Product innovation: Medicaid

The challenge

Administrative burden. Compliance challenges. Increasing regulatory scrutiny. Extensive reporting and verification requirements. All costs of a payer's participation in government health programs. Costs payers must balance against the benefits of an enormous customer base and substantial management fees. Innovative, risk-adjusted plans that meet the medical needs and financial limitations of Medicaid enrollees can tip the cost/benefit balance in favor of profitability.

Medicaid is funded by state and federal governments and administered by 50 state agencies. Each state has considerable flexibility, through the use of waivers, to design its Medicaid plan to meet budget constraints and to deliver care appropriate to the needs of its citizens. States often use their Medicaid programs as an instrument of health insurance reform. You need to understand the implications of each reform proposal, because these initiatives can significantly affect your profitability.

Some population groups may be eligible for both Medicare and Medicaid. Sorting out the complexities of dual eligibles and complying with extensive federal restrictions and disparate state programs present challenges that make Medicaid plans daunting to price and manage.

How we can help you

Evaluating Medicaid plan designs and rates is complicated and risky, and calls for specialized expertise. We can conduct risk assessments and devise risk-adjustment strategies for specific plans and populations. We can assess whether a state's rate-setting methodology is actuarially sound, compliant with federal guidelines and a good risk for payers to manage.

You need to understand the implications of evolving legislation on your plan designs and profitability. We help public and private payers analyze health legislation and plan proposals, and understand their implications on compliance, rates and profitability.

Common services include:

• Assisting with developing proposals and waivers to participate in Medicaid programs
• Performing diagnostic risk assessments
• Assessing provider contracting arrangements and healthcare reform proposals