Three Must-Haves in Your New Medicaid Strategy

So much can change in just a few months. Americans have filed more than 40 million claims for jobless benefits in the past 10 weeks, and the Kaiser Family Foundation estimates nearly half of those who lost their jobs thus far are eligible for Medicaid.

For comparison, an estimated 14.7 million people joined Medicaid from 2013 to 2019, according to estimates from the Medicaid and CHIP Payment and Access Commission.

While factors such as physical distancing may motivate a subset of Americans to wait to apply, preliminary state data already shows significant increases in Medicaid enrollment. Hawaii’s Medicaid program has received more than 21,000 applications since early March, an increase of 40 percent from this time last year. In April alone, Ohio added 140,000 individuals to its Medicaid program, which brings the percentage of the state’s population covered by Medicaid to 25 percent.

These signs foreshadow snowballing growth in Medicaid enrollment nationally. Lest we forget what we learned from the recession of 2008: Medicaid enrollment hit its high point more than a year after the recession started, in 2010.

The Increase in Medicaid Enrollment Will Affect Providers’ Bottom Lines

Job losses, tighter purse strings and abstruse reimbursements for telehealth will lead to significant adjustments in providers’ payer mix and margins. While the industry takes a closer look at value-based payment, we know financial volatility tends to intensify housing and food insecurity, which could in effect increase health systems’ costs and the need for programs that address social determinants of health.

Although the Medicaid population is not as homogeneous as the Medicare population, it’s likely safe to assume that a large percentage of the enrollees will be adults losing their commercial coverage. Therefore, COVID-19 will likely create a surge in adult Medicaid beneficiaries, as opposed to the babies and children that often comprise a majority of Medicaid recipients.

This group is more likely to have behavioral health issues than the general population, which may be heightened by COVID-19. Some of the new Medicaid beneficiaries may also have medical issues that worsened due to a lack of timely care: A recent Kaiser Foundation survey found that nearly half of adults (48 percent) say they or someone in their household have postponed or skipped medical care due to the outbreak.

In addition to the various health and social concerns of the population, providers will need to conduct financial assessments to understand the effect of Medicaid payments. Medicaid reimbursement is widely known to be the lowest of all the payers. While it is difficult to pinpoint Medicaid reimbursement in respect to Medicare and commercial rates, data suggests, on average, that Medicaid pays 72 percent of what Medicare reimburses.

To show what that might mean to a provider, here are some comparisons of Medicare and commercial recently published by the Kaiser Family Foundation:

• Private insurers paid nearly double Medicare rates for all hospital services (199 percent of Medicare rates, on average), ranging from 141 percent to 259 percent of Medicare rates across the reviewed studies.
• The difference between private and Medicare rates was greater for outpatient than inpatient hospital services, which averaged 264 percent and 189 percent of Medicare rates overall, respectively.

Three Must-Haves in Your Medicaid Strategy

Providers will need to swiftly assess the impact of these moving targets and build a comprehensive strategy that addresses population health needs, community partnerships and the health system’s capacity.

Your all-inclusive Medicaid assessments should include:

1. A snapshot of your current Medicaid community and their needs. A comprehensive community needs assessment helps provide better insight into the particular social determinants at play, and providers can use this intelligence to design programs and interventions that address concerns outside of the traditional healthcare delivery system.
2. Mechanisms already in place that align your health systems’ strategies with the needs of the community. The needs assessment will reveal programs providers can amp up or tweak to respond to the Medicaid community, as well as gaps.
3. Identification of areas for improvement. While brainstorming ways to better serve this community, providers need a cultivated, safe and open environment for their staff, clinicians and leaders to speak freely and ask questions about value-based payment reform, population health techniques, social determinants of health trends and other pressing issues. These insights are key to identify trends in concerns or comments that help direct executive leadership to areas of opportunity.

Providers should have the capability to draw on the experience from other health systems and learn from their challenges and opportunities in addressing the needs of their populations. With this information in hand, they can confidently map out a course for health improvement that yields positive and sustainable changes in their communities.

Bring industry best practices into your strategic roadmap. Premier’s customized Medicaid assessments and strategic initiatives will ensure that your organization is ready for the transitions post-crisis. Contact us to get started.

Further reading:

• Managing Medicaid Spending in the COVID-19 Era
• Ensuring Financial Sustainability Post-COVID-19