While government officials have spent months scrambling to fix the federal health-care law’s botched rollout, another issue is looming that could create new headaches for states, health plans — and patients.
In 2014, millions of people are expected to shift between the health exchanges and Medicaid as their income fluctuates. That could be costly for states and insurance companies, and patients could wind up having gaps in coverage or having to switch health plans or doctors.
The process — called “churning” — is common in Medicaid, the state-federal program for the poor and disabled. Typically, people lose Medicaid eligibility after their income spikes temporarily, such as when they get a seasonal job or pick up extra hours at certain times of the year. They re-enroll when their income drops.
Until now, people who churn out of Medicaid because of an income bump often wound up uninsured because they cannot afford private insurance. Starting this month under the Affordable Care Act, many will become eligible for insurance and subsidies through the exchanges.
But experts warn that churning will continue to be a problem as patients bounce between Medicaid and the exchanges. Patients in an exchange plan may end up in a Medicaid managed-care plan run by another company, with different doctors, or vice versa.
“This is a critical issue for the states and the providers. They are worried about patients experiencing gaps in coverage,” said Jenna Stento, a senior manager who tracks the health law at Avalere Health, a consulting firm. “It could be a very significant population that is moving back and forth.”
Matthew Buettgens, a senior research analyst at the Urban Institute who studies churning, estimates that 9 million people will shift between Medicaid and the exchanges during the year.
Nearly 30 million Americans on Medicaid are in private managed-care plans, which are designed to help reduce costs by providing administrative control over health-care services and are becoming the coverage of choice for state Medicaid operations. Millions more will become eligible for Medicaid this year under the federal health law. Many will be put in managed care. States pay managed-care plans a fixed amount per member each month to set up networks of doctors and hospitals to provide services.
Buettgens said that most states are just beginning to think about ways to deal with the coming problem.
“It took a back seat to Medicaid expansion decisions and launching the marketplaces,” he said. “Now it’s starting to get more practical attention.”
Jeff Myers, president of Medicaid Health Plans of America, a trade group representing about 120 members, called the problem “serious” for patients’ continuity of care and for the plans’ stability. Companies, which face administrative cost burdens, also won’t be able to predict what their financial risk will be, he said.
“The challenge is how the states want to address the churning issue,” Myers said. “They haven’t really given us any guidelines. We are on the front line.”
Matt Salo, executive director of the National Association of Medicaid Directors, said that states are anxious to seek solutions.
“You want people to have consistent insurance coverage, whether you’re dealing with someone who’s got mental health and substance abuse issues or a variety of undertreated chronic conditions,” Salo said. “If you get them into Medicaid at one point and get them stable and on a plan of care, you don’t want a transition into a different plan to set them back, and then have those people rebound back into Medicaid.”
Some states have tried to tackle the problem.
Nevada will require Medicaid managed-care companies to offer a comparable plan on the exchanges starting this year.
Washington has created a program to help health-care companies in the exchange also become Medicaid plans if they provide an identical network for patients.
In Delaware, companies in the exchange must continue to cover approved medical treatment and medications for new members coming from Medicaid during a transition period.
In Congress, a bill sponsored by two Texans, Reps. Gene Green (D) and Joe Barton (R), would require states to guarantee 12 months of continuous eligibility to people on Medicaid to help reduce churning. About two dozen states already require that for children on Medicaid and in the Children’s Health Insurance Program.
While the bill is enthusiastically supported by groups such as the Children’s Hospital Association, many states are skeptical because they say it will be costly.
All sides agree, however, that churning affects quality and interrupts care for Medicaid patients.
With Medicaid, people generally must reapply for or renew coverage every six or 12 months, depending on the state. They also must report changes in income or family composition, such as a marriage or divorce, which could affect eligibility. They could be dumped from the rolls any given month.
Some experts say that the best strategy to avoid churning between Medicaid and the exchanges will be for health plans to sign up for both markets.
But that’s easier said than done.
Margaret Murray, chief executive of the Association for Community Affiliated Plans, a trade group of nonprofit Medicaid health plans, said the process isn’t easy because of differences between Medicaid contract requirements and state insurance department rules for commercial health plans.
Experts say that whatever changes states make, they won’t be able to eliminate churning. But they can create programs that make the transition smooth.
In Oregon, where an advisory committee is spending six months reviewing options and data from other states before coming up with a plan, health officials are optimistic.
“The bottom line is we want to make sure people and their families are getting the care they need and that it’s a smooth transition,” said Jeanene Smith, chief medical officer for the Oregon Health Authority.
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.