Yesterday, the Public Affairs Research Council of Louisiana (PAR) released a report examining the state’s new healthcare privatization initiative. The report, “Checkup on Bayou Health Reform: What Louisiana Needs to Know About Medicaid Managed Care Privatization,” calls for increased legislative oversight of the program and recommends increased public education and discussion about the state’s Coordinated Care Network (CCN) approach.

“The key public policy issue at this juncture is the need for effective oversight, accountability, and program authority, especially given the public dollars involved and the impact on citizens,” states the report, noting the administration’s decision to resist a strong legislative oversight function and to proceed with statewide implementation without the benefit of a pilot program.

Also a concern for PAR is that Louisiana Medicaid currently spends among the least in the country on a per-enrollee basis for the covered population. “That relatively low rate of spending could be a potential impediment for Coordinated Care Network companies seeking to cut health care costs through efficiencies and lower expenditures on enrollees while also finding room to make a profit.” Intense scrutiny is necessary to ensure that the failure to realize anticipated savings does not prompt companies to cut back on health care services truly needed by Medicaid recipients, said PAR.

At the heart of the report are the following four recommendations:
• The Legislature should assert its authority and take the lead in providing oversight of this program by establishing a special committee or commission on oversight of health care reform with bipartisan membership from the House and Senate and other stakeholders.
• DHH should ensure that the state maintains the authority and control of systems and processes and that all private managed care companies operate in a transparent manner. Companies should be held to the same standards as state agencies in terms of public records related to the Bayou Health contracts.
• DHH should adhere to the federal definitions of “medical care” and “administrative costs.” Some managed care plans have creatively redefined certain administrative costs as medical care to maximize profits and overhead. DHH should remain vigilant that any redefinitions are transparent and in the best interest of citizens.
• The Legislative Auditor should monitor the impact and effectiveness of the Coordinated Care Networks and be given access to information to perform its analysis and report its findings to the Legislature.

PAR notes that after 30 years of Medicaid managed care and despite repeated studies, there is no consensus on whether it saves money or improves quality. “The uncertainty surrounding managed care in general and CCNs in particular should alert the state to the need for strong oversight of every phase of the program.”

You can read the full report here.