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Bayou Health Saves Louisiana up to $437M in 2015

Date: 03/04/16

The Bayou Health plans saved Louisiana nearly $440 million in 2015 when compared with what the state would have paid under the old fee-for-service model, according to a new study released by the Louisiana Association of Health Plans (LAHP).

The study, which was performed by Wakely Consulting Group, concludes that the managed care organizations are operating efficiently and producing significant savings when compared to the costs that DHH would have incurred under the old, fee-for-service program.

The Wakely study indicates a Bayou Health savings range from 6.7 percent, or $250 million, to 11.2 percent, or $437 million. The study was conducted by members of the American Academy of Actuaries and is actuarially sound.

LAHP CEO Jeff Drozda said the report highlights the benefits of the partnership between private Bayou Health companies and the Louisiana Department of Health and Hospitals (DHH).

“The Louisiana Association of Health Plans and our five Bayou Health plan members are actively working with DHH to provide the high-quality care Louisiana residents deserve,” Drozda said. “This study shows the partnership is successful—we’re seeing significant savings and improved outcomes with Bayou Health.”

DHH Secretary Dr. Rebekah Gee said managed care is a best practice used by private insurance companies and creates incentives for members to get primary and preventative care instead of more expensive care.

“Under the old Medicaid system, doctors, hospitals and others were paid for every service they provided. With managed care, we pay the managed care organizations (insurers) a set monthly fee. In order for those organizations to be profitable, they direct their members to primary care first, offer free or low cost preventive care such as screenings, and provide case management services for patients with chronic conditions such as asthma or diabetes. The result is better care for patients and a more efficient use of health care resources,” Gee said.

Recognizing that the Department of Health and Hospitals is facing a budget shortfall in the current year and an anticipated shortfall for next fiscal year, Secretary Gee added that cost containments must be achieved.

“This study is evidence that by adopting the same best practices used by private insurers to manage care, the State can better control the cost of the Medicaid program while ensuring our citizens get the right care at the right time,” Gee said.

The five Bayou Health plans are Aetna Better Health of Louisiana, Amerigroup RealSolutions, AmeriHealth Caritas Louisiana, Louisiana Healthcare Connections and UnitedHealthcare. To download the full report, click here.