Medicaid Managed Care in Thirteen States

Health Affairs

Volumn 17, Issue 3, 1998, Pages 43-63

  Holahan, John ^b   Zuckerman, Stephen ^b   Evans, Alison ^a   Rangarajan, Suresh ^b  

^a UNIVERSITY OF CALIFORNIA   (United States)

^b NONE

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; COST CONTROL; ECONOMICS; GOVERNMENT; HEALTH CARE DELIVERY; HEALTH CARE PLANNING; HEALTH CARE QUALITY; HEALTH INSURANCE; HUMAN; MEDICAID; ORGANIZATION AND MANAGEMENT; UNITED STATES; UTILIZATION REVIEW;

COST SAVINGS; HEALTH SERVICES ACCESSIBILITY; HUMANS; MANAGED CARE PROGRAMS; MEDICAID; QUALITY OF HEALTH CARE; STATE GOVERNMENT; STATE HEALTH PLANS; UNITED STATES;

EID: 0032062006     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.17.3.43     Document Type: Article

References (42)

1. Data from the Health Care Financing Administration Web site, "Medicaid Managed Care Trends," www.hcfa.gov/medicaid/trends1.htm (August 1997).
2. The Section 1915(b) freedom-of-choice waiver allows states to mandate managed care for Medicaid enrollees into either primary care case management or HMOs, but beneficiaries still must have a choice of plans. Section 1115 research-and-demonstration waivers allow states even more flexibility, because the federal government can approve states' requests to test new approaches to benefits, services, eligibility, delivery systems, and program payments. Section 1115 waivers have been designed to make managed care mandatory for current enrollees and, in some cases, use any savings that develop to expand eligibility. These waivers also allow states to limit the types of plans available to beneficiaries to a greater degree than 1915(b) waivers do.
3. For details of the ANF project, see A. Kondratas, A. Weil, and N. Goldstein, "Assessing the New Federalism: An Introduction," in this volume of Health Affairs.
4. U.S. General Accounting Office, Medicaid: States Turn to Managed Care to Improve Access and Control Costs, GAO/HRD 93-46 (Washington: GAO, March 1993).
5. R. Hurley, D. Freund, and J. Paul, Managed Care in Medicaid: Lessons for Policy and Program Design (Ann Arbor, Mich.: Health Administration Press, 1993).
6. See, for example, J. Mitchell, "Physician Participation in Medicaid Revisited," Medical Care (July 1991): 645-652; J. Cohen, "Medicaid Policy and the Substitution of Hospital Outpatient Care," Health Services Research (April 1989): 24-33; J. Cohen, "Medicaid Physician Fees and Use of Physician and Hospital Services," Inquiry (Fall 1993): 281-292; and J.W. Cohen and P.J. Cunningham, "Medicaid Physician Fee Levels and Children's Access to Care," Health Affairs (Spring 1995): 255-262.
7. See, for example, J. Mitchell, "Physician Participation in Medicaid Revisited," Medical Care (July 1991): 645-652; J. Cohen, "Medicaid Policy and the Substitution of Hospital Outpatient Care," Health Services Research (April 1989): 24-33; J. Cohen, "Medicaid Physician Fees and Use of Physician and Hospital Services," Inquiry (Fall 1993): 281-292; and J.W. Cohen and P.J. Cunningham, "Medicaid Physician Fee Levels and Children's Access to Care," Health Affairs (Spring 1995): 255-262.
8. See, for example, J. Mitchell, "Physician Participation in Medicaid Revisited," Medical Care (July 1991): 645-652; J. Cohen, "Medicaid Policy and the Substitution of Hospital Outpatient Care," Health Services Research (April 1989): 24-33; J. Cohen, "Medicaid Physician Fees and Use of Physician and Hospital Services," Inquiry (Fall 1993): 281-292; and J.W. Cohen and P.J. Cunningham, "Medicaid Physician Fee Levels and Children's Access to Care," Health Affairs (Spring 1995): 255-262.
9. See, for example, J. Mitchell, "Physician Participation in Medicaid Revisited," Medical Care (July 1991): 645-652; J. Cohen, "Medicaid Policy and the Substitution of Hospital Outpatient Care," Health Services Research (April 1989): 24-33; J. Cohen, "Medicaid Physician Fees and Use of Physician and Hospital Services," Inquiry (Fall 1993): 281-292; and J.W. Cohen and P.J. Cunningham, "Medicaid Physician Fee Levels and Children's Access to Care," Health Affairs (Spring 1995): 255-262.
