About 60 people attended the second pre-bid conference for the Kansas Medicaid managed care contracts. The event was held Nov. 30 in a conference room at the Eisenhower State Office Building. by phil_cauthon

Kansas isn’t the only state doing it.

When Gov. Sam Brownback announced his administration would seek bids from private companies to manage the care of virtually every person enrolled in the state’s Medicaid program, Kansas became part of what has been a rapidly accelerating trend since Medicaid managed care companies came on the national scene in the 1990s.

“Virginia, Florida, Texas, Illinois, New York, California … especially California and Texas and Florida. They certainly have a lot of people that are eligible for Medicaid,” said Michael McCue, a professor at Virginia Commonwealth University and co-author of a recent national study of Medicaid managed care operations.

Looking to cut budgets

“States are looking for ways to manage those populations and cut their budgets, and typically 20 to 30 percent of state budgets are going to Medicaid. With the recession, states are looking for ways to manage that cost,” he said.

In 2000, according to the federal Centers for Medicare and Medicaid Services, 18.8 million enrollees — or 55 percent of the nation’s Medicaid population — were covered by various managed care arrangements. By 2009, CMS reported that the number of enrollees receiving services covered by managed care plans had nearly doubled to 36 million, or 72 percent of the Medicaid population.

The agency also reported the nation now has 225 full-service Medicaid health plans that each have at least 5,000 members enrolled.

High stakes

But the business is increasingly dominated by a handful of major, for-profit insurance companies that are positioning themselves to manage the care of the 16 million more Americans expected to become eligible for Medicaid once the federal health reform law fully kicks in on Jan. 1, 2014.

“With enrollment in employer-sponsored health insurance steadily declining and more Americans falling into the Medicaid safety net, health insurance companies are going where the growth is — the Medicaid managed care market,” wrote Emily Berry in a recent article titled “Mining for Medicaid Gold” that appeared in American Medical News, a trade journal for doctors.

Most of the nation’s major managed care companies have shown interest in securing one of the three contracts that Brownback officials have said they intend to sign. The contracts are each expected to be in the range of $300 million to $400 million a year.

“Small state, big contract,” a representative of one of the major companies told KHI News Service, acknowledging his firm likely wouldn’t show interest in a contract here worth only $100 million.

The governor’s plan is a high-stakes affair for Kansans and for some of the insurance companies.

→ Continue reading this story, along with related documents and stories, at khi.org/medicaid-rfp.