Medicaid Managed Care

Originally intended to provide medical coverage for the impoverished, Medicaid now also caters to the needs of millions of people categorized as belonging to the aged, the disabled, the blind and medically-needy groups. While it is a partnership program by the Federal government and the States, each individual state is allowed great latitude when it comes to establishing their eligibility rules, the scope of benefits and services they provide to members and the regulate rates.

As the nation’s largest provider of health services to low income families, the Medicaid program has heavily relied on managed care to deliver health benefits and other services. A vast majority of Medicaid recipients now receive medical care and health services through a variety of arrangements with managed care organizations.

There are two main forms of Medicaid managed care. These are Risk-Based Managed Care Organizations and Primary Care Case Management.

Risk-Based MCOs – Under this model, a managed care organization is compensated a permanent monthly fee per enrollee, which is known as capitation, and takes on a partial or full financial risk for the delivery of a variety of services. Some plans contract on a limited basis, such as limiting to ambulatory services only.

Fee-For-Service Primary Care Case Management – Under this model, a medical provider, typically a person’s primary care physician (PCP) is authorized to act as a watchperson that endorses and supervises the provision of services to Medicaid recipients. These PCPs do not take on any financial risk for these services, and are paid monthly, per-patient as a case management fee.

Medicaid managed care rapidly grew in the 90s. More than 2 million Medicaid beneficiaries were enrolled in some form of managed care in 1991. In 1997, the number of Medicaid recipients who were enrolled in some form of managed care grew exponentially, reaching two-thirds of all beneficiaries, amounting to almost 30 million. Around 19 million of these were members who were covered by fully-capitated arrangements, while almost 6 million were enrolled in Primary Care Case Management.

While managed care is appealing due to its cost-cutting potential and effective coordination of care for beneficiaries, many agree that there is a risk of it not being able to help in the best possible way, the people it needs to serve if not carefully supervised.

In fact, studies have shown that there have been access and satisfaction problems for Medicaid beneficiaries receiving services through managed care compared to those who are enrolled in Medicaid fee-for-service. More research is being conducted as to how to improve Medicaid managed care to better serve beneficiaries, such as the disabled, the aged, the blind and the poor.

The success of Medicaid managed care relies heavily on sufficiency of capitation rates as well as the ability of the federal government and the states to supervise access to and quality of care.