Expanding Medicaid Managed Care for High Cost Sub-Populations: Evidence From Illinois
Medicaid Managed Care (MMC) plans have been a central part of the Medicaid program for more than 20 years. But most plans are focused on low cost populations of children and parents: MMC accounts for over 50% of Medicaid enrollment but only 20% of total Medicaid expenditures. One reason for the imbalance between enrollment and spending is that most states have not shifted complicated and expensive patients (disabled and older adults) into MMC. That is beginning to change. Several states have developed MMC programs that are specifically designed for aged, blind, and disabled (ABD) populations.
This study evaluates the effects of the Illinois Integrated Care Plan (ICP), which is a comprehensive and mandatory MMC program for disabled and older non-dual eligible Medicaid beneficiaries. The ICP program was pilot tested in a set of suburban counties near Chicago. To understand how ICP affected health care costs and utilization, we obtained claims and encounter records on ABD non-dual eligible Medicaid beneficiaries who lived in the pilot counties or the city of Chicago. We started following both groups 9 months before the launch of ICP and followed both groups for three years after the program started. After the program started, the suburban group was enrolled in the MMC program and the Chicago group continued with the conventional FFS Medicaid program.
We constructed inverse propensity score weights (IPW) to create a Chicago comparison group that closely resembled the suburban group at baseline. With the matched sample in hand, we estimated difference in difference and event study regression models of the effects of the ICP program on several measures of health care utilization and costs. We found that the ICP program did not initially reduce the state’s costs of providing care to the ABD population. However, some savings emerged in recent months after the state reduced the capitation rates it paid the MCOs. We also show how the shift to ICP made the state’s costs more predictable by reducing the monthly volatility. On the utilization side, we found that the ICP program led to small increases in the utilization of primary care physician services and small reductions in ER utilization relative to the matched Chicago comparison group. The program also increased the use of prescription medications and dental services, but did not affect hospital inpatient service utilization. Together, the results paint a somewhat favorable portrait of the ICP program. During its first three years of operation, the ABD specific MMC program seemed to increase utilization of non-emergency health services for a complicated population of patients without substantially increasing costs to the state Medicaid program. Indeed, the most recent data suggests that the program may actually have started to save the state money relative to the FFS alternative.