Managed Care Presents Advantages, Challenges for Medicaid

September 22, 2011

While private managed care has become a popular means of extending Medicaid coverage, a recent survey of the programs in each of the 50 states illustrate that private managed care plans don’t always deliver the savings that policy makers expect.

The survey, which looked at Medicaid managed care (MMC) data from 2010, was conducted by the Kaiser Family Foundation.

According to the survey report, forty-seven states and the District of Columbia have some form of managed care in place for Medicaid enrollees, with some using risk-based managed care organizations and others relying on primary case care management.

Growth in MMC has been rapid over the past two decades, now covering just over 70% of the Medicaid population. Texas and Florida each have managed care pilot programs, but are taking steps toward extending MMC statewide.

Only three states having small Medicaid enrollments – Alaska, New Hampshire and Wyoming – reported having no Medicaid populations enrolled in MMC programs.

The growth trend in MMC is expected to continue, with an extension of Medicaid coverage in 2014 to additional persons as mandated by the Affordable Care Act.

While the central reason for moving Medicaid to managed care is to reduce expenditures, it can also harm its effectiveness at ensuring persons receive the care they need. Managed care sometimes means lower payment to providers, who then drop out of participation.

The study found that to actually improve care via a managed care system, additional dollars were sometimes required to maintain acceptable capitation rates and to allow access to the care that is actually needed.

Roughly two-thirds of the states surveyed reported access issues, mostly with dental, pediatric specialties, and behavioral health providers. At the same time, improved access to care was cited as a benefit of managed care programs.

In cases where managed care was relied on chiefly to cut expenditures, the result was often diminished access to care as providers drop out of MMC networks.

Other shortcomings of MMC cited in the survey report are ill-conceived transitions from fee-for-service, provider networks that are not sufficient to meet patients’ needs, and poor oversight of managed care by state Medicaid programs.

Based on responses from the states, most have not fully grasped the implications to Medicaid from the Affordable Care Act, and how that will impact operation of MMC with respect to availability and standards of care.

Other findings:
• Some states have shaped their MMC programs to reduce the use of some high-cost care settings like emergency rooms and to attack preventable conditions such as obesity.
• Half of the states had strategies to reduce disparities in coverage and/or care based on race or ethnicity.
• Most states had strategies for improving primary care and better coordination of care for Medicaid beneficiaries that have complex care needs.
• There is a broadening of effort to improve care for Medicare-Medicaid dual eligibles.