- Low-spending Medicaid managed care plans with no cost sharing cause broad reductions in the use of healthcare services that ultimately worsen beneficiary satisfaction and health, according to a new paper published in the National Bureau of Economic Research.
- Researchers looked at Medicaid beneficiaries in New York City randomly assigned to one of 10 Medicaid managed care plans, all with no cost-sharing, from 2008 to 2012. They sought to determine the extent to which plans can influence spending without cost sharing and the tradeoffs of any spending reductions.
- They found enrollees in low-spending plans used fewer low-cost, high-value services such as diabetes and cancer screenings, and fewer high-value drugs used to treat diabetes, asthma and severe mental illnesses.
Previous research on health spending has focused mostly on factors such as cost-sharing — to determine whether giving people more "skin in the game" can prod them to seek out more low-cost and high-value care.
The new NBER paper seeks to determine how other cost-controlling methods payers have, like using narrow provider networks, negotiating lower rates and pushing follow-up visits and medication adherence, can influence whether cuts are targeted at low-value care.
The authors found, however, that those tools were not particularly precise.
"While many think of cost-sharing as a 'blunt' instrument and tools used by managed care plans as more of a scalpel, targeting low-value services, our evidence suggests otherwise: Managed care tools are as blunt as cost-sharing," co-author Timothy Layton said on Twitter in a thread about the findings.
The potential for saving money without sacrificing care is important for the Medicaid program, which can be a burden of strapped state budgets. In 2017, MMCs covered nearly 70% of all Medicaid beneficiaries, according to the authors.
Researchers looked at the second-largest MMC market in the country, New York City, from 2008 to 2012. City residents make up about two-thirds of the state's Medicaid population.
Beneficiaries who miss the deadline to actively choose a plan are auto-assigned to one of 10 competing plans in that market. Looking at some 70,000 enrollees randomly assigned to MMCs in the city, the plans with no difference in cost-sharing actually varied greatly in spending.
They found that enrollees auto-assigned to the lowest-spending plan will generate about 30% less in healthcare spending than if enrolled in the highest-spending plan in the market.
Against some prior research they found low-spending plans do not target low-value services. Low-spending plans reduce the use of high-value services, such as screenings for diabetes and various cancers. They also reduce the use of high-value drugs, including those to treat asthma and diabetes, along with antidepressants, antipsychotics and contraceptives, according to the paper.
They found low spending plans caused a significant increase in avoidable hospitalizations, and enrollees assigned to those plans are more likely to switch out of them post-assignment.
"There is no indication that low-spending plans achieve savings by promoting high-value care and achieving offsets or by targeting low-value care for elimination," the authors wrote. "Instead, similar to what happens when consumers face a high deductible, supply-side managed care tools appear to constrain virtually all types of care."