Health Care

Commentary: Coordinated Care Networks for Lower Medicaid Costs

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Consumers could negotiate with competing providers

A United Health Foundation report recently ranked Louisiana 49th in the union for health, but it doesn’t have to stay this way. In response to rising Medicaid costs, state health officials have suggested a new service delivery method as part of a larger set of reforms.

“Better access, more choices, improved health care.”

Those are operative words of Louisiana’s “Making Medicaid Better” initiative, which would shift the existing fee-for-service system over to Coordinated Care Networks.  Under the proposal, which has advanced through the Department of Health and Hospitals, enrollees could choose their own health care plans and providers.

Over the long term, by allowing greater competition, CCNs could alleviate budgetary pressure and protect vulnerable populations. Additionally, CCNs’ emphasis on preventive care could reverse Louisiana’s ranking in critical areas such as obesity and infant mortality.

DHH would simultaneously implement two models for CCN. One is the traditional managed care model in which providers receive a monthly fee for each enrollee. The other is an “Enhanced Primary Care Case Management” plan. Although Medicaid’s fiscal intermediary would still process all claims, the second model would foster opportunities for multiple providers to share in cost savings resulting from coordinating care.

With more than a quarter of Louisiana’s population on Medicaid, Lisa Faust, communications director for DHH explains that “coordinating care will improve these enrollees’ health and lead to a higher quality of life. The state has submitted a notice of intent as the official rule to implement CCNs for Medicaid, and expects the first recipients to enroll with CCNs early next year.”

Louisiana is bedeviled by a special set of challenges that CCNs have been tailored to address. The state, for example, has the highest infant mortality rate and ranks third in cancer deaths, according to DHH. Louisiana has consistently placed in the bottom tier of national health care rankings. The current system of care exacerbates this problem by “rewarding quantity over quality,” DHHs officials have concluded.

For those concerned about reduced quality, DHH would still impose restrictions included within the proposal to “ensure better health for enrollees and encourage responsible behavior.”

For example, providers would not be allowed to pay medical practices less than current Medicaid fee-for-service rates. Additionally, the amount, duration, and scope of services cannot be less than those covered in the current Medicaid program. State officials would also retain the authority to prevent networks, if they fail to satisfy key standards, from covering Medicaid enrollees.  At the same time, though, providers would have more flexibility and latitude to negotiate rates and to share in savings, according to DHH.

Under the current proposal, consumers would work with “choice counselors” to make the best selection for their individual and family needs. Counsels are not permitted to work with CCNs so as to avoid any potential conflicts of interest.

With health care costs expected to rise, state officials have come to view CCNs as an attractive option.  Medicaid already accounts for about 17 percent of all state-level spending, according to, which exceeds what is spent on transportation and higher education combined.

Moreover, policy analysts have warned that the mandates included as part of “ObamaCare” will greatly expand Medicaid rolls in the coming years. The federal law calls for states to extend their Medicaid programs to everyone earning up to 133 percent of the federal poverty level by 2014. This translates into $30,000 for a family of four.

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at Follow him on Twitter.