Report Gives Lawmakers Ideas for Reducing Medicaid Costs

Dec 12, 2016

A report by Virginia's Joint Legislative Audit and Review Commission delivered to lawmakers Monday took a look at how the state can reduce the $4 billion it annually spends on Medicaid. 

According to the report, one way is for the state to more carefully regulate the private companies that deliver benefits to Medicaid patients so rates for services stay low. 

Jeff Lunardi headed up the JLARC team. 

“It’s important for the state to be strategic in how it sets those rates, making sure that they’re not higher than they need to be," Lunardi says. "And that you’re placing the maximum incentives possible on those health plans to innovate and to become more efficient.

One suggestion to lawmakers is to cap how much profit those private companies that manage Medicaid services can make. 

While the state spends $4 billion, the federal government chips in another $4 billion. The most expensive part of Medicaid is long-term care for the elderly and disabled, and treatment for chronic conditions like heart disease and serious mental illness. 

Although costs are on the rise,  it’s because more people are participating - cost per participant has actually flattened.  

“Part of it is just that healthcare services are getting more expensive. And so it costs more to go to the doctor, it costs more to go to the hospital, it costs more for your prescriptions," Lunardi say. "And then the second component for the Medicaid program is that we’re covering more people. There’s just more people who are eligible.” 

Another possibility to reduce costs is to reduce eligibility, even though Virginia's standards are already one of the strictest in the country. Proposed adjustments could affect about 10,000 people. 

One of the more than 30 policy proposals for lawmakers to consider in the JLARC report is to allow the state agency that runs Medicaid to hire more staff. They say, while it would cost more up front, it would help control overall costs of the program in the long-run.