Providers Adjust to Managed-Care Contracting

A Period of Adjustment
– Modern Healthcare

Modern Healthcare interviewed Manatt government and healthcare partner James Lytle and Manatt Health Solutions director Anthony Fiori for an article discussing how post-acute providers are adjusting to Medicare and Medicaid managed-care contracting.

Modern Healthcare reports that as more beneficiaries enroll in Medicare Advantage and as more states look to rein in costs through expansion of Medicaid managed care, post-acute providers are facing the kind of managed care growing pains hospitals experienced in the 1990s. That's been accelerated by the development of alternative payment models such as accountable care organizations in the private sector as well. Industry insiders are concerned that managed care might have harmful effects on vulnerable post-acute patients, and those concerns have risen in New York state, which requires Medicaid patients needing extended long-term care to enroll in a managed-care plan.

"What we've seen in New York as it's been expanded is a great deal of distress, especially among small agencies," said Lytle. "They were just used to billing the state. Now they have to confront the challenge of billing 10 to 12 plans that have slightly different requirements. I'm sure they'll get over that learning curve, but there have been cash-flow issues and significant breakdowns in payment as the organizations try to figure out what this new world looks like."

In states with Medicaid managed care for LTSS, the plans typically oversee both the acute-care and long-term services and supports benefits. That push is underway in New York state, which has addressed the growth in spending for long-term care services, particularly home care. Beginning in August 2012, the state required that any Medicaid recipient who needs more than 120 days of home- and community-based services must enroll in a managed long-term care plan.

Fiori told the publication that he considers skilled-nursing care the "last frontier of risk." It tends to be the last benefit that states bring into their Medicaid managed-care programs because it's usually the most difficult to manage. Lytle added that it's also the most expensive form of care.

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