Report: Missouri could save billions with Medicaid overhaul

JEFFERSON CITY, Mo. -- Missouri could save up to $1 billion a year within the next four years if it overhauls the state's Medicaid health insurance program, according to a study from a consulting team.

A draft of the report obtained by the St. Louis Post-Dispatch does not recommend tightening eligibility rules for Medicaid. State lawmakers are separately considering a plan to require healthy Medicaid recipients to work.

The consulting firm, McKinsey & Co., said the state could reduce Medicaid costs by altering reimbursement rates for hospitals, doctors and nursing homes. The report also recommends more people be moved to home-care services and states prescription drug costs could be better managed.

"Without significant changes, Medicaid spending may comprise 26 percent to 30 percent of state general revenues by 2023. To bring growth of Medicaid spending in line with the level of economic growth of the state while preserving access for participants and avoid reducing eligibility or coverage, significant savings would be necessary," according to the report.

The study began last year after former Gov. Eric Greitens pushed to find ways to control Medicaid's escalating costs. The consultants were paid $2.7 million.

Gov. Mike Parson said Monday the state owes it to citizens to maximize the use of tax dollars spent on Medicaid.

"Ensuring that each and every Missourian has access to the quality health care they deserve is crucial to improving Missouri's workforce and infrastructure," Parson said.

The study found Missouri spent nearly $10 billion on Medicaid in 2018, funded with 53 percent in federal funds and 21 percent in state general revenue, with the balance paid by taxes on hospitals and other funds.

The health-care industry and advocates who are concerned the state will cut off services to vulnerable residents are likely to object to some of the recommendations.

For example, the study said the state could save up to $270 million if it adjusted a decades-old system of reimbursing nursing homes for care. The consultants also say the state could save money by improving health-care offerings in rural areas, where recipients may go to hospitals for basic services instead of lower cost clinics and doctor's offices. And, as noted by the report, Missouri paid $186 million last year to reimburse care by out-of-state patients.

The study comes as Missouri's Medicaid rolls are already dropping faster than in other states. Parson has introduced a budget calling for $50 million less in health-care funding because of a drop of more than 71,000 enrollees over the past year. His administration attributed the decrease to an improving economy.

The effort to reduce Medicaid costs will be led by former House Speaker Todd Richardson, a Poplar Bluff Republican who became the state's Medicaid director last year.

"We must now begin the hard work of planning and implementing a transformation of Missouri's Medicaid program," Richardson said. "While the report identifies a range of options for the state to consider, the path forward will ultimately be determined by what is best for Missouri."

Information from: St. Louis Post-Dispatch, http://www.stltoday.com