The Washington Post’s Alec MacGillis looks at some of the pitfalls and challenges states that outsource their Medicaid programs to private managed care companies will face as they try to cover some 16 million people over the next 10 years:

With an expanded Medicaid absorbing at least half of those newly covered under the health-care law, Medicaid HMOs will play an outsize role in managing costs. Some studies suggest that managed Medicaid has, in certain states, slowed the increase in costs without harming care, and even improved care for some conditions. The theory is that insurers can save states money by reducing avoidable treatments — by monitoring diabetics to keep them from needing dialysis, for example.

But managed Medicaid has also produced a steady stream of controversies. Last year, insurer WellCare agreed to pay $40 million in restitution to Florida after it admitted shortchanging children on Medicaid by setting up a subsidiary to make it look like WellCare was spending more on medical care than it really was.

Today, 70 percent of the 48 million Medicaid enrollees are in a managed plan. States typically pay insurers a per-person rate and the insurers, or HMOs, negotiate rates with doctors and hospitals.

Indeed, from Medicaid’s beginnings in the mid-1960s, states have struggled with skyrocketing health care costs and diminishing provider participation (the program’s reimbursement rates are generally lower than private insurers or Medicare). By the 1990s, policy makers began to see managed care as a way to control spending and improve patients’ access to primary care physicians. Approximately 70% of Medicaid enrollees are already covered by some sort of managed-care plan “rather than by a fee-for-service model in which the states simply pay bills for care.”

With the new health care law, private insurers are hoping to expand that reach. In April, UnitedHealth Group Inc. released a report “describing a variety of managed-care strategies it says will help cash-strapped states solve budget problems and doctor shortages that hobble the government health-care programs for the poor.” Cash strapped states are strongly considering partnering with private insurers, but the evidence on the degree to which managed care actually accomplishes these goals varies. Medicaid patients in some states seem to have better access to doctors, while other surveys have found that overall improvements in access associated with managed care are minimal.

States view managed care as way to budget their Medicaid expenditures and managed care firms consistently claim that they’re relying on coordinated care to reduce costs. That may be true in some instances, but if you talk to providers, they’ll tell you that many commercial companies simply look out for short term profits and pay them less than private insurers. Consequently, they pull out of the Medicaid program.

So it seems that as states begin to think about how to expand their Medicaid programs and contract with managed care companies, they need to remain vigilant in ensuring that the firms are paying providers in thoughtful ways, rather than simply reducing their reimbursements. As payers, states can become drivers of innovative payment reforms, but they need to keep an eye on patient outcomes and resist the urge of simply passing along risk to a third party.

Just days after House Minority Leader John Boehner (R-OH) released a 43-page health care reform report card, The Senate Doctors — Sens. Tom Coburn (R-OK) and John Barrasso (R-WY) — are out with their own 32-page booklet on all of the problems one can anticipate from the yet-to-be implemented provisions in the new health care law. The report is what you would expect:

– 100 million Americans will lose their current form of health insurance.

– Taxes and fees on pharmaceutical drugs, medical devices and providers will be passed on to consumers.

– The report also argues that insurance premiums will shoot up because large numbers of young and healthy Americans will avoid signing up for government-mandated insurance unless and until they need it.

It’s fairly elementary stuff that an aide pasted together using the available press clippings and Republican talking point points, but it also points to the fact that whether or not these predictions are true will depend on how well the law is implemented by the federal and state governments. Republicans have settled on a strategy of complaining about every projected problem and concern, rather than offering legislation to improve the cost control mechanisms of other provisions in the current law. They’ve decided to drag down implementation, instead of trying to shape it. And that could become problematic.

