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Utah Medicaid's managed care experiment is now on firmer footing, says the state's Inspector General.

The Utah Department of Health is in contract negotiations with four health plans that, starting in January, will manage care for 70 percent of the 252,000 Utahns on Medicaid. The "accountable care" experiment was touted for its potential to save taxpayers $770 million over seven years.

In an Aug. 2 memo detailing weaknesses in draft contracts, Inspector General Lee Wyckoff cast doubt on whether those gains would be realized.

But health officials have since added safeguards to protect against fraud and ensure that patients have access to quality care, he reported in an Oct. 15 audit. Added to the contracts were:

• Financial penalties to guard against health plans going over budget or rationing care.

• A clear mechanism for the Inspector General to recoup misspent funds.

He is still pressing for more direct oversight of the plans and a financial analysis of what the state expects to reap from its investment. But the audit cites no reason to delay contract negotiations.

Backed by health industry chieftains and unanimously approved by the Legislature, the Medicaid overhaul was pitched as a way to preserve Utah's low-income health safety net, which is set to explode in size under federal health reform.

It envisions steering Medicaid patients into accountable care organizations, or ACOs, managed care networks that would be paid monthly lump sums per patient. If an ACO spends more than allotted for care and prescription drugs, it absorbs the loss. If it spends less, it gets a share of the leftovers — similar to old HMOs of the '90s.

Most savings will come from limiting inflation; funding for the ACOs can't grow faster than the state's budget.

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