Last week, Louisiana lawmakers approved one-year extensions for the state’s six largest Medicaid contracts, totaling over $17 billion. These contracts are with six health insurance companies that manage coverage for Medicaid recipients.
State health secretary Bruce Greenstein told the Joint Legislative Committee on the Budget that these contracts are the biggest in Louisiana’s history and continue to grow every year.
The companies involved are Aetna Better Health of Louisiana, AmeriHealth Caritas Louisiana, Healthy Blue, Humana Healthy Horizons in Louisiana, Louisiana Healthcare Connections, and UnitedHealthcare Community Plan.
Medicaid is a government program that provides health insurance for low-income people, including children, pregnant women, and those who are disabled or blind. Louisiana has about 1.5 million people enrolled in Medicaid. Almost 479,000 of them are covered under Medicaid expansion, according to an October report from the state health department.
The total Medicaid budget for Louisiana is about $22 billion this year, with $16.6 billion coming from the federal government. The remaining funds come from state taxes, fees, and payments from medical providers.
The new contracts start in January and are worth about $2.2 billion more than last year. On average, the state will now pay $563 per Medicaid patient each month, up from $514.
This increase is largely due to higher payments to hospitals, doctors, nurse practitioners, and other health care providers. Louisiana raised these rates to encourage more providers to accept Medicaid patients. Before, many doctors and hospitals refused to see Medicaid patients because the payments were too low.
Despite the higher payments, Greenstein said the spending growth per patient is still below the national average for health care inflation.
Lawmakers expressed concerns about the quality of services from the Medicaid companies. They receive complaints about listed doctors and facilities that are not actually accepting new Medicaid patients.
There is also frustration with non-emergency medical transportation (NEMT), which helps Medicaid recipients get to their appointments. Many depend on these rides, especially those with disabilities, but often miss important treatments because transportation services fail to pick them up.
Senator Thomas Pressly of Shreveport questioned whether the new contracts offer enough incentives to improve transportation.
Greenstein said the health department is forming a group to study the problem. He added that other states face similar issues, and Louisiana’s system is among the best.
Governor Jeff Landry’s administration plans to raise performance standards for the private insurance companies managing Medicaid. Greenstein said these companies will no longer be rewarded simply for participating but must provide better services.
As part of accountability measures, the health department is holding back 3% of payments to the companies until year’s end, when they will review whether services met expectations. This is an increase from the 2% withheld last year.
When Landry took office in 2024, his administration considered reducing the number of companies managing Medicaid to lower overhead costs. However, Greenstein told lawmakers last week that having six companies meets the diverse health care needs of different people. Most Medicaid recipients prefer to stay with their current plan rather than switch.
Reducing the number of contracts could be politically difficult due to pressure from large national insurers, though Greenstein did not mention this directly.
Senate President Pro Tempore Regina Barrow sponsored a resolution requiring the health department to report in January on plans to improve oversight of Medicaid managed care and the number of contracted companies. Barrow said she believes Louisiana currently has too many.
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