Medicaid Managed Care Program Cost Taxpayers $328 Million Last Year, Report Says
Insurers that contract with the state to manage the care of low-income Medicaid patients are expected to save money, in part by negotiating lower prices with health providers. But a new report by the state inspector general found that the plans pay higher fees to many hospitals and doctors than the traditional Medicaid program pays for the same services.
In the 2011 fiscal year, the higher payments cost taxpayers $328 million, the report said.
Hospitals that dominate their region or have a highly recognizable name and strong reputation were paid the most, up to 2.5 times the standard Medicaid rate, the investigation found.
“We are talking about a lot of money, especially a lot of money that’s being paid to select providers with geographical and other market power, not to others,” said Gregory W. Sullivan, whose last day as inspector general is Friday.
The report did not examine whether the managed care plans, which rely on case managers to prevent unnecessary care and help people manage chronic illnesses, save money over the long term. It focuses instead on shorter-term variation in payments to health care providers.