Medicaid Managed Care

Health care spending is swamping the budgets of both federal and state governments, with Medicare and Medicaid being the primary offenders.  For the states, Medicaid spending is often the number one budget item and its growth during the recession is creating budget crises in many states.  The proposed expansion of Medicaid as part of health reform will only add to the pressures.  The political nature of the program makes it difficult to enact true reforms.  Medicaid started out as an almost exclusively fee-for-service program but states are increasingly moving beneficiaries to managed care plans in whole or in part.   A new Kaiser Foundation report describes these state managed care Medicaid programs.   (KFF Report)

About 71 million Americans will be covered at least one month by Medicaid in 2011, with average monthly enrollment at 55 million.  About 71% of these beneficiaries will be enrolled in some form of managed care plan, a percent that has grown steadily over the last two decades.  Only three small states, Alaska, Wyoming and New Hampshire, report having no Medicaid managed care program as of the end of 2010.  Many of the states have comprehensive plans; some have single-service or carve-out plans, but the trend is toward more complete managed care coverage.  About two-thirds of people in these plans are in a plan that is focused on Medicaid.  Most states use an actuarial rate-setting process; others use competitive bidding or negotiation.

Many states have pay-for-performance programs for their managed care plans and most have quality improvement requirements.  Network adequacy is a common area of concern.  Accreditation is required in about half of the states using comprehensive managed care plans and almost all states require HEDIS or other data reporting.   One barrier for state experimentation is CMS’ requirements and CMS’ permission is often needed to make program changes.  Given the spending growth, states need more freedom.  In fact, it is hard to think of a real justification why there should be any federal involvement in this program.  Several billion administrative dollars could be saved by making this a state-only program.  Moving to a managed care program is an obvious way for states to help control spending under the current regulatory regime, but having complete control is necessary if they are really to be able to rein in this out-of-control program.