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Georgia Governor Nathan Deal

ATLANTA - Georgia officials are exploring whether the state could expand its use of for-profit companies to hold down ballooning Medicaid costs and better coordinate care, The Atlanta Journal-Constitution reported Sunday.

The program, which costs about $21 million daily, provides care for the needy, aged, blind and disabled and low-income families with children. Some 1.7 million residents are enrolled.

"The current Medicaid program design cannot be sustained," said David Cook, the commissioner of the Georgia Department of Community Health. He expects an annual Medicaid deficit of more than $600 million within three years. "By acting now, we can save this important safety net program while improving quality care and providing greater value for patients and the public."

In January, a consultant's report recommended using private companies to manage Medicaid. Since then, state authorities have convened task forces of health care providers and others to explore the options. Those choices range from maintaining the current system to letting hospitals and doctors manage care. Now state health officials are preparing to make decisions.

Gov. Nathan Deal, a Republican, said the department has taken the right approach by analyzing its options. Lawmakers would not need to approve the proposed changes.

"Unsustainable costs are the driving forces behind the state's Medicaid redesign," said Deal spokesman Brian Robinson, "but beyond that, Gov. Deal wants reforms that will focus on higher-quality outcomes for recipients."

Medicaid officials said three companies already coordinating Medicaid treatment largely for poor children have saved the state more than $400 million between 2007 and 2011. Peach State Health Plan, for example, said it has reduced the number of preterm births and made it less likely that children in its program will need to visit a hospital for asthma treatment.

But a state-ordered report found that Georgia's management companies performed at or below the 50th percentile for 40 of 47 measures of quality analyzed in 2009 compared to other managed care programs.

Medical providers have questioned whether for-profit companies can improve care, spend less than the current system and earn a profit in a program that caregivers say fails to pay them enough for treating Medicaid patients.

The president of the Medical Association of Georgia, Dr. Sandra Reed of Thomasville, said about half of her practice deals with people using Medicaid. Physicians in fields dominated by Medicaid patients have said the program's low payments and red tape force them to spend more time focusing on claims and less time on patients. If the state increasingly uses for-profit companies to manage care, doctors said it could put more financial pressure on them.

Reed, for example, said she has added cosmetic services to her practice.

"We just can't keep our doors open if all we do is run our practice on what we make from practicing medicine," she said.