2021 Outlook: COVID Vax, State Budget Issues Add to Medicaid MCOs’ Urgency to Address Disparities

January 13, 2021

2021 Outlook: COVID Vax, State Budget Issues Add to Medicaid MCOs’ Urgency to Address Disparities

Reprinted with AIS Health permission from the Jan. 7, 2021, issue of RADAR on Medicare Advantage

As the novel coronavirus erupted across the U.S. and created a widespread economic downturn, it led to increased enrollment in state Medicaid programs and created devastating budget shortfalls for states. Yet Congress’ latest pandemic relief effort — the Consolidated Appropriations Act signed by President Donald Trump on Dec. 27 — does not include direct financial help for states, which are now rolling out newly authorized COVID-19 vaccines with limited resources and guidance from the federal government.

Earlier legislation, the Families First Coronavirus Response Act, afforded states a temporary increase of 6.2% in their federal match rate, yet multiple stakeholders including managed care plans have beseeched Congress to enact another temporary boost during the public health emergency.

In a Dec. 14 letter to President-elect Joe Biden, Medicaid Health Plans of America President and CEO Craig Kennedy said that securing an additional Federal Medical Assistance Percentage (FMAP) increase of at least 5.8% (for a total increase of 12%) remains the trade group’s top legislative priority. A growing reliance on state Medicaid programs for coverage coinciding with “unprecedented state budget pressures” could result in “deep cuts which will have severe impacts on Medicaid agencies, providers, and beneficiaries that rely on the program for high quality coverage and care,” he warned.

“MHPA’s members continue to see states propose and enact unsustainable rate cuts and harmful risk corridors, which threaten the continued viability of state-managed care partnerships,” Kennedy continued. To minimize disruptions in care, MHPA urged the incoming administration to immediately extend the public health emergency beyond its Jan. 20 expiration date and enact an additional FMAP increase at least through September 2021. (HHS at press time renewed that period for an additional 90 days, effective Jan. 21.)

“There is no question that the new administration will push hard to increase funding for state Medicaid,” predicts Avalere Health Founder Dan Mendelson. “Generally, the new administration will want to expand coverage and work with the states to get that done.”

Jerry Vitti, CEO and founder of Healthcare Financial, Inc., agrees that making states whole will be a Biden priority. “This is not a blue state/red state divide. Every state has these problems, and it’s the double whammy of the decreased revenue at a time where your expenses are going way up because people need social services programs, they need Medicaid, their health care systems are strained, they have to distribute vaccines — all these associated costs need to be covered.”

Meanwhile, as the COVID-19 pandemic has highlighted so many disparities in health care, Medicaid MCOs will be expected to take concrete action to bridge care gaps, especially in communities of color.

“With people of color comprising over half of Medicaid enrollees, 2020 has been a reckoning: COVID-19 and health disparities have made it so much more deadly for them. We’ve seen a large-scale public response that has made it pretty clear that these kinds of outcomes are no longer acceptable. Medicaid MCOs will need to innovate to address equity issues,” says Abner Mason, founder and CEO of ConsejoSano, a health tech startup that specializes in linguistically and culturally aligned Medicaid and Medicare patient outreach for health plans and health systems.

“Interestingly, I think as Medicaid plans invest money upfront into innovative solutions that reduce disparities for underserved communities, they’ll see those outcomes improve and see larger-than-expected savings in the end. Hopefully, those savings will be funneled into further offerings,” he adds.

In addition to greater investments in social determinants of health, Vitti predicts “more widespread adoption of telehealth, and appropriate reimbursement for telehealth,” whether members are in a rural or urban setting. And with more people seeing and engaging with their doctors, telehealth has the potential to increase member engagement, in turn allowing health plans to better manage their care and overall costs, he suggests.

Contact Mendelson at dmendelson@avalere.com and Mason and Vitti via Joe Reblando at joe@joereblando.com.

by Lauren Flynn Kelly