HealthReformGPS is made possible through generous financial support from the RCHN Community Health Foundation. Visit them at

GAO report examines Medicaid managed care

Posted on September 24, 2012 | No Comments

PDF Version
Key Developments
Implementation Briefs

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.

No Comments

Public comments are closed.

The Centers for Medicare and Medicaid Services (CMS) posted a document which clarifies whether Medicaid managed care plans can market their private qualified health plans (QHP) to potential enrollees. CMS says federal rules do not prohibit Medicaid plans from providing information about QHPs to potential enrollees who might enroll in such a plan as an alternative to the Medicaid plan. However, CMS recommends that plans consult contracts and their state Medicaid agencies for more information on what is allowed.
Guidance issued by the Centers for Medicare and Medicaid Services (CMS) advises states that that their capitated payment rates for Medicaid managed care plans should cover the costs of the Affordable Care Act's (ACA) health insurance tax, as it is considered a “reasonable business cost.” The tax starts at $8 billion in 2014 and increases every year, up to $14.3 billion in 2018. Starting in 2019, the amount of the tax will increase annually based on premium trends. CMS contends that this fee is not unlike other taxes and fees that actuaries must take into account when developing capitation rates.
A new report from the Urban Institute, funded by the Robert Wood Johnson Foundation, interviewed health care stakeholders in eight states to determine if Medicaid managed care programs were prepared for the imminent influx of beneficiaries resulting from the Affordable Care Act's (ACA) Medicaid expansion. Researchers found that managed care programs generally possess a strong organizational and operational structure that would permit them to readily absorb new beneficiaries. In an effort to mitigate the negative implications of churn, the study also found that some states will choose to offer private plans similar to those of Medicaid. One challenge addressed by the report was the ability of each state's health information technology to uptake a vast increase of new enrollees and eligibility processes.
A growing number of state Medicaid agencies are planning to launch or expand programs that offer risk-based contracts to managed care organizations (MCOs) to provide long-term services and supports (LTSS)—and, in some cases, acute and primary care—to older adults and people with disabilities. Because these individuals often have one or more chronic health conditions, they tend to use more health services than younger people and people without disabilities. In addition, they often depend on other services and supports such as personal care to perform activities of daily living, such as bathing and eating. In risk-based managed care arrangements...
Two new reports, released by the New England Journal of Medicine, analyze the impact of Medicaid expansion under the Affordable Care Act (ACA). "The Supreme Court and the Future of Medicaid," authored by Timothy Stoltzfus Jost and Sara Rosenbaum, reviews both the Supreme Court’s majority and dissenting Medicaid expansion arguments and addresses three outstanding questions regarding the ruling. On June 28th...
The Kaiser Family Foundation reviews a number of state initiatives related to Medicaid Accountable Care Organizations (ACOs) in a recently published report. Findings indicate that most Medicaid ACOs are currently at an early stage of development. The structure of the Medicaid ACO initiatives is influenced by individual states’ history and experience with managed care, other existing care delivery arrangements within Medicaid, and the challenges inherent in serving low-income and chronically ill populations. Medicaid ACOs directly engage providers and provider communities in improving care and contain costs. ACOs are provider-run organizations in which the participating providers are collectively responsible for the care of an enrolled population. Under an ACO, the managing providers may share in any savings associated with improvements in the quality and efficiency of the care they provide. Several states are rolling out ACO initiatives with the goal of improving Medicaid care.
On November 6, 2012, the Centers for Medicare and Medicaid Services (CMS) published final rules (77 Fed. Reg. 66670-66701) implementing an Affordable Care Act (ACA) provision whose purpose is to temporarily increase state Medicaid payments for primary care services. The ACA requires that state Medicaid agencies pay for primary care furnished by physicians in 2013 and 2014 at least...
In NFIB v Sebelius the United States Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act (ACA or the Act). At the same time, the decision adds a new dimension to the implementation of §2001(a) of the Act, which establishes expanded Medicaid eligibility for certain low-income people. This Implementation Brief begins with a discussion of exactly what the Court held in its Medicaid ruling. It then discusses the significance of the majority conclusion, as well as the key implementation questions that arise in the wake of this opinion.
Low physician participation rates in Medicaid -- virtually since the program’s 1965 enactment[1] -- have long posed a key limitation to its effectiveness. Many factors are thought to account for limited physician participation but, historically, low payment rates have stood out as a primary underlying problem.[2] As of 2008, Medicaid physician fees stood at approximately 72 percent of Medicare fees[3]...
This brief provides an in-depth look at the outreach and enrollment provisions in the Patient Protection and Affordable Care Act affecting Medicaid and CHIP.