What state Medicaid organizations need to do to address funding uncertainty

By George Mathew, MD and Rikin Patel

There are probably few topics more newsworthy than Medicaid. It seems that every other day, lawmakers propose legislation that will affect how Medicaid is funded, managed and accessed. In this environment, state Medicaid commissioners must address some pressing challenges related to funding, managing a complex patient population, and how — and when — to approach technology programs to derive greater efficiencies.

With healthcare funding in the headlines, we’d like to start by addressing this pressing and uncertain issue. Let’s be frank: We don’t have a crystal ball, so what Medicaid funding will look like in the long term or even the midterm is impossible to predict. What is certain, however, is that whatever change occurs will have a significant impact, and states are advised to take a conservative approach and decide what they need to do if their budgets are constrained.

What does that mean in practice?

For the past three or four years, states have received money from the federal government to support existing Medicaid populations and to bring in new populations that had never been covered by insurance before. States were allowed to develop innovative programs, which they supported with some funding, and the rest was met by the federal government.

With costs escalating, Republicans have sought to implement cost control. Several proposals have been put forward, from pulling all funding to the more likely recourse of block grants, where the federal government commits a set amount and the state must determine how and where to spend that money. One type of block grant under consideration is a per capita cap, which would limit funding to an agreed per capita rate, regardless of whether medical costs increase. For the foreseeable future, states need to determine how to manage with just using their own budgets, especially if federal funding decreases or is cut off completely.

Preparing for the future

With so much uncertainty and endless speculation as to what federal lawmakers will agree upon and when funding changes might be introduced, among the biggest challenges for states are figuring out how to manage, where to assign funds and what changes will be needed.

There are, however, progressive steps that state-based Medicaid organizations can take to prepare for funding shortfalls. The old saying that necessity is the mother of invention is apt in this situation. To prepare for multiple contingencies, including potential funding cuts, these organizations will have to develop flexible and scalable solutions.

Cloud solutions make it possible to optimize capabilities and to become nimble, lean and flexible in meeting the needs of populations because cloud can be easily scaled and adapted to current needs and can match usage and cost while leveraging the scale of industry for innovations.

Efficiencies can be further derived by digitizing the organization, focusing on automation and finding new ways to leverage technologies to deliver innovative services that were not possible in the past, and allowing end-to-end processes to be digitized. For example, using robotics and machine learning to carry out certain administrative tasks could allow the funds used for those tasks to be diverted to caring for the state’s patient population.

Another valuable innovation is segmentation-based analytics, which will help states quickly determine population needs, thereby allowing them to prioritize their services.

Some consumer-driven approaches are under consideration, such as building some form of vested partnership between the member, the provider and the program itself. For example, one state asks Medicaid patients put some of their own money into a health savings account (HSA), to incentivize members to be more selective in using health services.

Organizations can and should be considering many approaches as they prepare for lawmakers to decide how they will broach Medicaid funding. Payment models and drug pricing and rebates will also be in the crosshairs as federal funding is cut. In this environment, state Medicaid organizations must act now, using technology to help them prepare for the future.

George Mathew, M.D. is the Chief Medical Officer for the North American Healthcare organization for DXC. In this role, he serves as the clinical expert and healthcare thought leader to our healthcare clients in transforming the healthcare marketplace. Dr. Mathew graduated from Boston University School of Medicine and completed his residency in Internal Medicine at Greenwich Hospital/Yale University in Connecticut.


Rikin Patel is a DXC Technologist with 25 years of diverse experience in Information Technology.  He serves as the Chief Technologist for DXC’s Americas Healthcare & Life Sciences and is a member of the Office of the CTO. Rikin is responsible for building key client relationships, advising senior leadership on technology trends, and providing thought leadership to effectively grow client and DXC business.





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