Tasked with finding ways to save money, Idaho legislators say they need more time to study Medicaid
A panel of Idaho lawmakers tasked with studying ways to save money through the state’s Medicaid program didn’t reach a conclusion on how to restructure funding for the program.
The Idaho Medicaid Managed Care Task Force — which has met eight times starting this June while the Idaho Legislature is out of its official legislative session — released its final report on Tuesday, outlining suggestions to continue with Idaho’s existing Medicaid structure and introducing draft legislation to create another panel of state lawmakers to oversee Medicaid.
The task force focused on finding ways to save money in the state’s Medicaid program, looking at how services in the program are funded by a mix of private companies, doctors and the state’s health department running benefits for Medicaid patients.
The panel of Idaho lawmakers didn’t make a final decision on a key question it has been focused on: Who should manage health care for Medicaid enrollees — private companies or doctors?
Medicaid management by private companies is typically called managed care. That is the most popular form of managing Medicaid programs used by 40 states.
Idaho policymakers call the model of doctor-managed care “value-based care.” The model, established in 2020 in Idaho, provides patient health care outcome benchmarks that health care providers must meet to earn cost savings.
“The task force was unable to reach a consensus on whether to recommend adoption of a comprehensive Medicaid managed care program in Idaho,” the task force’s final report said. “Some members support a comprehensive managed care program or at least greater use of managed care, while other members believe the current value-based care model is showing promise and should be given more time.”
Idaho’s Medicaid program is split between different funding structures. The state oversees some aspects of care, like inpatient mental health care, while private managed care companies manage other aspects of care, like dental care, non-emergency medical transportation and outpatient mental health.
Report calls for continuing Idaho Medicaid’s status quo
The final report calls for continuing Idaho’s Medicaid funding structure for the time being. It calls for continuing using value-based care organizations and looking to improve the model, continuing to contract with managed care organizations where they’re already overseeing care, and tapping the Idaho House and Senate health committees to create quality measures for managed care and value-based care organizations. Those aspects of the report were approved on a 6-3 vote.
Managed care companies and value-based care organizations have both claimed they’ve saved Idaho money over months of meetings. A state-ordered report recommended managed care to save costs over time, but the committee also heard mixed testimony that managed care leads to less spending on health expenses or better outcomes for patients.
The task force’s final report calls for closer monitoring of the state’s Medicaid contracts.
If the draft legislation is approved, a new panel of Idaho legislators would meet as ordered by the chairmen of the House and Senate Health and Welfare committees. The chairmen for both committees co-chaired the Medicaid Managed Care Task Force and would co-chair the new panel.
“Contrary to some narrative that’s going on out there, I don’t think we’ve made any conclusions that Medicaid is not beneficial to our state,” task force co-chairman Sen. Julie Van Orden, R-Pingree, said at the start of the final meeting on Nov. 7. “… I would just like the public to know that we are not moving in a direction to remove Medicaid from the state of Idaho. That we want to still serve the populations that need Medicaid and need assistance. And that we’re just trying to find a way to make this an efficient system by possibly putting more eyes onto it. And I don’t think anything hurts to have more eyes on it at a time when dollars can be very scarce.”
The task force voted 5-4 for the draft legislation to be included in the final report. Some legislators who opposed it argued that the issue could be studied by existing health committees in the Idaho House and Senate, rather than creating a new panel of lawmakers.
Health committees in the House and Senate should explore options to make the Medicaid budget predictable and stable, the final report concluded.
Medicaid is Idaho’s biggest state government program, with a $4.6 billion budget request for next year. Idaho Medicaid — mostly funded by the federal government — has drawn scrutiny from state lawmakers over its growing budget. In the program’s budget request for next fiscal year, the federal government would pay about $3 billion of Medicaid’s costs. Idaho Medicaid has requested funds to support 62 new staffers next year to, in part, focus on containing costs.
Questions surrounding Idaho Medicaid left unresolved
The task force heard hours of testimony over months about Idaho’s value-based care system, where medical providers only manage inpatient and outpatient hospital services. And there’s only one year of cost-savings data available for value care organizations, which were first implemented in Idaho in 2020.
Representatives for value-based care organizations, citing early promising saving reports, asked the task force to allow the program to mature over more time.
The state contracts with 11 value care organizations that cover 242,648 people on Medicaid. The value-based care organization contracts in 2023 began to include the Medicaid Expansion population, a group of the so-called working poor that gained access to Medicaid in 2021 after the income eligibility threshold was lowered.
Some legislators saw promise in the value-based care model. But legislators were also skeptical about the program, pointing out that contracts with value-based care organizations limit covering high-cost care and that organizations aren’t responsible for covering the costs of pharmaceutical drugs, which were Medicaid’s largest and fastest growing budget area last year. Legislators in October called for more oversight into the state’s Medicaid contracts, the Idaho Press reported.
“Is this something you could see two or three years down the road?” Rep. Josh Tanner, R-Eagle, asked value-based care organizations earlier this month about whether they could handle covering pharmacy drugs.
“With pharmacy management, I do think there is opportunity for us to achieve some additional savings,” said Dani Jones, chief operation officer at St. Luke’s Health Partners, a large value-based care organization.
Sen. Kevin Cook, R-Idaho Falls, said before pharmacy benefits are added to contracts, pharmacy costs must be controlled.
“I would love to see us do that eventually. But right now, my opinion is pharmacy is a runaway train, and I think we have to get that under control first as a state,” Cook said.
It isn’t clear how many people will be enrolled in Idaho Medicaid in the long run. Medicaid had an average of less than 450,000 enrollees in fiscal year 2023, which ended in June.
The state had removed at least 121,000 people from Medicaid by September, when the Idaho Department of Health and Welfare finished evaluating the eligibility of people who state officials flagged as likely ineligible for Medicaid.
But Idaho couldn’t prove everyone removed was actually not eligible for Medicaid. Idaho officials removed about 77,000 people from the program for not responding to the state’s requests for information. At least 13,000 Idahoans removed from Medicaid this year have gotten back on the program, an official announced earlier this month. Anyone eligible for Medicaid can enroll at any time.
Who manages which Medicaid benefits in Idaho?
Idaho’s Medicaid services are managed by a mix of private companies, health care organizations and the Department of Health and Welfare itself.
So far, value-based care organizations have received $10.8 million from the state in savings out of a pool of $60.8 million in total savings in their first year, Medicaid Administrator Juliet Charron told the task force in September. The state received the rest of the savings.
The company Molina manages Medicaid benefits for people dually eligible for Medicaid and Medicare. A company representative told the task force in September that its contract has saved at least $7 million.
Mental health services for Idaho Medicaid are managed by Optum Health. The contract, under litigation, was managed for 10 years by Optum Health. The state has signed onto a new contract that would put Magellan Health in charge starting next March.
The new contract puts one company in charge of managing both outpatient mental health care like therapy visits and inpatient care like hospitalizations. The previous contract only tasked Optum with managing outpatient care, while the Idaho Department of Health and Welfare managed inpatient care, the Idaho Capital Sun previously reported.
Optum claimed, in its lawsuit against Idaho awarding the contract to Magellan, that it saved taxpayers around $400 million.
Idaho Medicaid dental care is managed by a company called MCNA. A previous task force meeting heard testimony on dentists being limited in their ability to accept Medicaid patients due to low reimbursement rates. MCNA representative Shannon LePage told the task force on Sept. 11 that the program’s list of providers was growing.