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Healthcare

UPDATE 1-UnitedHealth lays out steps for Medicaid savings

* Insurer sees $366 bln in savings over next decade

* Medicaid set for big expansion under reform (Recasts, adds details from report, executive comments)

NEW YORK, April 15 (Reuters) - Shifting more Medicaid beneficiaries to managed care plans and other strategies can significantly help states offset budget pressures caused by the health program for poor Americans, UnitedHealth Group Inc UNH.N said on Thursday.

The health insurer, whose Americhoice division is the largest Medicaid managed care company, released a report detailing ways to produce savings under Medicaid.

The report comes as the newly passed health reform law sets in motion an expansion of Medicaid by 30 percent to an estimated 15 million more members. Yet Medicaid is a financial burden for many states, which administer the program with the help of federal funding.

The report describes $366 billion in estimated savings that can be achieved over the next decade. The expansion of Medicaid is expected to cost more than $430 billion from 2011-2019, the company said.

“We certainly do think that care management inside Medicaid produces better results for consumers and for states,” Simon Stevens, a UnitedHealth executive vice president and the company’s point person on reform, said in an interview.

The 2014 expansion of the Medicaid program presents one clear growth area for UnitedHealth, which has about 3 million Medicaid members, and other health insurers, although that growth comes with some risks. [ID:nN30179206]

Large diversified insurers such as UnitedHealth as well as smaller insurers that specialize in Medicaid such as Amerigroup Corp AGP.N and Centene Corp CNC.N have increased their share of the overall Medicaid market in recent years.

The share of Medicaid enrollees in managed care plans rose from 56 percent to 71 percent in the past 10 years, according to the Kaiser Family Foundation. The companies bid for contracts awarded by states.

About one-fourth of UnitedHealth’s projected savings stems from moving more Medicaid beneficiaries into managed care plans and from adding the new members from the expansion into the plans.

One example of the benefits of such managed care plans, Stevens said, was an Americhoice effort in Tennessee to identify women with high-risk pregnancies, leading to fewer intensive care hospital stays.

An even greater area of projected savings comes from increased use of managed care for people with long-term care needs, where Medicaid managed care plans have seen far less penetration.

“For the long-term care population there hasn’t been as much progress,” Stevens said. “That gets particularly complicated with the interactions between Medicaid and Medicare, and the savings opportunities are very substantial there both for the feds and for the states.”

Another big savings area would come from modernizing Medicaid’s administrative and transactional processes, through new health information technology systems and other methods.

The UnitedHealth report also estimated the changes to Medicaid enrollment and costs on a state level. California and Texas are expected to see the greatest expansion in enrollment by 2019 -- both with around 2 million new members --- while Florida is projected to add another 1 million members.

Ten states will see their Medicaid rolls swell by more than 50 percent as a result of the legislation, according to UnitedHealth. (Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and Matthew Lewis)

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