The Evolution of Medicaid Managed Care
During the late 1980s, two developments prompted significant growth in state Medicaid managed care initiatives. First, there was extraordinary growth in the number of Medicaid enrollees and Medicaid costs, prompted in part by a series of new federal mandates on Medicaid eligibility. In 1989, for example, the federal government required states to cover pregnant women and children below age 6 in families with income below 133 percent of the federal poverty level.
The following year, federal law required states to phase in coverage of all children up to age 18 in families with income below 100 percent of the poverty level. These eligibility mandates added millions to the Medicaid rolls, at the same time that federal law was requiring more generous benefit coverage for children and higher reimbursement to community health centers and many safety-net hospitals.
Meanwhile, an economic recession meant states had far less tax revenue with which to finance the rapidly increasing Medicaid bill. State policy-makers began referring to Medicaid as the “Pac-Man” of state budgets, gobbling up nearly all available revenues.
In the midst of this economic and political crisis, state officials soon turned to Medicaid managed care, in the hope that it might provide a magic bullet (lower costs combined with better access and quality). By the early 2000s, managed care had become mainstream care in Medicaid, at least for children and young adults. By 2010, nearly 70 percent of the nation’s 60 million Medicaid beneficiaries were enrolled in some form of managed care.
Have states saved money through Medicaid managed care?
As of this examination, peer-reviewed studies had found wide variation in the success of managed care plans to contain costs, but the weight of the evidence suggested any potential savings will not be significant. The successful states appeared to be those with relatively high provider reimbursement rates in their fee-for-service program. The cost savings generally were due to reductions in provider reimbursement rates rather than managed care techniques.
Does Medicaid managed care improve access to care?
Medicaid managed care can provide beneficiaries with improved access, but the scope and extent of such improvements are often state-specific. As of this examination, studies from California, New York, Ohio and Wisconsin had found improved access under managed care relative to fee-for-service. The positive findings had come from studies measuring access by usual source of care, reduction in emergency department visits, and reduction in ambulatory sensitive care hospitalizations. Although there were a few exceptions, national studies generally had not found improved access to care under managed care.
Does Medicaid managed care improve quality of care?
Despite the performance measures required by state Medicaid programsfor managed care plans, the research using these measures to evaluate quality is slim. As of this examination, there had been no peer-reviewed studies on care management programs in Medicaid managed care, even though the programs were proliferating. Several small case studies had found improved clinical outcomes through the use of care management techniques.