Connecticut is Taking a Different Approach to Managed Care
Unique Approach to Medicaid Under a Managed Fee-for-Service Model
THE VBP Blog
April 27, 2023 – About a decade ago, Connecticut made a bold decision to diverge from their traditional Medicaid managed care system to assume full financial risk for the 529,000 people under their Husky Health program. This move effectively severed ties with private insurers as the state shifted to what they call a managed fee-for-service model.
If you’re wondering why this is such a big deal, let us break it down for you. Most states use managed care systems for their Medicaid programs. In fact, we would even go as far as saying Medicaid managed care is the rule, not the exception, as 41 states currently use managed care for their Medicaid programs. In these programs, states contract with private insurers to manage healthcare services for Medicaid beneficiaries. Connecticut, however, chose a different path and assumed direct control of their Medicaid program.
So, how is that working out for Connecticut? And more importantly, how has that shift worked out for consumers? Keep reading as we take an in-depth look at what is going on in Connecticut and whether they are finding success under the unique managed fee-for-service model.
How is Connecticut’s Medicaid Managed Care Program Different?
Connecticut’s Medicaid Managed Care program is different because they don’t have one. The state uses what they call a managed fee-for-service program. Known as the Husky Health program, it has been in operation for a decade now.
Why did they make the switch? According to several articles, the state government believed that the existing managed care system was riddled with issues like inadequate provider networks, poor care coordination, insufficient oversight, and growing administrative costs. Patient advocates complained about denied services, beneficiaries expressed their frustration at the lack of access to care, and state officials became disgruntled with health plans’ refusal to share data on costs and claims.
Spurred by all of this, in 2012, they ended the $800 million contracts with private insurers. The state assumed full financial risk for over half a million Medicaid beneficiaries under the Husky Health program, believing that it would give them more control over cost containment and quality improvement.
The Husky Health program covers adults and family members covered by Medicaid, as well as children enrolled in the Children’s Health Insurance Program (CHIP). The state adopted a self-insured system similar to those used by large employers and entered into contracts with three companies to offer administrative services under Administrative Services Only (ASO) agreements. These contracts facilitate the approval of payments for hospitals, physicians, and other providers catering to Medicaid and CHIP members on behalf of the state.
Has Connecticut Found Success Under the FFS Managed Care Model?
The Husky Health program is built on the foundation of a person-centered model, which emphasizes the importance of care coordination and preventative care. The care of Medicaid beneficiaries is still managed, just under a different state-run model. But how successful has that model been? So far, the fee-for-service managed care program has seen promising results.
One of the most significant advantages of Connecticut’s managed fee-for-service program has been the financial savings. According to estimates, the state saved an estimated $50 million in the first year of the program’s implementation and has seen a consistent 2% to 3% reduction in costs each year since. The average cost per patient, per month, has also decreased to $670 from the $718 it was in 2012. Administrative costs of running Connecticut’s Medicaid program also declined and are currently less than the national average.
These savings have been attributed to the state’s ability to negotiate lower rates with healthcare providers and implement cost-containment measures more effectively than private insurers. There is also more transparency with the state government directly managing the healthcare services. That means it is easier to track where the money goes and ensure that it’s being used effectively.
Medicaid beneficiaries have also seen improved quality of care, which is the most important success indicator for a managed care program of any type. Under this model, the state has more control over the healthcare system, allowing it to directly address issues like provider networks, care coordination, and oversight, so Medicaid beneficiaries can get the care they deserve. Because there is increased efficiency and less administrative burdens, 7% more providers are willing to take Medicaid patients under this model, which has led to fewer patients seeking routine care in the emergency room.
While there have been successes under the FFS Managed Care program, it’s important to acknowledge that this approach isn’t without its challenges. Some healthcare providers have expressed concerns about lower reimbursement rates associated with the managed fee-for-service model. In fact, in 2019, the state settled a lawsuit that the Connecticut Hospital Association and other hospitals filed in 2015 to challenge the hospital fees that the state had established while others appealed the Medicaid rates or sought retroactive adjustments.
