Louisiana's Historic Medicaid Contracts Approved! 🚀💊

By: Julie O'Donoghue
Louisiana Illuminator

Louisiana lawmakers signed off on one-year extensions to the state’s six biggest government contracts, collectively worth more than $17 billion. The agreements are with the six health care companies that manage health insurance for Louisiana Medicaid recipients.

“These are the largest contracts that the state of Louisiana has in history,” state health secretary Bruce Greenstein told Louisiana’s Joint Legislative Committee on the Budget Thursday. “They are [the largest] every year because they only go up.”

The managed care organizations receiving the contracts are: - Aetna Better Health of Louisiana
- AmeriHealth Caritas Louisiana
- Healthy Blue
- Humana Healthy Horizons in Louisiana
- Louisiana Healthcare Connections
- UnitedHealthcare Community Plan

Medicaid provides government-backed health insurance for low-income residents, including children, and people who are disabled, blind and pregnant. Louisiana has a little over 1.5 million Medicaid enrollees, including 479,000 people insured through Medicaid expansion, according to health department projections from October.

Overall, Louisiana’s Medicaid budget is approximately $22 billion in the current fiscal year, including $16.6 billion provided by the federal government. The rest of the funding comes from a mixture of fees, dedicated taxes that medical providers pay and state tax revenue collected from other citizens and businesses.

The new Medicaid contracts take effect in January and are worth approximately $2.2 billion more than the companies received last year. The average amount the state pays the managed care organizations to insure Medicaid members will go up from $514 to $563 per patient per month.

Much of that increase can be attributed to Louisiana’s decision to pay more money to hospitals, doctors, nurse practitioners and other health care providers who treat Medicaid patients, according to Greenstein and other members of his staff.

Louisiana significantly boosted the amount of money Medicaid pays to hospitals and medical professionals in order to expand the network of providers who take Medicaid patients. Several doctors and hospitals were refusing to see people with Medicaid coverage because they considered Medicaid reimbursement rates too low to cover their costs.

Even though payments to the Medicaid health care organizations are going up significantly, Greenstein said the growth in the Louisiana program’s spending per patient is lower than national health care inflation.

Legislators expressed frustration last week that the six companies offering Medicaid plans have fallen short of adequate services in the past. For example, they hear complaints from constituents about the plans listing doctors and medical facilities as being available to Medicaid enrollees when they aren’t taking new Medicaid patients.

There’s also an ongoing frustration with non-emergency medical transportation services, which help get Medicaid enrollees who can’t drive or take public transportation to and from their appointments. Legislators said constituents relying on this transportation, including those with disabilities, miss crucial treatments and doctors’ visits because their rides never pick them up.

Sen. Thomas Pressly, R-Shreveport, questioned whether there were enough incentives to improve non-emergency medical transportation in the new Medicaid contracts.

Greenstein responded that the health department was setting up a group to study the transportation issue, and that other states have similar challenges to the ones seen in Louisiana.

“No one has a system that is superior to ours” when it comes to non-emergency medical transportation, Greenstein said.

More generally, the state health secretary said Gov. Jeff Landry’s administration intends to raise standards for the private health insurance companies receiving the giant Medicaid contracts. They will no longer be rewarded with “participation trophies” for carrying out their services, Greenstein said.

“This is a hard reset on our side,” he said.

The state health department is withholding 3% of the money paid out on a per patient basis to the Medicaid contract holders until the end of the year when it can be determined whether they provided adequate services. Last year, the agency withheld less, only 2%, until a similar end-of-year review was conducted, according to a fact sheet the health department provided.

The Landry administration initially showed interest in reducing the number of health insurance companies with Medicaid plans from the current six when the governor took office in 2024. Lawmakers in both parties have questioned whether the state is paying too much for overhead and administrative costs with so many companies involved.

But Greenstein, a Landry appointee, didn’t seem enthusiastic when lawmakers asked about those efforts last week. The six companies meet different people’s health care needs, and very few Medicaid enrollees change their plan from year to year, he said, indicating they prefer to stay where they are.

Reducing the number of contracts could also prove difficult because of the political pressure that would ensue from national health care companies losing out on the business, although Greenstein didn’t mention that as a reason to avoid doing so.

Still, a legislative resolution Senate President Pro Tempore Regina Barrow, D-Baton Rouge, sponsored earlier this year requires the state health department to submit a report in January outlining the department’s plans for addressing oversight of Medicaid managed care organizations and how many companies currently have contracts.

“It’s not a secret that I think we have too many,” Barrow said last week.