Care Transformation Center Blog

Medicaid margins are eroding. Here's how to protect your organization and your patients.

by Petra Esseling, Gillian Michaelson, Natalie Trebes

Managing Medicaid patients is tougher than ever before as expenses have started to outpace revenue. While Medicaid expansions have led to less uncompensated care, providers are spending more on higher-cost services for their aging Medicaid populations—services that aren't adequately reimbursed.

Here are four key considerations for setting a successful Medicaid management strategy and protect eroding margins.

1. Determine readiness to take on risk and plan your road ahead

As the economics of fee-for-service Medicaid become increasingly unsustainable, providers face a growing incentive to transition to alternative payment models. A shift towards risk-based contracting, however, requires a shift in focus from treatment to prevention. A particularly challenging undertaking given that the combined impact of low reimbursement rates, an intricate contracting environment, and a complex patient population make managing Medicaid risk more difficult than managing risk in any other payer segment.

To succeed, providers must create an intentional strategy to guide your transition into Medicaid risk by assessing three key questions:

  1. Are you currently ready to take on Medicaid risk?
  2. If you're ready, what's the right entry point into Medicaid risk?
  3. How are you planning to advance your Medicaid risk strategy over time?

Join us for our panel on Succeeding under Medicaid Risk to ask Gillian Michaelson about readying yourself for taking on risk.

2. Build complementary partnerships with payers, and benefit from their experience and expertise

There's a lot to learn from payers. Medicaid agencies and plans have been grappling for a while with questions providers are asking today. To reduce total cost of care, their focus has been three-fold and in line with provider goals: meeting the needs of disengaged, complex patients; rewarding high-quality, low-cost, accessible care; and reducing inappropriate ED utilization.

As providers transition into Medicaid risk, they can benefit from the experience and resources of plans and gain by aligning with plans' current priorities. In particular, advanced plans offer infrastructure and access support to providers and programs to address social determinants of health to patients.

Join us for our panel discussion to ask Natalie Trebes about who payers seek out as provider partners and how they can support you in managing risk.

3. Set an intentional management strategy with sustainable behavioral health and non-clinical support

However, providers cannot solely rely on payers and favorable contracts. Providers need a focused management strategy tailored to the specific needs of the Medicaid population. Extending care management services offered to commercial or Medicare patients is often insufficient.

Behavioral health, non-clinical needs, and lack of access to low acuity services are the key drivers of avoidable, costly acute utilization. So, to succeed under Medicaid risk, providers need to find ways to sustainably expand access to behavioral health and non-clinical support services.

Join us for our panel to ask Petra Esseling about strategies to reduce avoidable ED use and sustainably expand access to behavioral health and non-clinical services.

4. Improve access to preventative care via community partnerships or strengthened internal services

Medicaid patients' access to low-acuity services is growing worse. Frustrated by low reimbursement rates and high patient complexity, some independent physician practices have closed their doors to Medicaid. But this approach increases the pressure on health system-employed physicians, because the same strategy doesn't work for them.

Turning Medicaid patients away from ambulatory care increases the risk that they will use the ED instead. Health systems must strengthen Medicaid patient access to physician services by partnering with existing community clinics, establishing Medicaid-focused primary care clinics, or bolstering Medicaid access across existing practices.

Join us for our panel discussion to ask Sarah O'Hara about ways you can improve access to ambulatory care for Medicaid patients.

Make your patients healthy and your ED happy with community paramedicine

For organizations assuming population health risk, top priorities include reducing the rates of avoidable ED visits, avoidable admissions, and readmissions. But most organizations don't have all the staff they need to engage patients and support robust care management.

Our infographic explains how community paramedics can help extend the care team to achieve these system goals.

Download the Infographic