10. GAO, Medicaid Managed Care: Challenge of Holding Plan Accountable Requires Greater State Effort, GAO/HEHS 97-86 (Washington: GAO, May 1996).
11. The number of Medicaid beneficiaries enrolled grew from 22.0 million in 1988 to 34.8 million in 1992. DSH payments grew from virtually nothing in 1988 to $17 billion in 1992. Some of this was initiated by states, but nonetheles, to many observers Medicaid expenditures appeared to be out of control. Growth in acute care spending per enrollee also was high in most states, increasing, on average, by 9.5 percent per year between 1988 and 1992. J. Holahan and D. Liska, "The Slowdown in Medicaid Spending Growth," Health Affairs (March/April 1997): 157-163.
12. Ibid. Most of the slower growth of Medicaid spending since 1992 was attributable to reduced growth in enrollment and cessation of growth in DSH expenditures. Although increases in spending per beneficiary also fell, they declined more for the elderly and disabled, who are largely not in managed care plans, than for adults and children. Thus, little of the slowdown in Mediaid growth is attributable to managed care.
13. R. Hurley and D. Freund, Primary Care Case Management Evidence from Medicaid: Synthesizing Program Effects by Program Designs, Health Care Financing Administration (HCFA) Cooperative Agreement no. 18-C-99490/3-01 (Baltimore: HCFA, June 1991); and G.G. Bonnyman Jr., "Stealth Reform: Market-Based Medicaid in Tennessee," Health Affairs (Summer 1996): 306-314.
14. R. Hurley and D. Freund, Primary Care Case Management Evidence from Medicaid: Synthesizing Program Effects by Program Designs, Health Care Financing Administration (HCFA) Cooperative Agreement no. 18-C-99490/3-01 (Baltimore: HCFA, June 1991); and G.G. Bonnyman Jr., "Stealth Reform: Market-Based Medicaid in Tennessee," Health Affairs (Summer 1996): 306-314.
15. States with high acute care spending because of either rich benefits or limited controls have a greater potential to save money. Others whose spending is already low because of low provider payment rates and limited benefits have much less potential for saving. In addition, states recognize that improving access and quality may limit their savings potential.
16. AFDC has been replaced by Temporary Assistance to Needy Families (TANF), but AFDC rules still apply for Medicaid eligibility.
17. Acute care accounts for only about half of Medicaid expenditures. If Medicaid acute care spending could be reduced by 10 percent for all beneficiaries in managed care, spending would decline by 5 percent. It is difficult to enroll all beneficiaries in managed care. Most states rely on managed care for adults and children, who only account for 25 percent of Medicaid spending.
18. New Jersey and Florida allow dual eligibles to voluntarily enroll in managed care for Medicaid-covered services. Massachusetts allows dual eligibles to receive benefits through an HMO if it is a Medicare risk-contracting plan.
19. Healthy beneficiaries may opt to enroll in managed care because they expect to use fewer services and are willing to have fewer provider options. Alternatively, sicker beneficiaries may enroll as a way of ensuring their access to some providers that will treat Medicaid patients.
20. GAO, Medicaid: States' Efforts to Educate and Enroll Beneficiaries in Managed Care, GAO/HEHS 96-184 (Washington: GAO, September 1996); and J. Horvath and N. Kaye, Enrollment and Disenrollment in Medicaid Managed Care Program Management (Portland, Maine: National Academy for State Health Policy, December 1996).
21. GAO, Medicaid: States' Efforts to Educate and Enroll Beneficiaries in Managed Care, GAO/HEHS 96-184 (Washington: GAO, September 1996); and J. Horvath and N. Kaye, Enrollment and Disenrollment in Medicaid Managed Care Program Management (Portland, Maine: National Academy for State Health Policy, December 1996).
22. For example, states differ in how they count newborns enrolled in their mother's plan (some consider them assigned, while others do not) and in the length of time they give beneficiaries to select a plan.
