Quarterbacking Medicaid: the Toughest Job in Healthcare

The following is an excerpt from Navigant Healthcare’s Pulse Weekly. Click here for a complete copy of this week's article.

Medicaid is the least understood, most complicated and significant program in the U.S. health system. Its leaders face gargantuan odds and unparalleled challenges. Reasons why:

Medicaid serves a sizeable and growing population in every state. In the average state, 25% of the population is insured through the state’s Medicaid program. Enrollment is growing faster than any other health plan, and will continue for years to come.

Medicaid costs are significant and increasing. The median budget for a state’s Medicaid program is $6.1 billion—second only to K-12 education in most states, and first when the federal contribution is added. In the average state, it is 25% of the state’s total budget (up from 10% in 1987) and, in addition, spending on Medicaid accounted for 9% of the federal budget in 2014. But Medicaid funding is unrelated to a state’s overall economic health: funding levels are driven by political and public support more than a state’s economic vitality. And In every state, Medicaid pays providers less than their cost of delivery resulting in higher charges to the commercially insured.

The health problems addressed by Medicaid plans are uniquely challenging. As established in Title XIX of the Social Security Act in 1965, Medicaid serves vulnerable populations’ needs for medical care, long-term care, and other services deemed appropriate by a state. The populations served vary by state and include the low income adults, the elderly, disabled, prisoners, poor single mothers, low-income children and, under the ACA, all poor nondisabled, nonelderly adults. Thus, diagnosing and treating populations is uniquely challenging: many do not have a medical history, many live in unhealthy environments, most can’t afford even modest co-payments, and all face obstacles being seen in traditional care delivery settings. Their medical conditions reflect higher exposure to chronic and congenital conditions, and their socio-economic status limits access to appropriate care settings at optimal times when diagnoses can be made and effective treatment begun.

As a result, Medicaid is controversial. State and federal legislators argue about its cost. Doctors argue that it pays them too little. Patient advocates argue the inadequacy of its funding. And hospitals argue it’s contributing to their margin erosion.

Today’s Fact File is devoted to Medicaid: if Medicare is the elephant in the room in health reform, Medicaid is next. And at the center, the Medicaid Director who might have the toughest job in healthcare. Imagine a job description that includes the following responsibilities:

Securing funding for programs and services. Raising capital for Medicaid programs is a Herculean challenge. State legislators are cautious about allocating funds, and in some cases, downright unwilling. The federal government is a challenging investor, with regulatory compliance strings attached to their funds that constantly change.

Getting and keeping competent managers. The Medicaid Director’s recruitment pitch for key managerial posts is unlike any other. “Join my team. Do important work. Serve the state. Work hard, make less than your private sector peers and be assured your decisions will be second guessed by journalists, patient advocates, political adversary and legislators eager to find fault.” Staffing in Medicaid programs is lean, and most depend on contracts with outside managed care organizations and vendors to do a substantial share of the work. Nonetheless, recruiting talent is a significant challenge.

Building and improving efficient operations: Medicaid programs operate efficiently: administrative overhead is 5% versus 7% for private plans. But the nature and scope of operations in a Medicaid plan is arguably tougher than in plans that serve commercial and Medicare populations. Many enrollees are first-timers to the system, lacking medical history or basic acumen to use the health system. Information system investments are key. Getting funding for them is hard enough; implementing them in sync with meaningful use efforts in the private sector, ICD-10 deployment across the system, and the spotty successes of MMIS systems used in states means headaches across the board. And beyond information systems, coordinating care to secure access to other health programs for enrollees requires deft juggling of time and resources for frontline staff.

Building and maintaining healthcare provider participation and support. Here again, the pitch to doctors, nurses, hospitals and long-term care providers is dubious: “We need you. We value your work and our members do as well. We can’t pay you as much as we’d like, and we know it doesn’t cover your costs. But rest assured you’re doing the public a social service and these enrollees need your help.”  It’s a tough sell in every state, whether directly to providers, or to the private MCOs with whom the state contracts.

Innovating clinical processes and payment strategies: The majority of the Medicaid population is fluid, into and out of the program. A minority are old and poor, requiring intense services and social support. Some diagnoses and conditions are significantly more prevalent in the Medicaid population (i.e. Hepatitis C, obesity, et al) and access to novel treatments is limited. The SIM program (funded by the CMS Innovation Center) is a start: 17 states are using $1 billion granted to overhaul their programs featuring accountable care and bundled payment models as key elements. But Medicaid Directors acknowledge more change is needed to align incentives for providers with optimal value for the state and optimal health outcomes for enrollees. Tall order, especially when funding is stretched thin already.

Measuring and monitoring results: Measuring and monitoring the access, errors, outcomes, user experiences and costs is difficult in populations that have continuous relationships with a plan or provider organization. But in a population that’s fluid, somewhat invisible and sporadic users of the “system”, it’s a virtually impossible task, but essential. Medicaid directors face the unenviable task of documenting results to legislators, journalists, providers and patient advocates knowing each of these has its sight set on the subset of measures they deem more important than the others.

Building public support. Ultimately, Medicaid is a taxpayer-supported program that competes for voter favor in our Democracy against other public priorities—education, homeland security, roads and bridges and others. But unlike public education that serves or has served a majority of a community’s citizenry, Medicaid is funded by the majority and serves a minority. And this minority is not well-healed, politically connected nor organized, so the process of building public support is vexing to the Medicaid CEO.

