS comes with a host of efficiency gains and improved health care delivery through care coordination.  But moving towards this model makes it essential that there is proper oversight in order to make sure that the states, health care providers and patients are all being treated fairly and that an equilibrium of health outcomes and efficiency is being reached.

The report was compiled based on interviews with 23 senior state Medicaid officials and a representative from a quality review contractor in eight states where Medicaid managed LTSS programs (MLTSS) have been implemented.  From these interviews, the team assembling the report identified oversight practices that fell into three categories: norms, promising practices, and caution flags.  Norms are oversight practices that are required by federal rules; promising practices go beyond these regulations and have beneficial outcomes; caution flags pose a risk to patients or to the success of the MLTSS system.

Encouragingly, no caution flags were identified in any of the eight states, and multiple promising practices were identified.  Promising practices included conducting regular revisions of contracts to include higher performance targets, offering incentives to exceed quality standards, auditing internal management processes to make sure contract requirements are being met and using automated workflow tools to ensure that reports are delivered and acted upon.

Reflecting upon the report’s conclusions, Susan Reinhard, Senior Vice President at AARP and Director of the AARP Public Policy Institute, pointed out many of the opportunities that MLTSS presents.  These include better care through better coordination; fewer avoidable hospital admissions; a reduction in unnecessary use of institutional care; and less medication mismanagement. In general, Dr. Reinhart said, MLTSS creates a “one-stop shop for accountability” instead of having to separately oversee all payers, providers, agents, etc. as in a traditional fee-for-service model. Dr. In addition, MLTSS gives states budget stability because they pay a single fixed fee.

Along with the opportunities that MLTSS presents, there are also significant challenges.  The primary challenges are that states have limited experience with MLTSS, and that there is a financial incentive for care providers to restrict access to care that takes their costs beyond their flat Medicaid rate.  Determining the monthly rate at which the MCOs should be paid is extremely difficult, as James Toews of the Administration for Community Living at HHS pointed out; ““We don’t have a lot of actuarial experience in rate setting and figuring out how we actually provide supports that people need.  In fact, we have a very long history of vast overspending on a lot of wrong things, so recalibrating that into a capitation model that really is tailored to individual needs and is budget sensitive is a relatively new task.”

In the end, moving towards the MLTSS model is about quality care for patients. Medicaid patients that require LTSS are some of the most difficult to care for because they often have functional disabilities and multiple conditions, and the complex care that they require must be administered by a highly functional system.  With the eight states from the study clearly on the right path to administering a thriving MLTSS system and many other states looking to implement their own plans in the near future, this report suggests a challenging but bright future for this vulnerable long-term care population.

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