You need to look no further for the consequences of lawmaker inaction than Sunday’s Boston Globe. The Massachusetts health law did not deal with cost control, but last July a panel proposed paying “doctors and hospitals buffet style – one price per patient, no matter what they consume – rather than à-la-carte fees for each and every service.” The policy has garnered some opposition from provider groups and lawmakers have been hesitant to act. Citing political opposition and technical challenges, state Senate President Therese Murray, a Democrat, “told the Boston Globe she would wait at least until next year to move legislation on the change after ‘going around in circles’ with policymakers for months.” Meanwhile, health costs are increasing as fast as 8 percent a year.

So what happens if lawmakers do the same thing on the national level? Jonathan Cohn reminds us that “politicians might decide to be careless with taxpayer dollars–and taxpayers might let them get away with it,” but they can’t exactly “force tomorrow’s to be fiscally responsible.” Just like today’s lawmakers can’t fix SGR without paying for it, tomorrow’s “leaders” will have to pay for whatever it is they take out. There is truth to that, but it’s all them ore likely to create problems if Coburn, Barrasso, and the rest of the GOP continue to work very hard to ensure that their predictions are come to fruition.

Refusing to allow Republicans to delay implementation of reform any longer, the White House announced last night that President Obama would recess appointment Harvard Professor Don Berwick as head of the Center for Medicare and Medicaid Services (CMS), a position vacant since 2006. Republicans had characterized Berwick as a proponent of “health care rationing” and the British health care system just days after Obama announced his nomination in April, precluding any possibility of an open and honest confirmation process that could contextualize Berwick’s statements or debate the need in using quality measures to control health care spending.

Now, the GOP is outraged by his recess appointment:

- SEN. MITCH MCCONNELL (R-KY): “As if shoving a trillion dollar government takeover of health care down the throat of a disapproving American public wasn’t enough, apparently the Obama Administration intends to arrogantly circumvent the American people yet again by recess appointing one of the most prominent advocates of rationed health care to implement their national plan.”

- SEN. JOHN BARRASSO (R-WY): “This recess appointment is an insult to the American people. Dr. Berwick is a self professed supporter of rationing health care and he won’t even have to explain his views to the American people in a Congressional hearing. Once again, President Obama has made a mockery of his pledge to be accountable and transparent.”

- SARAH PALIN: SarahPalinUSA: Press Corps-pls do your job as Obama sneaks in Berwick appt;pls cover his mission:socialized healthcare&rationing based on”quality of life.”

The GOP’s rhetoric justifies Obama’s recess appointment. Had Berwick’s nomination gone through the committee process, it would have undoubtedly been subject to anonymous GOP holds and delays. The party would have used the hearings as an opportunity to revive the old “death panel” and health rationing smears, putting Democrats on the defensive just as the first benefits of reform are beginning to take effect. The shenanigans would have jeopardized the implementation of the health care law, which relies on CMS to “expand coverage to millions of new Medicaid recipients” and “re-engineer Medicare itself, so that it pays for services in ways that foster better, more efficient care.” As Mark McClellan, who served as CMS administrator from 2004-2006, put it, “What happens at CMS in the next few years will determine whether the new legislation actually improves quality and lowers costs.” “Don [Berwick] has a unique background in both improving care on the ground and thinking about how our nation’s health care policies need to be reformed to help make that happen,” he said.

Berwick is a respected Harvard professor and pediatrician who has built a reputation for improving quality and reducing health care costs. The American Hospital Association, the Federation of American Hospitals and a host of other provider groups praised Berwick, predicting that he “will bring a wealth of knowledge and practical experience to CMS from his perspective as a physician, teacher and passionate advocate for high-quality care.” Berwick’s “experiences from his lifelong quest to find better and safer ways to deliver care will greatly inform and enhance the implementation [of] healthcare reform,” the groups wrote in letter to the Senate Finance Committee.

Thomas Scully, who led the CMS from 2001 to 2003 put it best: “He’s universally regarded and a thoughtful guy who is not partisan,” he said. “I think it’s more about … the health care bill. You could nominate Gandhi to be head of CMS and that would be controversial right now.” 

Berwick’s appointment will expire at the end of the next session of Congress, in late 2011.