Senate Votes to Reform Medicaid, Save $1.5 Billion Over 10 Years

By Greg Reed

The Alabama State Senate unanimously passed sweeping legislation today to reform the state Medicaid program, one of the largest cost drivers within the general fund budget. Under the current system, long-term care is paid for using fee-for-service reimbursement. Senate Majority Leader Greg Reed’s (R-Jasper) legislation – part of the Senate Republican Caucus agenda – will establish integrated care networks (ICNs) to contract with Medicaid to provide long-term care services under a capitated system. It also allows increases the nursing home-care to home-based care ratio from 75/25 to 50/50.

The proposal will slow the rise in Medicaid costs and save taxpayers as much as $1.5 billion over the first ten years, assuming a three-percent annual growth in the program. Optumas, a national actuarial consulting company that provides advice to state Medicaid programs, calculated the projected savings.

“Our state has an obligation to provide crucial long-term care services for the elderly eligible for Medicaid coverage, while at the same time finding ways to protect taxpayers from cost increases,” said Senator Greg Reed. “My bill will help us better care for patients and cut spending.”

In 2012, the legislature passed another Medicaid reform by Senator Reed to establish regional care organizations (RCOs), where each are given a set dollar amount to cover the cost of all Medicaid care within their established coverage area. The integrated care networks for long-term care will operate under the same premise and will be in operation by October 1, 2018. Beneficiaries will be prohibited from participating in both an RCO and ICN to further control costs.

“The population of people age 75 and older is expected to double by 2028. This is projected to add 9,000 more seniors to the Medicaid long-term care roles,” Senator Gerald Dial, chairman of the Senate Health & Human Services committee. “I am proud to support Senator Reed’s bill to save more than a billion dollars and allow for more home-based care.”

Alabama Medicaid will actively supervise the ICNs’ activities to ensure solvency and quality assurance. The bill also establishes a citizens’ advisory committee for each ICN, which is tasked with advising the ICN on way to be more efficient in providing quality care to Medicaid beneficiaries.

Greg Reed is the Alabama Senate Majority Leader and represents Senate District 5, which is comprised of all or parts of Winston, Walker, Tuscaloosa, Jefferson, and Fayette counties. He is vice president of Preferred Medical Systems, a representative of Samsung Healthcare. Sen. Reed and his wife, Mitsy, have three sons: Andrew, James, and John Michael.