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GAO report examines Medicaid managed care

Posted on September 24, 2012 | No Comments

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The Medicaid program is both a federal and state effort to finance health insurance coverage for certain categories of low-income individuals and serves as a source of coverage for about 67 million individuals. Medicaid enrollment and spending have increased astronomically over the past decade and states are beginning to turn to managed care to provide services to Medicaid beneficiaries. Because states have such flexibility in implementing Medicaid managed care programs, there exists wide variation in terms of the scope of services they provide and the populations they enroll in managed care.

The Affordable Care Act (ACA) requires that all states expand eligibility for Medicaid to nonelderly individuals whose income does not exceed 133 percent of the federal poverty level (FPL); this expansion is estimated to result in the enrollment of an additional 7 million individuals in 2014. States that choose to provide Medicaid services to newly eligible individuals may do so through managed care arrangements.

In response to requests from Senator Jay Rockefeller (D-West Virginia) and Representative Henry Waxman (D-California), the Government Accountability Office (GAO) released a report reviewing Medicaid managed care. The GAO report describes states’ use of Medicaid managed care, including the type of managed care arrangements they have in place, and their enrollment of populations with complex health care needs.

GAO identified four groups of states that differed in their use of Medicaid managed care on the basis of the 12 indicators included in the analysis. A number of these indicators, specifically Medicaid enrollment in managed care organizations (MCOs) and primary care case management (PCCM) programs, health maintenance organization (HMO) penetration rates, and the concentration of low-income individuals that lived in urban areas, had significant influence on how states grouped. In contrast, within the four groups, considerable variation existed among the other indicators we examined, such as states’ primary care capacity and commercial HMO market index. For labeling purposes, GAO described the four groups on the basis of states’ enrollment of Medicaid beneficiaries in MCOs and PCCM programs:

Group 1: PCCM dominant states;

Group 2: states with both a large number of MCO and PCCM programs;

Group 3: MCO dominant states; and

Group 4: “other” states in that although their enrollment of beneficiaries was similar to Group 3, they were outliers on other indicators.

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