Medicaid reform bill ushers in managed care

MONTGOMERY, Ala. (AP) -- A bill that restructures the way Medicaid is administered passed the Alabama Legislature Tuesday and now awaits the governor's signature.

The State Medicaid Agency now pays doctors directly for services provided to Medicaid patients. Under the new policy, there will be several regions managed by privately owned, for-profit Regional Care Organizations that will contract with doctors and other providers. This will allow the state to be free of financial risk and essentially become contract managers.

The Senate sponsor, Republican Greg Reed of Jasper, praised the bill as a fundamental shift in health care policy that would improve patient care and save money.

"From the beginning, I had three groups in mind: patients, providers and taxpayers," he said. "This will benefit all three, and in time I believe it will be a model for other states to follow."

Reed predicted that the first full-year of managed care will cost the Medicaid program $50 million to $75 million less than the traditional fee-for-service model. Routing patients into care organizations, he says, will allow doctors to more effectively chart a patients overall progress, with follow-ups and referrals to specialists who will have access to a patient's history. The idea is that such a system will prevent costly hospitalizations and emergency room visits that result from patients not managing chronic conditions and overall health.

"These are skills that providers already put to use every day" treating privately insured patients, Reed said.

In order to meet soaring needs and contain costs, Gov. Robert Bentley last year appointed a blue-ribbon committee of 33 members to recommend sweeping changes that would provide both flexibility and reduce financial risk.

The results were based loosely on Oregon's managed care model, which combines comprehensive medical care with preventive care. By helping people navigate the health care system and ensuring patients have access to other local support services they need for a fixed fee per customer, the numbers of hospital visits will decline.

Alabama is trying to improve the efficiency of health care delivery in the state, which can be done only by reducing hospital admissions. Any improvements the state might make, such as following Oregon's lead, will have little effect on the state's budget overall, but should reduce future costs.

The Medicaid budget for the states' 938,000 recipients is about $6 billion annually.

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Associated Press writer Bill Barrow contributed to this report.