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Medicaid Restrictions Impede Innovation to Improve Care, Reduce Costs

President Trump’s 2020 budget doubles down on the Administration’s unprecedented policy of letting states take away Medicaid coverage from people not meeting work requirements by proposing work requirements nationwide. We’ve previously explained why work requirements cause large coverage losses while doing little to promote work. Our new report explains why they also directly conflict with the Administration’s support for shifting the health care system toward value-based payment models — which pay providers a set amount for all or most of a patient’s care rather than paying for each service they provide, while requiring them to meet quality and outcomes standards.

Federal and state health care programs are increasingly changing the way they pay for health care, rewarding providers for managing patients’ care and providing low-cost, high-value services. The goal is to boost providers’ incentives to cut costs and improve care by better coordinating patients’ care, avoiding duplicative or low-value care, and helping patients get high-value, low-cost services, such as preventive and primary care and medication to manage chronic conditions.

But providers have trouble coordinating and managing care for people who aren’t continuously enrolled in health coverage. Care management depends on:

  • Regular access to primary and preventive care. People with coverage gaps often forgo needed screenings and other preventive services. For example, beneficiaries who weren’t continuously enrolled in Medicaid for at least six months before they were diagnosed with cancer were likelier to be diagnosed at later stages, when it’s harder to treat.
  • Regular access to medications to manage chronic conditions. People with coverage gaps often don’t take medications as prescribed. For example, Medicaid beneficiaries with coverage gaps refill prescriptions less often — and use the emergency room more — than beneficiaries with continuous coverage.

In a recent legal brief opposing Kentucky’s restrictive new Medicaid policies, the American Academy of Pediatrics, American College of Physicians, American Medical Association, American Psychiatric Association, Catholic Health Association of the United States, March of Dimes, and National Alliance on Mental Illness wrote:

Periodic gaps in coverage trigger a cascade of negative health effects. Even the short-term uninsured are consistently and significantly less healthy than the insured. . . . Health care delivery breaks down for patients who lack continuous coverage. . . . Intermittent coverage also reduces access to preventive screenings and treatment. . . . Then, once conditions arise, coverage gaps make it far more difficult for patients to get needed treatment.

Coverage gaps also create other problems for value-based payment models. Since continuous coverage is essential for care management, for example, states’ value-based contracts with providers — giving them incentives to manage patients’ care efficiently — typically don’t apply to beneficiaries without continuous coverage. As a result, the contracts give the providers no financial incentive to manage their care.

Medicaid policies that take coverage away from people who don’t meet work requirements or pay premiums, impose cost-sharing, or create complex health savings accounts lead to coverage gaps for a large share of the affected beneficiaries, preventing them from developing ongoing relationships with providers and getting appropriate, regular care. Arkansas, the first state to take coverage away from people who don’t meet work requirements, ended coverage for more than 18,000 adults between June 2018 and January 2019, or more than 1 in 5 of those subject to the new policy. State waivers that the Trump Administration has already approved would cause hundreds of thousands of people to lose coverage, and implementing the policy nationwide would raise the figure to millions. The effect on state and federal efforts to shift the health care system toward value-based care is yet another argument against these policies.