Year after year, the agency that pays for health services for the state's quarter million Medicaid enrollees is asked to make cuts. This year, the Department of Health and Human Services is trying to find more than $64 million in savings to meet the state's budget shortfall. This has led to a discussion about turning the state's Medicaid program, known as MaineCare, into a managed care program as a way to save money and improve quality.

"I think the conversation we will have with all of you with next session is whether or not we go to a full managed care environment for different pieces of our Medicaid program, for the entire population," said DHHS Commissioner Brenda Harvey, speaking to legislators on the Health and Human Services Committee. The committee, along with the Appropriations Commitee, has asked for a report on how MaineCare would look under a managed care model.

"I have been asked to look at managed care for long-term care, managed care for transportation, managed care for behavioral health," Harvey said.

Under a managed care program, the state would pay vendors a fixed fee to deliver service -- what's known as capitation. The idea is that to get the most bang for its buck, the company would efficiently coordinate care for MaineCare patients. And that is expected to result in better health outcomes.

Committee chair Joseph Brannigan, for one, is skeptical about managed care programs, and whether they have the patients' best interest at heart. He recalls getting a call from private insurer Anthem Blue Cross Blue Shield. "Now they want to manage my care. Now they don't do that for my sake -- they do it for the underlying, trying to save money. Not save me. They don't give a damn about that."

Maine, however, is one of only four states that doesn't use some form of capitation in its Medicaid programs. Trish Riley, Director of the Governor's Office of Health Policy and Finance, says that the other states are also rural: Montana, Wyoming and South Dakota.

"It's probably the fact that in rural states you have really dispersed provider networks. It's harder to organize care and it's harder to get an entity that stretches over a big enough population to have a managed care organization," Riley says.

Riley's office is working with DHHS on looking at managed care for Medicaid. She says the closest thing to managed care in the MaineCare program is a fee paid to primary care physicians to coordinate care for patients.

But she points out they get the fee no matter what, on top of the usual fees for service. "So in the current system, we reward volume, activities, lots of visits, lots of service, lots of tests. Where we're trying move is to reward value. So it may not be more and more care, it's better and better care."

The physician community, which has had a contentious relationship with managed care, questioned the proposal. Gordon Smith is Executive Vice President of the Maine Medical Association. "I'm somewhat skeptical about the ability of an organizaotin to come in and bid, for instance, an amount of money to take care of a large group of MaineCare patients. These are patients, many of whom are eligible for Medicare and Medicaid, they're patients with chronic conditions and there's no magic bullet here."

Smith says that moving MaineCare to managed care would be very disruptive to doctors and other providers. Like HMO's, vendors would select certain providers to contract with. "Depending upon who was contracting with whom, you could end up with a lot less MaineCare patients in your practice, or you could end up with a lot more."

DHHS is supposed to present a report about the feasibility of a Medicaid managed care program to legislators in April. Harvey said after the meeting with legislators that there will be a lot of work making such a change -- for example, selecting vendors, and doing the actuarial work to set fees -- but that transitioning to a fully managed care program could be done in a year and a half's time.