United Cites State Savings in New Push for Medicaid Managed Care

Managed Medicaid

United Cites State Savings in New Push for Medicaid Managed Care

Reprinted from the April 29, 2010, issue of MEDICARE ADVANTAGE NEWS, biweekly news and analysis on the Medicare (and Medicaid) managed care programs.

It didn’t take long after the health reform law was enacted for UnitedHealth Group to position itself for some of the dramatically expanded business opportunities the statute is likely to produce on the Medicaid side. In a “Working Paper” from its year-old Center for Health Reform & Modernization and in a follow-up interview, the insurer makes the case for much greater use of managed care in both Medicaid and long-term care, emphasizing its potential to save states money. And United leaves no doubt that it sees itself as a big part of that growth.

United’s AmeriChoice division, which specializes in Medicaid, now operates in about half of the states, up 10 states in the last half decade, Rick Jelinek, AmeriChoice’s CEO, tells MAN. That is also a gain of about 20 states since United acquired AmeriChoice in 2002 and merged it with United’s own Medicaid operations, he notes. AmeriChoice’s revenues will be about $10 billion in 2010, he adds, up from about $4 billion in 2006.

“We intend to expand our geographic footprint and position ourselves” in the long-term care arena, Jelinek says. Growth in that segment, he points out, would come in conjunction with United’s Evercare unit, which Jelinek also oversees, and he contends that the potential already has been demonstrated in pilot projects in multiple states.

As for Medicaid managed care itself, “we’re the largest today and expect to remain the leader,” he asserts. Jelinek says AmeriChoice likely won’t be in 100% of the states, but it will continue “to expand beyond our footprint.” He declines to specify where the company will focus in that expansion.

There is no question, though, that United — like other industry observers — sees the potential as huge. A state-by-state impact fact sheet disseminated by United with the Working Paper projects a Medicaid enrollment expansion of 16.4 million by 2019 under the new federal Medicaid eligibility thresholds in the reform law. While Jelinek would not project how many of those enrollees AmeriChoice or United as a whole (and United is planning to phase out the AmeriChoice name in favor of “branding” as UnitedHealthcare) may get, he says that the company now has a 6% Medicaid market share, which corresponds to about 3 million members. Were this share to continue, he notes, it would add up to about a million more Medicaid enrollees for United.

Such prospects are realistic, he indicates, given states’ current and likely ongoing fiscal crisis. “The use of managed care is one of the few levers” to both cut costs and boost quality in Medicaid, and states therefore are likely to keep using it, he says. Jelinek envisions particularly large gains in Medicaid managed care for aged, blind and disabled (ABD) enrollees. Long-term care programs, he adds, often are not very responsive to seniors’ needs, and managed care can help in this, especially by better coordinating care.

The Working Paper itself projects that increased reliance on coordinated care techniques to provide coverage to new members would save $94 billion by 2019, of which $36 billion would accrue to the states. Further leveraging managed care to support people to live longer in their own homes and better coordinate between Medicaid and Medicare would save $140 billion, $60 billion of that for the states, according to the paper.

United’s new thrust to encourage states to deal with the upcoming Medicaid expansion with more use of managed care puts United and its AmeriChoice unit in a hitherto rare position — publicly using its Medicaid leadership role to push for expanded managed care use. AmeriChoice posted revenues for the first quarter of 2010 of $2.3 billion, up 22% from the year-ago period and unquestionably the highest in the industry, but it has not generally taken out-front public-policy positions.

The company’s enhanced public position comes at a time when many insurers, including some such as Universal American Corp. and Bravo Health that have not previously been in Medicaid managed care, are eyeing the field’s growth potential. While not commenting on any other firms, Jelinek says the market is “very, very, big,” with more than $350 billion in current expenditures.

“We’re not focused on competition; we’re focused on what we can do to improve quality,” he asserts.