Report: Publicly Traded Managed Medicaid Plans Have High Clerical Costs
Medicaid managed care plans owned by publicly traded, for-profit companies spend more on administrative costs than similar plans owned by non-publicly traded companies, according to a study by the Commonwealth Fund, CQ HealthBeat reports (CQ HealthBeat, 6/15).
The study examined 225 Medicaid managed care plans covering 23.8 million beneficiaries. The findings show that publicly traded companies spent 14% of premiums on administrative costs, while non-publicly traded plans owned by health systems, local health care providers and clinics spent 10% of premiums on administrative duties. The report noted that health care provider-sponsored plans spent the least on administrative costs, using 8% of member premiums (Vesely, Modern Healthcare, 6/15).
The report also found that 27% of publicly traded plans covering only Medicaid beneficiaries scored lower on reported quality measures than non-publicly traded plans. Publicly traded plans scored 13 percentage points lower on managing chronic illness and 11 percentage points lower on a composite score measuring preventive care, according to the study.
Study authors noted that enrollment in Medicaid managed care plans is increasing, a trend they expect to continue.
CMS reported that in 2009, 72% of Medicaid beneficiaries were fully or partially covered by a managed care plan, compared with 55% in 2000. Between 2004 and 2009, the number of beneficiaries in Medicaid managed care plans owned by publicly traded companies increased from 5.6 million to 9.8 million.
Lead author Michael McCue, professor at Virginia Commonwealth University, said, "Managed care plans represent a large piece of Medicaid's future, and â¦ it will be crucial that state Medicaid directors responsible for managed care contracts take into account publicly traded plans' commitment to Medicaid and whether they are striking the right balance between providing high-quality care to patients and increasing earnings" (CQ HealthBeat, 6/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.