Medicaid is facing growing pains

Medicaid, which along with the smaller Child Health Insurance Program covers 37% of US children, is undergoing a big transformation even as it is expanding significantly.

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At the same time, the program has ongoing problems that could keep it from working at top efficiency, according to a new report from the Government Accountability Office (GAO), the watchdog agency of Congress.

The program is expected to add 10 million enrollees to the 2013 total of 72 million in the next 5 years, and that “may stretch healthcare resources and exacerbate challenges to ensuring access to care,” says the GAO.

Medicaid spending, which is shared between states and the federal government, is expected to rise from $529 billion to about $700 billion over 5 years, attributed in part to the continuing implementation of the Affordable Care Act (ACA). It accounts for the second-largest share of state spending, following elementary and secondary education.

Meanwhile, the program’s basic characteristics are changing. The Centers for Medicare and Medicaid Services (CMS) has granted waivers for “demonstration” programs in individual states for doing some things differently. According to the GAO, in 2011 these demonstrations made up one-fifth of federal Medicaid spending, but they had increased to almost one-third last year.

Some of the demonstrations that have specifically targeted children include child and adolescent respite services: the Office on Children and Family Services Programs committees on special education direct care program; early intervention services; childhood lead poisoning services; child and adolescent addiction and mental health services; pediatric palliative care; tobacco control; and newborn screening.

Arkansas and Iowa have also been approved to use funds for premium assistance for private health insurance through the health exchanges.

In a June report, GAO had said, “How the approved expenditures for the state-operated programs and funding pools would promote Medicaid objectives was not always clear in [the Department of Health and Human Services’ (HHS)] approval documentation.”

Next: What about Medicaid's move toward managed care?

In addition, although demonstrations are not supposed to cost more than what the traditional spending would have, GAO has estimated CMS has approved spending limits that were billions higher for the demonstrations.

Medicaid is also moving more to managed care, with states using it in more areas and more populations. In 2014, 37% of expenditures went to managed care and premium assistance.

In one example of concerns about managed care, GAO says that more could be done to ensure that states with inadequate managed care dental provider networks take action to strengthen them.

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Also, with improper payments in the whole Medicaid program estimated at $17.5 billion in 2014, GAO says setting appropriate rates for managed care organizations is one key point for oversight.

Altogether, GAO says the potential for “sweeping changes” to payment and delivery systems has implications for access, quality, and costs. Issues may include enrollees potentially losing limits on cost-sharing and certain benefits that were traditionally mandatory.

In the midst of these changes, Medicaid enrollees have reported access to care comparable to privately insured people. However, they report problems in getting specialty care including mental health and dental care.

In 2012, GAO noted that officials in about half of states reported challenges in getting enough participating specialty providers, including for pediatric services. In data from 2008 to 2010, it found that 21% of people with Medicaid-covered children said it was “only sometimes” or “never” easy to see a specialist, compared with 13% of those with privately insured children.

Data from 2007 to 2009 indicated that 14% of noninstitutionalized Medicaid-covered children potentially needed mental health services, but most did not get them.

The GAO has also found that about two-thirds of Medicaid children did not go to a dentist in 2010, whereas about 42% of privately insured children did not, although Medicaid children had greater needs for dental care.

Ms Foxhall is a freelance writer in the Washington, DC, area. She has nothing to disclose in regard to affiliations with or financial interests in any organizations that might have an interest in any part of this article.