By skyforbes 
One of the top challenges facing the health care industry as a whole is the rampant occurrence of fraud, waste and abuse–costing taxpayers billions of dollars each year.
Over the past decade, management of the Texas Medicaid program has transitioned from a fee-for-service (FFS) model to the managed care approach, under which health plans contract with the State to manage Medicaid. These health plans, also called managed care organizations (MCOs), assume the full financial risk for reducing and preventing incidents of fraud, waste and abuse for every beneficiary they serve. The managed care private market approach drives innovation through flexibility and competition, reduces health care costs, and holds MCOs accountable for providing access to quality care.
If unanticipated costs arise from incidents of fraud, waste and abuse in a given year, each MCO is at full risk of covering those costs. Because of this accountability, MCOs are increasingly focusing their efforts on preventing fraud, waste and abuse; reducing inappropriate payments; and finding real-time results and methods to transition away from the pay-and-chase environment common under FFS.
The result? Texas Medicaid health plans have made important strides in reducing inefficiencies in Texas Medicaid, achieving billions in savings for taxpayers while improving the quality of care for the millions of Texans enrolled in Medicaid.
Saving Money Through Better & More Efficient Care
MCO efforts to reduce fraud, waste, and abuse include important initiatives aimed at preventing unnecessary services through better care coordinating and ensuring appropriate care–often called “utilization management.” Health plans do so using methods called “prior authorizations” and “medical necessity requirements,” whereby providers submit requests for approval or medical documentation justifying the medical necessity of a service prior to performing it.
These combined efforts by Texas health plans have resulted in substantial cost savings for Texas taxpayers. Between SFY 2010 and SFY 2015, actuaries estimate that managed care reduced Medicaid costs by 7.9%, or nearly $3.8 billion, when compared to the traditional FFS model. This trend is expected to yield an additional $3.3 billion in savings through SFY 2018.
Medicaid Dental managed care has experienced the highest percentage of total program savings: 28.4% since SFY 2013.
MCO Spotlight: How One Texas Health Plan Achieved Real Results in Reducing Fraud, Waste, and Abuse
After the State expanded managed care into South Texas, one MCO quickly identified that they were spending a disproportionate share of dollars on incontinence supplies for Medicaid members in the Hidalgo service area.
Almost 70% of all incontinence supplies ordered in the State were going to the Hidalgo area. Total spending on incontinence supplies for STAR members in
Hidalgo was found to be 456% more than all other regions of the state, and individuals in the Hidalgo area were receiving on average 16% more units compared to Medicaid members in other parts of the state. There was no authorization process in place and as a result, services were being used inappropriately.
For example, the MCO identified that incontinence supplies were being ordered for children under the age of 3 for nocturnal enuresis (bed-wetting).
The MCO initiated a prior authorization requirement for medically necessary incontinence supplies and almost immediately saw a 77% reduction in spending per-member, per-month, saving taxpayers $18 million a year.
Improved Outcomes and Quality of Care Prevents Unnecessary
Services & Costs in Medicaid
Another way that Medicaid managed care reduces waste in the system is focusing on improving health care outcomes. Unlike FFS, the managed care model is designed to emphasize preventive care, early interventions, and appropriate care management. The focus on quality and outcomes through managed care has successfully resulted in double-digit reductions in hospital admissions for a number of conditions for children and pregnant women served in the STAR program, and Texans who are elderly or have disabilities who are served through the STAR+PLUS program (2009-2011).
Texas is becoming a national leader in the managed care approach, and the proof is in the significant taxpayer savings, increased efficiency, and improved health care outcomes for the many Texans who depend on Medicaid for their health care needs.