State Managed Care Medicaid Programs Show Mixed Financial Results

January 25, 2016

The use of state managed care Medicaid programs have increased, but new research finds that these programs have mixed financial outcomes.

As the number of enrollees in state Medicaid programs increase, the usage of commercial managed care organizations (MCOs) within the same states has also increased. However, new research finds that these programs have mixed financial outcomes.

While some states have experienced a reduction in costs because of the programs, some states have not recorded additional savings as a result of the programs. Certain basic managed care principles do not apply to a Medicaid population, mostly because of financial limitations, resulting in no extra savings.

Shellie L. Keast, PharmD, PhD, and colleagues explained the key managed care principles on which state Medicaid programs work. The study, published in Journal of Managed Care and Specialty Pharmacy, also highlights the pros and cons related to cost, accessibility and quality of treatment for this population.

In the last decade, the number of state Medicaid programs using commercial managed care companies has increased significantly. That, partnered with the Affordable Care Act (ACA), has been effective in reducing the cost of healthcare for the low-income patients, while still providing quality care and access.

Coordinated care models of managed care help in bringing down wasteful and duplicate healthcare costs as compared to a fee-for-service (FFS) program that provides disintegrated and uncoordinated care.

Earlier managed care structured programs were available only to selected groups such as pregnant women and children. However, the plans have expanded enough to include other members with complex health needs too.

Is Managed Care the Best Alternative?

A 2012 report by the Robert Wood Johnson Foundation stated that the savings were minor after switching to managed care models. Additionally, there was no evidence that the quality of care had improved.

Most state Medicaid programs may be functioning on the FFS model but in reality, they have been operating on the principles of managed care. However, the mixed model drew mixed results. While it benefitted clinically, it had limitations on the cost aspects.

With limited opportunity for savings and increased administration costs, the use of commercial MCOs may present limitations in market instabilities, delivery disruptions and uninformed or confused members. Managed care Medicaid enrollees also faced problems in getting appointments and increased wait periods.

The Final Word

Policymakers should consider the cost-benefit analysis before converting the FFS Medicaid program to a commercial managed care vendor.

Some states will see minimal benefit in patient cost sharing if they convert to a portion of the population to managed care. Those states shouldn’t opt for the option then. On the other hand, some states have used commercial managed care for the longest time. In such cases, the Medicaid beneficiaries in such states would be better off with the state program.

Regardless of the assessment, the unmanaged FFS models are rapidly phasing out. If programs do not implement the principles of managed and coordinated care, then the members may experience obstacles in cost, accessibility, and quality of healthcare.