What’s ahead?

On June 28, 2012, the Supreme Court ruled that states could not be required to expand their Medicaid programs. Across the 31 that have, membership increased on average over 18%. Medicaid expansion remains a contentious political issue that’s as divisive as immigration policy. In Campaign 2016, it will be in the spotlight for sure. But Medicaid expansion is NOT the most important issue framing Medicaid’s future. There are others that are arguably more significant…

Innovation in care coordination: How can Medicaid build the clinical programs and needed infrastructure to coordinate care that traverses challenging demographics, social determinants, problematic diagnoses amidst funding restrictions and political posturing? The SIM grants were a start, but more is needed.

Accountability of private MCOs: How can Medicaid programs exact greater accountability from the private managed care organizations with them they contract? How should state’s acquire and compare data from their contractors to improve the effectiveness and efficiency in their programs?

Leadership sustainability: The role of the state’s Medicaid Director rivals that of a Fortune 1000 CEO. But the median tenure for a Medicaid CEO is 3.5 years versus 6 in the corporate world. Mean compensation is $146, 753—less than one third the average for not-for-profit hospital and college administrators, and 10% of Fortune 1000 CEO base comp. It’s easy to understand why 23 state Medicaid directors left between 2013 and early 2015: it’s an almost impossible job with few ‘at-a-boys and lots of boos.

Chris Koller, President of the Millbank Memorial Fund, summed it up well in describing a pitch to a Medicaid CEO candidate: “Fortune 1000 company—multiple lines of business, unclear organizational structure, a CEO paid one-fifth of the market rate, CEO turnover every two and half years, and a 100-member Board of Directors that is distracted and divided.”

Recruiting competent leaders, equipping them to be able to do the job well, and keeping them is a major challenge facing states, whether Blue or Red, whether expanded enrollment or not.

Medicaid is our nation’s biggest health insurer and least understood. Its quarterbacks, the Directors who run these programs, are arguably healthcare’s MVPs.



Chris Kardiah, “In and Out in 2 Years: Why Can’t States Keep Medicaid Directors?” Governing, March 2, 2015

Andy Allison, “The Role of State Medicaid Directors: A Leadership Imperative,” Millbank Memorial Fund, September 28, 2015

Medicaid and CHIP Payment and Access Commission. (n.d.). Medicaid’s Share of State Budgets. Washington, DC: Medicaid and CHIP Payment and Access Commission. (Accessed July 29, 2015:https://www.macpac.gov/subtopic/medicaids-share-of-state-budgets/.)

DeNavas-Walt C., Proctor B.D., Smith J.C. (2011). “Income, Poverty, and Health Insur­ance Coverage in the United States: 2010.” Washington, DC: US Department of Com­merce, (Accessed July 21, 2015)

For enrollment and federal spending projections and for total Medicaid spending, see Congressional Budget Office. (2015). March 2015 Baseline from Updated Budget Pro­jections: 2015 to 2025. Washington, DC: Congressional Budget Office. (Accessed July 21, 2015: https://www.cbo.gov/publication/45069); for total Medicaid spending, see note 5 above and also Centers for Medicare and Medicaid Services. (2014). National Health Expenditure Historical and Projections 1960-2024. Washington, DC: Centers for Medicare and Medicaid Services. (Accessed September 4, 2015: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHeal­thExpendData/NationalHealthAccountsProjected.html.)

Medicaid’s average rank among K-12 education, higher education, public assistance, corrections, and transportation rose from 1.7 to 1.4 between FY 2009 and FY 2013, prior to expansion in most states, and Medicaid’s share of state spending grew in 37 states. See National Association of State Budget Officers. (2013). State Expenditure Report: Examining Fiscal 2011-2013 State Spending. Washington, DC: National Asso­ciation of State Budget Officers. (Accessed July 21, 2015:http://www.nasbo.org/sites/default/files/State%20Expenditure%20Report%20%28Fiscal%202011-2013%20 Data%29.pdf)

Medicaid and CHIP Payment and Access Commission. (2014). Report to the Congress on Medicaid and CHIP: June 2014. Washington, DC: Medicaid and CHIP Payment and Access Commission. (Accessed July 21, 2015:https://www.macpac.gov/wp-content/ uploads/2015/01/2014-06-13_MACPACReport.pdf)

Kaiser Family Foundation. (2014). Kaiser State Health Facts: Status of State Action on the Medicaid Expansion Decision. Washington, DC: Kaiser Family Foundation. (Accessed December 3, 2014: http://kff.org/health-reform/state-indicator/state-activi­ty-around-expanding-medicaid-under-the-affordable-care-act/.)

Center for Medicare and Medicaid Innovation. (2012). State Innovation Models: Funding for Model Design and Testing Assistance. Washington, DC: US Department of Health and Human Services, Centers for Medicare and Medicaid Services, Center for Medicare and Medicaid Innovation. (Accessed July 21, 2015:http://innovation.cms. gov/Files/x/StateInnovation_FOA.pdf)

The opinions expressed in this article are those of the author and do not necessarily represent the views of Navigant Consulting, Inc. The information contained in this article is a summary and reflects current impressions based on industry data and news available at the time of publication. Any predictions and expectations noted herein are inherently uncertain and actual results may differ materially from those contained in this article. Navigant undertakes no obligation to update any of the information contained in the article.

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