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Millions expected to ‘churn’ between marketplaces and Medicaid

Experts warn gaps in coverage could result for people near cutoff for Medicaid eligibility

By Jenni Bergal | January 06, 2014

This KHN story was produced in collaboration with <img src="http://media.khi.org/img/photos/2013/12/05/washingtonpost.jpg" />

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Dr. Camille Heeb checks an infant's heartbeat during its first well-baby exam. Heeb, a Topeka pediatrician, sets aside half of her practice for patients covered by Medicaid; half for those covered by private insurance.

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While government officials have spent months scrambling to fix the federal health law’s botched rollout, another issue is looming that could create new headaches for states, insurance companies, and patients.

In 2014, millions of people are expected to shift between the health insurance marketplaces and Medicaid, as their income fluctuates over the year. That could be costly for states and insurance companies, and patients could wind up having gaps in coverage or having to switch insurance plans or doctors.

The process — called “churning” — is common in Medicaid, the state-federal program for the poor and disabled. Typically, people lose Medicaid eligibility after their income spikes temporarily, such as when they get a seasonal job or pick up extra hours at certain times of the year. They re-enroll when their income drops.

Until now, people who churn out of Medicaid because of an income bump often wound up uninsured because they can’t afford private insurance. Starting this month under the Affordable Care Act, many will become eligible for subsidies to help pay for private insurance purchased through HealthCare.gov or a state-based marketplace.

But experts warn that churning will continue to be a problem, as patients bounce between Medicaid and the marketplaces — and between different coverage plans and provider networks.

“This is a critical issue for the states and the providers. They are worried about patients experiencing gaps in coverage,” said Jenna Stento, a senior manager who tracks the federal health law at Avalere Health, a consulting firm. “It could be a very significant population that is moving back and forth.”

Matthew Buettgens, a senior research analyst at the Urban Institute who studies churning, estimates nine million people will shift between Medicaid and the exchanges over the course of a year.

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KanCare: Managed Care Contracts Aim to Achieve Savings and Quality Improvement

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Beginning to face the challenge

Nearly 30 million Americans on Medicaid — including some 380,000 Kansans — are in private managed care plans, which are designed to help reduce costs by providing administrative control over health-care services and are becoming the coverage of choice for state Medicaid operations.

Millions more will become eligible for Medicaid this year under the federal health law. Many will be put in managed care. States pay managed care plans a fixed amount per member each month to set up networks of doctors and hospitals to provide services.

Buettgens said most states are only now beginning to think about ways to deal with the upcoming challenge.

“It took a backseat to Medicaid expansion decisions and launching the marketplaces. Now it’s starting to get more practical attention,” he said. “The churning issue is going to become much more visible this year.”

Jeff Myers, president of Medicaid Health Plans of America, a trade group representing about 120 members, called the problem “serious” both for patients’ continuity of care and for insurance plans’ stability. Companies not only face administrative cost burdens, but they won’t be able to predict what their financial risk will be, he said.

“The challenge is how the states want to address the churning issue,” Myers added. “As far as we know, we haven’t gotten any guidance about how they intend to do that yet. They haven’t really given us any guidelines. We are on the front line.”

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Matt Salo, executive director of the National Association of Medicaid Directors.

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Matt Salo, executive director of the National Association of Medicaid Directors, said states are anxious for solutions.

“You want people to have consistent insurance coverage, whether you’re dealing with someone who’s got mental health and substance abuse issues or a variety of undertreated chronic conditions,” Salo said. “If you get them into Medicaid at one point and get them stable and on a plan of care, you don’t want a transition into a different plan to set them back — and then have those people rebound back into Medicaid.”

States' initial attempts to address churn

Some states have tried to tackle the problem:

  • Nevada will require Medicaid managed care companies to offer a comparable plan on the insurance marketplaces starting this year.
  • Washington has created a program to help health insurance companies in the marketplace also become Medicaid plans if they provide an identical network for patients.
  • In Delaware, companies in the marketplace must continue to cover approved medical treatment and medications for new members coming from Medicaid during a transition period.

In Congress, a bill sponsored by Democratic Rep. Gene Green and Republican Rep. Joe Barton, both of Texas, would require states to guarantee 12 months of continuous eligibility to people on Medicaid, to help reduce churning. About two dozen states — including Kansas — already require that for children on Medicaid and in the Children’s Health Insurance Program.

While the bill is enthusiastically supported by advocates, including the Children’s Hospital Association, many states are skeptical because they believe it will be costly.

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The Continuity of Medicaid Coverage: An Update

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All sides agree, however, that churning affects quality and interrupts care for Medicaid patients.

An April 2013 study by George Washington University researchers noted that interruptions in Medicaid coverage can result in sick people being unable to afford to visit the doctor or pay for prescription drugs. They wind up delaying or avoiding treatment, such as vaccinations and blood pressure screenings.

Churning isn’t unique to Medicaid, but with workplace insurance, health benefits generally remain unchanged over the course of a year. Employees stay enrolled until the next open enrollment period or they change jobs.

With Medicaid, people generally must reapply for or renew coverage every six or 12 months. They also must report changes in income or family composition, such as a marriage or divorce, which could affect eligibility. They could be dumped from the rolls any given month.

Some experts suggest that the best strategy to avoid churning between Medicaid and the insurance marketplaces will be for health plans to be available in both markets.

Easing transition, if not eliminating churn

But that’s easier said than done.

Margaret Murray — chief executive of the Association for Community Affiliated Plans, a trade group of nonprofit Medicaid health plans — said that 16 of its 60 members have joined the marketplaces. The process isn’t easy, she said, because of the differences between Medicaid contract requirements and state insurance department rules for commercial health plans.

