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The return of Medicaid
redeterminations and the resulting changes in the risk pool could mean a more
expensive-to-cover mix of members for managed care organizations, according
to a recent webinar convened by the American Academy of Actuaries. Experts say
that Medicaid managed care organizations will likely lose healthy, employed
members, but retain sicker members —
and could face artificially inflated costs related to unnecessary
disenrollments.
Disenrollment processes
will vary by state
- States can
resume Medicaid eligibility redeterminations as of April 1, which means
that private Medicaid health plans will see heavy turnover as all of
their members are checked for eligibility by state Medicaid agencies.
- Some members
will have their enrollment renewed without their knowledge as states
complete redeterminations on an ex parte basis. The ex
parte renewal process requires states to make a good-faith effort
to retain Medicaid enrollees by, if possible, confirming their income
and eligibility status through existing data sources before removing
them from the rolls.
- The goal of
the ex parte renewal process is to minimize unnecessary
disenrollments that might harm patients. That’s the cause of what’s
known in the managed care industry as “churn” — a state of affairs that
in Medicaid often means eligible beneficiaries lose their insurance
membership for administrative reasons. Those patients might reenroll
later, after a coverage gap.
- But other
members not cleared by ex parte processes will have to respond
to communications
from state Medicaid agencies, which they may not receive, fill out
incorrectly, or ignore. Some states are further along than others —
according to research by the Kaiser Family Foundation, eight states
started redeterminations in February, 15 began in March and 28 are
waiting until April to begin.
Healthier members are
likely to leave Medicaid
- “It’s important
for state decisionmakers — and actuaries, of course — to recognize the
impact of fluctuating
membership, that which it has had and will continue to have on
average costs or acuity,” said Sterling Felsted, an associate director
at Guidehouse and a member of the Academy’s Medicaid committee, during
the March 14 webinar. In other
words, if decision makers “think getting rid of 10% of the [Medicaid]
population is going to result in a 10% cut to their budget, they're
going to be fairly surprised.”
- “People tend to
seek coverage when they have a need, as opposed to when they are
immediately eligible,” Felsted added. “This means when new entrants tend
to cost more than existing members….As those urgent needs are addressed,
the average cost of individuals tends to decrease over time.” However,
“when people leave the program, it’s often the lower acuity members who
leave…in order for the acuity of a population covered by a plan to be
consistent, the upward and downward pressures on acuity must balance
out.
- “On average,
the members who have stayed on are the ones with lower-than-average need
or acuity. We expect that most Medicaid plans will have experienced
lower-than-expected trends over the last couple of years,” Felsted
continued. “We expect that when they start removing these [low-need]
individuals, it's going to drive a noticeable spike in [plan-wide]
acuity.”
- “The next year
will be very interesting for state budgets,” Felsted added. “The phase
down of the enhanced FMAP…is going to cause total costs to go down. But
this is going to be offset by the general increase in average acuity at
the member level for many of their populations.”
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