Additionally, under the new fee-for-service managed care program, the state government must now shoulder the entire financial risk for the healthcare of over half a million residents. By taking full financial responsibility for Medicaid beneficiaries, Connecticut has placed a significant burden on its own shoulders. Any unforeseen medical crises or surges in healthcare costs might strain the state’s budget and resources, which might not be as flexible as those of private insurers.
The Husky Health program has shown promising results in the short term, but it’s hard to say how well it will fare in the long run. While costs have decreased overall from 2012-levels, the last few years have seen a slight but steady rise in per patient per month costs and overall payouts. It remains to be seen whether this model can sustain its success.
While Connecticut has found some success under their innovative model, it is unlikely to spark a max exodus from managed care because most states have found success with their managed care programs. Statistics chose that Managed Care saved states over $6.4 billion this year. Even states that have quit Medicaid managed care like Oklahoma or held out on the transition like North Carolina have made the commitment to managed care.
What is Unique About Husky Health Program?
One of the unique aspects of the Husky Health Program is the concept of “medical homes.” Under this approach, primary care physicians receive additional compensation for coordinating patient care. To be eligible, medical practices must reserve spaces for Medicaid patients, use electronic medical records, and provide off-hours coverage to prevent patients from defaulting to emergency rooms.
Over 100 practices and 1,332 physicians have qualified for this program, and providers say it allows them to monitor patients more effectively. Patients have also noticed a difference. Under the new system of care coordination and integrating electronic medical records, there is more communication, which leads to enhanced access to care and better health outcomes.
And even though Connecticut does not have a typical Medicaid managed care program, the Husky Health program also recognizes the importance of addressing social determinants of health (SDOH) to improve overall health outcomes for its beneficiaries. One way the Husky Health program addresses SDOH is through the provision of resources and training for healthcare providers. The program offers a comprehensive list of SDOH resources on its website to help providers identify and address the social and economic factors affecting their patients’ health.
Furthermore, the Husky Health program actively collaborates with community organizations and local agencies to address SDOH in a more comprehensive manner. Through these partnerships, the program can effectively connect beneficiaries with resources and services that address the root causes of health disparities, ultimately contributing to improved health outcomes for Connecticut’s Medicaid population.
Another important aspect of the Husky Health program is that Husky C covers long term services and supports (LTSS) for people with disabilities. Connecticut also has a strong focus on rebalancing via Money Follows the Person program to reduce reliance on institutional care and expanding access to community-based Long-Term Services and Supports (LTSS) like home care and home health care for individuals with disabilities. This includes specialized care coordination services through home and community-based waivers that are designed to integrate care and allow individuals to remain living independently at home.
Another interesting aspect of the Husky Health program is the CT Behavioral Health Partnership that provides behavioral health services. By integrating behavioral and physical health, Husky Health aims to provide whole-person care to improve overall health outcomes. Under this model, the primary goal is to provide access to a more complete, coordination, and effective system of community based behavioral health services and support. Through care coordination and integration of care, Husky Health aims to provide whole-person care.
As you can see, Connecticut’s unique take on managed care has had its fair share of ups and downs. While the Husky Health program has delivered some impressive results regarding cost of care, it’s essential to remain aware of the critical success indicator—quality of care, access to care, and the ability for consumers to remain living independently in the community. Connecticut’s managed fee-for-service program has showcased the benefits of a state-run Medicaid system, but time will tell how the program fares as advanced are made in typical Medicaid managed care models. As the Husky Health program continues to evolve, quality of care, access to care, and health equity need to remain at the forefront of all decisions.
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About the Author
Fady Sahhar brings over 30 years of senior management experience working with major multinational companies including Sara Lee, Mobil Oil, Tenneco Packaging, Pactiv, Progressive Insurance, Transitions Optical, PPG Industries and Essilor (France).
His corporate responsibilities included new product development, strategic planning, marketing management, and global sales. He has developed a number of global communications networks, launched products in over 45 countries, and managed a number of branded patented products.
About the Co-Author
Mandy Sahhar provides experience in digital marketing, event management, and business development. Her background has allowed her to get in on the ground floor of marketing efforts including website design, content marketing, and trade show planning. Through her modern approach, she focuses on bringing businesses into the new digital age of marketing through unique approaches and focused content creation. With a passion for communications, she can bring a fresh perspective to an ever-changing industry. Mandy has an MBA with a marketing concentration from Canisius College.