“It’s definitely a challenge for our members,” Murray said. “They don’t collect premiums, they don’t market, they don’t set rates.” Commercial plans do all three.

A recent analysis by Murray’s group found that while 41 percent of plans that are available via the marketplaces also operate Medicaid plans, the rest don’t.

Even if an insurance company runs both a Medicaid plan and a marketplace plan in a state, that doesn’t mean that patients will be able to stay in the same network.

Sara Rosenbaum, a law professor and Medicaid expert at the George Washington University.

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“There’s no guarantee that your plan in one market is also participating in another market,” said Sara Rosenbaum, a health policy professor at George Washington University. “The potential is great that you not only will have to switch plans, but you’ll have to switch providers if they don’t share networks.”

Experts say that whatever changes states make, they won’t be able to eliminate churning. But they can create programs that make the changeover smooth and reach out through consumer assistance and education.

In Oregon — where an advisory committee is spending six months reviewing options and data from other states before coming up with a plan — health officials are optimistic.

“The bottom line is we want to make sure people and their families are getting the care they need and that it’s a smooth transition,” said Jeanene Smith, chief medical officer for the Oregon Health Authority.

KHI News Service coverage of Medicaid expansion

Medicaid Access Coalition launches online "ticker" showing foregone federal dollars (2/13/14)
→ KHI report: Nearly 182,000 Kansans in the ‘Eligibility Gap’ (1/11/14)
House speaker says Medicaid expansion is "up to the governor" (1/10/14)
KS Senate president says Medicaid expansion unlikely to gain approval this session (1/7/14)
Profiles of the coverage gap: Kathleen Christian (1/6/14)
Efforts continue to expand Medicaid in Kansas and Missouri (1/6/14)
Hospital association hires former Bush HHS secretary to help craft a plan Kansas Republicans might support (12/23/13)
Iowa wins approval to expand Medicaid by using federal funds to buy private insurance (12/11/13)
White House officials hold call to urge Medicaid expansion in Kansas (11/21/13)
Republican governor talks up plan to expand Medicaid — his way (10/28/13)
Challenger says Brownback owes voters a decision on Medicaid expansion (10/22/13)
Nearly 5.2M Americans fall in coverage gap in states not expanding Medicaid (10/16/13)
Sebelius: Feds flexible on how states expand Medicaid (9/22/13)
Sebelius says Kansas and Missouri are missing the boat on Medicaid expansion (9/20/13)
Medicaid expansion coalition finds strength in numbers (9/17/13)
Republican Gov. Corbett proposes expanding Pennsylvania Medicaid (9/16/13)
Kansas lawmakers urged to consider Medicaid expansion by Wesley CEO (8/29/13)
Estimating maneuver could help more people gain from Obamacare: How the poor might qualify for Affordable Care Act subsidies in states that don't expand Medicaid (8/12/13)
Report: States not expanding Medicaid stand to benefit most from doing so (7/18/13)
CMS won’t penalize hospitals in states slow to expand Medicaid (5/14/13)
Insurer Centene: We can do Arkansas-style Medicaid (5/14/13)
The Arkansas Medicaid Model: What you need to know about the 'private option' (5/2/13)
Nothing to be done about coverage gap in states not expanding Medicaid, feds say (4/29/13)
Brownback says he's listening to Medicaid expansion proponents, opponents (4/5/13)
Oregon shows costs of putting Medicaid enrollees in private coverage (3/29/13)
Governor urged to expand Medicaid eligibility (3/27/13)
Arkansas Medicaid expansion attracts other states' interest (3/26/13)
Senate president prefers options remain open on Medicaid expansion (3/25/13)
States urged to expand Medicaid with private insurance (3/22/13)
Senate budget amendment underscores opposition to Medicaid expansion (3/21/13)
Study: Kansas employers face millions a year in possible penalties without Medicaid expansion (3/15/13)
More than 30 Kansas groups pushing for Medicaid expansion (3/12/13)
Health insurers see big opportunities in health law’s Medicaid expansion (3/8/13)
Medicaid expansion supporters to step up lobbying efforts (3/7/13)
Budget committee hears resolution opposing Medicaid expansion (2/22/13)
Legislators focusing on Medicaid expansion cost estimates (2/19/13)
Kansas hospital group study predicts expanding Medicaid would generate 4,000 jobs (2/18/13)
Brownback officials release their cost projections for Medicaid expansion (2/8/13)
Medicaid expansion bill introduced (1/22/13)
Kansas hospitals worried about loss of dollars for charity care (1/14/13)
Brownback compiling own estimate of Medicaid expansion cost (12/20/12)
Group urges Brownback to expand Medicaid eligibility (11/9/12)
Debate begins on possible Kansas Medicaid expansion (10/25/12)
Amerigroup CEO says states ‘need’ to go along with Medicaid expansion (7/11/12)
Kansas hospitals ready to get on with federal health reform, spokesman says (7/2/12)
Kansas AG claims partial victory in health reform case (6/29/12)
High court upholds Affordable Care Act, but ruling puts limits on Medicaid expansion (6/28/12)

Commentary
→ Kansas Hospital Association: An opportunity for the Kansas Medicaid program
→ Americans for Prosperity-Kansas: Well-intentioned policies do more harm than good
→ Health Reform Resource Project: The cost of not expanding Medicaid
→ Rep. Jim Ward: Medicaid expansion essential for healthier Kansas
→ Rep. David Crum: Reasons for opposing Medicaid expansion
→ National Academy for State Health Policy: Much ado about Arkansas: Medicaid in the insurance exchange

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