Social services: Meet managed care demands with operating solutions

Managed care needs are rising, but funding is not necessarily following suit. With an understanding of the changes to come, not-for-profit social service agencies will have a clearer view of their options for meeting this challenge.

Demand for services will increase In most states, children and/or adults with disabilities are subject to mandatory participation in a managed care arrangement for some or all of their physical and mental health care, as well as other needs. We expect many states to expand their use of managed care services in the coming year, particularly for the Medicaid population, as the Patient Protection and Affordable Care Act extends Medicaid eligibility to many uninsured low-income adults, including those with disabilities. Based on the most recent Medicaid managed care enrollment census data available, 36 million participants are enrolled in managed care programs; this constitutes over 70% of all Medicaid participants. We anticipate the number of participants within managed care programs to increase exponentially. The impact of this growth in the Medicaid population will be keenly felt by organizations that serve this population.

Reimbursement overhaul will impact delivery and resources Managed care changes will have a vast effect on every aspect of service delivery for virtually all social/human service providers. Under the new Medicaid reimbursement policy, agencies will no longer bill on a fee-for-service basis. Instead, managed care will transition agencies’ reimbursements to a single per-month, per-member flat payment, regardless of how many services the individual receives.

Up until now, most agencies have operated under a cost-based reimbursement funding mechanism. If the needs of an individual changed, services would change, as would reimbursements. In a managed care environment with flat reimbursements, it will — at least initially — be challenging to address changes in service needs; nonprofit social service agencies almost uniformly have limited resources to provide additional services without additional reimbursement.

Managed care will require revisions in staffing complements, administrative support and, inevitably, the acceptance of members. The potential for more members and services will require organizations to add care professionals or else risk unduly straining current staff. Additional reporting requirements will require extra staff training and time to maintain organizational compliance. Furthermore, agencies that operate in multiple states will have to deal with differences in Medicaid funding on a state-by-state basis.

Determine your response to the coming challenges You may need a combination of solutions to sustain operations and maintain quality service:
  • Consider consolidation with other agencies, which could work to your agency’s advantage by sharing back-office administrative costs.
  • Examine opportunities for incentives to encourage employees to serve more individuals, thus boosting total reimbursements.
  • Weigh the pros and cons of accepting funding designated for certain members.
  • Analyze your entire operation for opportunities to streamline processes to increase efficiencies and reduce costs.
  • Develop a training continuum for staff involved in the entire billing cycle to ensure charting, evaluation and billing are maximizing your agency’s reimbursements.
  • Consider your agency’s approach to donor development, as well as opportunities to enhance the process or embark on a new campaign.

Your agency’s response to operating challenges will determine its ability to continue its mission to serve individuals in need.

See the full report: The State of the Not-for-Profit Sector in 2015