23. Some believe that auto-assignees are above average in health status, less costly to health care providers, and therefore desirable. Others maintain that refusing to choose a plan means makes these patients difficult to deal with in managed care, that is, they are unlikely to follow the rules.
24. State of New York, Assembly Bill 11329, 12 July 1996.
25. GAO, Better Controls Needed for Health Maintenance Organization under Medicaid in California, B-164031 (Washington: GAO, September 1974); and J. Holahan et al., Health Policy for Low-Income People in New York, Urban Institute State Reports (Washington: Urban Institute Press, December 1997).
26. GAO, Better Controls Needed for Health Maintenance Organization under Medicaid in California, B-164031 (Washington: GAO, September 1974); and J. Holahan et al., Health Policy for Low-Income People in New York, Urban Institute State Reports (Washington: Urban Institute Press, December 1997).
27. F. Schulte and J. Bergal, "Medicaid HMOs Face State Scrutiny," Ft. Lauderdale Sun-Sentinel, 16 December 1994, 1A.
28. For example, Medicaid programs often provide extensive coverage for substance abuse treatment, mental health care, rehabilitation, home and personal care and case management. This issue is further complicated by the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program, which requires broader service coverage for Medicaid-covered children than for adults.
29. L.L. Morlock, "Recognition and Treatment of Mental Health Problems in the General Health Care Sector," in The Future of Mental Health Services, ed. C.A. Taube, D. Mechanic, and A.A. Hohmann (Washington: U.S. Government Printing Office, 1989).
30. R.G. Frank et al., "Solutions for Adverse Selection in Behavioral Health Care," Health Care Financing Review (Spring 1997): 109-122.
31. S. Bachman et al., Medicaid Carve-Outs: Policy and Programmatic Considerations (Princeton: Center for Health Care Strategies, Inc., March 1997).
32. But even many of these plans still pay physicians and other providers on a fee-for-service basis.
33. Data from the HCFA Web site, "Medicaid Managed Care Enrollment by Program Type," www.hcfa.gov/medicaid/plansum4.htm (August 1997).
34. However, in thirteen states the only type of Medicaid managed care is primary care case management (Alabama, Arkansas, Idaho, Kentucky, Louisiana, Maine, Mississippi, New Mexico, North Dakota, South Carolina, South Dakota, West Virginia, and Wyoming).
35. Federal law imposed the 75/25 rule, whereby at least 25 percent of enrollment must not be Medicaid and Medicare. This was intended to counter the creation of "Medicaid mills." Some of these plans were exempt from this rule. Still others met the rule by counting their general medical assistance enrollees toward the 25 percent group.
36. J. Yang and M. Litt, Quality of Care in Medi-Cal Managed Care Plans: A Survey of the California Department of Health Services Medical Audits (Los Angeles: Center for Health Care Rights, 1995).
37. B. Landon, C. Tobias, and A. Epstein, "Quality Management by State Medicaid Agencies Converting to Managed Care," Journal of the American Medical Association (21 January 1998): 211-216.
38. The 9 percent penalty was phased out with New York's rate-setting system and ended when the 1115 waiver was approved.
39. "The New York State Office of Managed Care Bureau of Managed Care Financing Actuarial Review" (Unpublished report, Arthur Andersen, Hartford, Connecticut, December 1996).
40. Many states are continuing to assure that federally qualified health centers receive revenues consistent with the cost-based reimbursement requirements under Medicaid fee-for-service.
41. The Colorado Access Network consists of the University Hospital, Children's Hospital, and Denver Health, as well as the Colorado Community Managed Care Network, which comprises many community and migrant health centers from around the state.
42. However, exceptions are made for states that previously included DSH in their rates. For example, in Minnesota DSH payments are included in rates paid to plans, which are expected to pass them on to hospitals.