Amid Managed Care Reforms, Alabama's Governor Hints at Possible Medicaid Expansion

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Fresh off re-election, Governor Robert Bentley moved this week to name 6 groups to coordinate managed care in Medicaid, as part of a cost-saving strategy he launched in 2012. But the bigger news has been his reversal on expanding the program; as in other Southern states, hospitals have been pressing for the change to solve fiscal problems.

This week, Alabama Governor Robert Bentley offered an update on a yearlong effort to bring managed care reforms to his state’s Medicaid program, which treats some of the nation’s poorest residents.

But it’s the prospect of Medicaid expansion that would bring real change to this Deep South state, where rates is diabetes and obesity are among the highest in the country, and hospital leaders have begged for relief.

Alabama’s Bentley easily won re-election on November 4, 2014, and on December 11, 2014, announced he was “open” to the idea of Medicaid expansion. Bentley was careful to say he would seek changes, including a possible work requirement—even though CMS refused a similar demand by outgoing Pennsylvania Governor Tom Corbett in that state’s expansion waiver.

The news had Alabama conservatives and Democrats alike howling, since it contrasted sharply with Bentley’s campaign statements, but it also confirmed whispers that some in the healthcare community had heard throughout the year.

Like Tennessee, which on Monday unveiled a Medicaid expansion proposal that will require federal consent, Alabama has been rural hospitals suffer due to the lack of coverage for the population between its existing Medicaid population and those earning up to 138% of the federal poverty level.

Hospitals Push for Change


Because the Affordable Care Act (ACA) assumed that Medicaid expansion would be universal, it closed off some other forms of compensation for caring for the uninsured, leading to steep losses for these safety net hospitals. This is problematic in the Deep South, where states have more poor residents and stricter standards to qualify for Medicaid in the first place. Rural hospitals that serve small, poor population bases may be lifelines not only to their patients but also to their local economies: they may be the only link to healthcare for some poor residents, and the hospital is often the area’s largest employer and purchaser of goods and services.

Thus, with good reason, hospital advocates have linked the failure to expand Medicaid with Alabama’s overall economic viability. In July, Danne Howard, a senior vice president for the Alabama Hospital Association, told an economic development forum that 75% of those who come to the state’s emergency rooms for care were uninsured, and often at a stage of illness that is difficult to treat. Alabama’s refusal to expand Medicaid was only making things worse, she said.

"Things are tough," Howard said, according to

Tennessee’s announcement and Bentley’s changing signals come the same week that a Kaiser Health Tracking Poll revealed that Republican officials’ refusal to expand Medicaid or set up state exchanges due to ACA opposition may be misplaced.

According to the poll, while Republicans as a group do strongly oppose the healthcare law, their resistance is rooted in opposition to the individual and employer mandates. A slim majority of Republicans support both Medicaid expansion (52%) and financial assistance for the working poor (55%), while a solid majority (66%) support exchanges that let consumers shop for healthcare.

Managed Care in Medicaid

For now, Governor Bentley said he is keeping the managed care proposal separate from Medicaid expansion, and this week he announced 6 groups certified on a probationary basis to serve specific regions of the state. Plans for managed care began with a task force in 2012 and are designed to slow the growth of Medicaid costs, which in Alabama are on pace to reach $685 million, or a third of the state’s general fund. More than 1 million residents receive Medicaid in Alabama, which had an estimated population of 4.8 million in 2013, according to the US Census Bureau.

The slow movement toward managed care in Medicaid required action from the state legislature, which in 2013 approves changes from fee-for-service payments to physicians and hospitals to capitated monthly payments. The new system is set to take effect October 1, 2016.

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