Medicaid Managed Care: Increasing Expectations and Accountability

This brief is one in a series of seven on key Medicaid issues for state policymakers. The series is designed to assist new state leaders in understanding the Medicaid program and their role in using it to improve the health of their states’ residents and communities.

The Issue

Over the past two decades, state Medicaid programs have been on a steady march away from fee-for-service toward payment and delivery systems designed to bring greater budget predictability, quality, and accountability. For most states, this has meant increasing reliance on Medicaid managed care. Today, managed care is the primary delivery system for Medicaid nationally, with more than 8 in 10 beneficiaries enrolled in some type of managed care across 48 states plus the District of Columbia. With this growth has come similar growth in expectations. States are covering a broader array of services for more highneed enrollees, bringing more rigor to their contracting, oversight, and payment processes, and holding managed care plans accountable for achieving targeted goals. For new state officials, this begs a critical question: Is my state getting enough value from our Medicaid managed care program?

Why It’s Important

A well-managed Medicaid managed care program has the potential to help states bring more predictability to program costs while enhancing efficiency and outcomes. But managed care is no panacea. Evaluations over time have documented mixed results, ranging from measurable improvements in access, quality, and efficiency, to headline-grabbing horror stories of care disruption and cost overruns. With this in mind, states with managed care are increasingly focused on getting more value from plans and explicitly building state priorities into contractual requirements. New state policymakers should consider assessing their current managed care programs and exploring strategies for advancing cost, quality, and accountability goals.

Considerations for State Policymakers

Consider Integrating the Full Service Array Into Managed Care. Early on, Medicaid managed care was mostly reserved for relatively healthy populations and a core subset of mostly physical health services. As managed care has taken root, states have begun to include a broader range of services—including behavioral health, prescription drugs, and even long-term care—into integrated risk arrangements. These efforts generally have been met with success, aligning financial incentives and enabling better coordination of care across the care continuum. Yet most states have a long way to go to realize the full value of integration. For example, while mounting evidence indicates that integration of physical and behavioral health is a best practice, only a minority of states currently do so.

Exercise Caution With High-Need Populations. States have increasingly enrolled more vulnerable populations in managed care. For example, one-fourth of managed care states enroll individuals with intellectual/ developmental disabilities (I/DD) into managed care. Twenty-four states operate some form of managed care to provide long-term services and supports (LTSS) to older adults and those with physical disabilities. States design managed care products for high-need individuals differently—sometimes adding subpopulations and new services into comprehensive plans that serve the majority of Medicaid enrollees, and sometimes developing “specialty” plans for targeted higher-need members. High-need individuals are far more likely to have complex care relationships with multiple providers and informal caregivers; manage more chronic conditions and medications; and be highly vulnerable to care disruptions. Enrolling these populations requires time and thoughtful planning, including consultation and partnership with beneficiaries, their families, their providers, and communities, and is best attempted in mature managed care environments.

Create Accountability for State Priorities. While wide variation exists among states’ managed care programs, states are increasingly including contractual mandates designed to hold plans accountable for specific policy, operational, and financial priorities. Many states include operational provisions tied to withholds and incentives designed to, for example, minimize administrative burden on providers, create rate floors for essential providers, or mandate a certain medical loss ratio. A smaller but growing number of states are going further—using their contracts to drive innovation and test new ways to achieve state health care priorities.

• Targeting vulnerable populations. Many states have begun requiring plans to identify and address needs for targeted subpopulations, including children with neonatal abstinence syndrome and individuals transitioning out of incarceration.
• Addressing social determinants of health (SDOH). States are beginning to include SDOH-related provisions in their managed care contracts that, for example, require screenings for social needs and ensure enrollees are connected to community-based resources. (See Medicaid Policy Brief #5, Medicaid's Role in Addressing Social Determinants of Health, for details.)
• Shaping care management. States are demanding more, in terms of how and where care management is delivered, including mandating coordination with health homes and requiring locally based care management.
• Accelerating value-based payment. States are increasingly looking to enhance accountability through upside and downside risk arrangements between plans and providers, including requiring plans to expand their deployment of meaningful value-based payment with provider networks and setting targets for the proportion of plan payments that are value-based.
  

For additional information on how states can get the most out of their Medicaid managed care programs, please refer to the resources included in the downloadable PDF.

About Manatt Health

Manatt Health is an interdisciplinary policy and business advisory division of Manatt, Phelps & Phillips, LLP, one of the nation’s premier law and consulting firms. Manatt Health helps clients develop and implement strategies to address their greatest challenges, improve performance, and position themselves for long-term sustainability and growth. For more information, visit www.manatt.com/Health.

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