Medicaid must rein in costs, advisory panel says

WASHINGTON — A federal advisory panel says that long-term care for aging baby boomers threatens to bankrupt Medicaid, and it recommends extensive changes to rein in costs, including greater use of managed care for the sickest Medicaid recipients.

The proposals set up a likely clash between the new Democrat-controlled Congress and the Bush administration, which has sent strong signals that it will seek big savings in Medicaid next year.

Panel members adopted the recommendations last week, by a vote of 11-1, and are drafting a report to be submitted next month to Mike Leavitt, the secretary of health and human services. Leavitt created the panel in May 2005 and is receptive to many of its proposals.

The panel, known as the Medicaid Commission, said states should have more freedom to alter benefits and eligibility for the program, which serves more than 50 million low-income people.

Moreover, it said states should be allowed to enroll some of the sickest Medicaid recipients, including nursing home residents and people with disabilities, in managed care plans.

The panel said such plans "would provide a medical home and better coordinated care" for people entitled to both Medicaid and Medicare. Care is often fragmented now because Medicaid pays nursing homes while Medicare is the primary payer for doctors and hospitals, and in many cases "clinical data is not shared," the panel said.

People enrolled simultaneously in the two programs account for 13 percent of Medicaid recipients, but more than 40 percent of Medicaid costs. Medicaid, which is financed jointly by the federal government and the states, covers two-thirds of the nation's 1.6 million nursing home residents.

"The anticipated costs for long-term care services in this country threaten the future sustainability of the Medicaid program," the panel warned. It recommended that the federal government and the states provide new tax incentives for people to buy private insurance covering the costs of long-term care, so they would not rely so much on Medicaid.

"Public policy should promote individual responsibility and planning for long-term care needs," said the panel, led by former Gov. Don Sundquist of Tennessee, a Republican.

More generally, the panel said states should be free "to consolidate or redefine eligibility categories" and should be given "greater flexibility to design Medicaid benefit packages."