MEDICAID MANAGED CARE: A REPORT FROM THE STATES
The rapid expansion of Medicaid managed care, particularlyThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
in the form of risk-based programs, and the increasing
sophistication of the structure of such programs, are detailed in
a new report from the National Academy for State Health Policy
The third edition of "Medicaid Managed Care: A Guide for States"
is the result of a 24-page questionnaire sent to all 50 states
and the District of Columbia, as well as site visits to five
states (Arizona, California, New Jersey, Oregon and Tennessee).
NASHP Executive Director Trish Riley said the report illustrates
the evolution of Medicaid managed care. "Early on in a Medicaid
managed care program, states say we can save X amount of dollars.
But, as the program goes on, it is budgetary certainty and not
cost savings that become the primary issue," she said.
STUDY FINDINGS: Among the findings of the study:
o The level of Medicaid managed care activity has grown
substantially since the second edition of the guide was
published in 1994. Currently, only two states --
Alaska and Wyoming -- have no Medicaid managed care
program, down from six in 1994. A total of 36 states
now report operating risk-based managed care programs,
up from 32 in 1994. Conversely, 32 states now operate
at least one primary care case management (PCCM)
program, a decline from 33 in 1994. According to the
survey, there are now between 12 and 13 million
Medicaid beneficiaries enrolled in at least one managed
care program; 8.6 million are enrolled in at least one
risk-based program and 4.1 million in a PCCM program.
o "The number of risk-based programs serving people with
disabilities grew by 67%" since 1994, but there has
been little growth in such programs for the elderly.
According to the report, "[t]he biggest development
since 1994 in terms of eligibility groups enrolled in
Medicaid managed care is the growth of risk-based
programs that include, or are designed specifically
for, people with disabilities." According to Riley, a
parallel can be drawn between what is happening in
managed care for the disabled today with the
development of managed care for the AFDC population.
She noted, "Managed care began with small experimental
programs aimed at determining if it could effectively
serve the AFDC population. Once states became
confident with managed care, it was made mandatory for
AFDC recipients. Currently, the states are developing
small experimental managed care programs for specific
populations of disabled Medicaid beneficiaries, it
remains to be seen when the next step will be taken."
o Risk-based programs are more likely to be served by
Medicaid-only and prepaid health plans than by
commercial HMOs. While 35 of the 38 states with risk-
based plans contracted with commercial HMOs, only 11
contracted exclusively with commercial HMOs for
comprehensive services. In addition, the participation
of "safety net" providers, such as federally qualified
health centers (FQHC) and public health departments, in
risk-based managed care programs has increased
significantly since 1994. FQHCs are now involved in
risk-based plans in 30 states, up from 19 in 1994, and
local health departments are participating as
contractors or subcontracts in 25 states, up from 14 in
1994. Mental health centers, which participated in
risk networks in only four states in 1994, are now
participating in 24 states.
o Twenty-five of the 38 states with risk-based programs
select contractors through RFPs. Sixteen states use a
certification process, through which all plans that
meet the program requirements automatically become
contractors, and four states use both methods. Thirty
of the 38 states operating risk-based plans use rate-
setting to determine capitation for at least one
eligibility group, while eight states use competitive
bids and 11 used negotiations. A "clear majority of
all risk program states now adjust by age (33 states),
sex (28 states), geography (27 states) and eligibility
category (29 states)."
o Of the 38 states with risk programs, 31 have mandatory
enrollment requirements for at least some
beneficiaries. Of the 32 states with PCCM programs, 27
have mandatory enrollment programs. Medicare enrollees
are the group most frequently barred from enrollment in
Medicaid managed care. According to the report,
"[t]his exclusion, combined with our finding that there
has been almost no growth in managed care programs that
enroll the elderly, confirms the difficulty that states
encounter when they enroll this population." However,
states are beginning to explore managed care enrollment
for dual-eligible populations. Six New England states
-- Massachusetts, Connecticut, New Hampshire, Rhode
Island, Vermont and Maine -- are working together to
develop 1115 waivers for coordinated dual-eligible
managed care programs. Riley identified several
difficulties, however, in creating such programs.
First, she noted, Medicare and Medicaid have different
administrative rules, and melding these into a mutually
acceptable system has proven to be challenging.
Second, both programs have separate quality assessment
requirements causing further complications. Finally,
there is the issue of choice. Riley said, "Medicaid
has chosen to restrict choice through mandatory
enrollment, while Medicare is legally barred from
taking such action." She said it becomes very
difficult to administer a managed care plan when many
of the enrollees can opt out of the program at any
o Consumer protection has become a major issue for
Medicaid managed care programs. To help ensure that
consumers choose appropriate plans, states have begun
to rely heavily on independent brokers for plan
marketing and outreach. Since 1994, the number of
states utilizing health benefit managers increased from
eight to 18 in 1996. Most states are also
"standardizing and increasing their oversight" of
Medicaid managed care plans. Thirty-six of the 38
states with risk-based plans collect encounter data, 27
"require the reporting of some version of HEDIS" and 26
require the reporting of utilization data. According
to the National Academy, Wisconsin has been especially
effective at utilizing the aggregate data that it
collects, while Arizona has made exceptional use of
encounter data. Finally, states are increasingly
requiring plans to meet the Health Care Financing
Administration's Quality Reform Initiative.
In addition to working to meet the needs of vulnerable
populations and dual-eligibles, the report concludes that states
need to "improve their data systems to better track managed care
enrollees." Riley said that "states will always want more data."
States are purchasing a health care system for Medicaid
beneficiaries, and they feel a great deal of responsibility for
this. Consequently, she said, they want to collect as much
standardized information as possible. Riley added, however, that
with the advent of managed care and its emphasis on data
collection, the states are gaining a better picture of service
utilization, delivery, access, and quality (Courtright, 3/14).