Managed Care Principles and State Medicaid Programs

Rising numbers of enrollees in state Medicaid programs following the implementation of the Affordable Care Act have resulted in the increased use by states of commercial managed care organizations (MCOs) to manage their Medicaid programs.

Policymakers should carefully consider their options when considering converting their fee-for-service (FFS) Medicaid programs to commercial managed care vendors, according to a recent Viewpoint article in the Journal of Managed Care & Specialty Pharmacy by Shellie L. Keast, PharmD, PhD, of the Oklahoma College of Pharmacy, and colleagues.

The authors conclude that the use of MCOs for Medicaid patients has a mixed record of success, and they advise that little may be achieved by converting this portion of the population to managed care. The article suggests that the Medicaid population may need a unique type of managed care and that more research is needed.

While the use of some aspects of MCO delivery applied to state Medicaid programs is not new, and many state Medicaid programs already mirror components of the managed care model, historically commercial managed care participation was limited to pregnant women, children, and parents, with the more chronically ill remaining in the FFS environment. But recent trends indicate that states are beginning to enroll more chronically ill patients into Medicaid programs managed by MCOs.

For their exploration of the issue of applying managed care tenets to the Medicaid population, the Viewpoint authors used Robert Navarro’s 3-tenet model of managed care (from his 2009 book Managed Care Model): (1) it is a subscription with a contract defining benefits and premium costs to sponsor and individuals; (2) all stakeholders and participants are financially and contractually linked; and (3) costs are managed by controlling supply and demand of healthcare resources.

This definition of managed care works well for a commercially insured population getting insurance through self-purchase or employers, Dr Keast notes, but not as well for a beneficiary who does not typically possess the same level of financial responsibility required for a monthly premium payment and does not share in the financial risk or have an incentive to limit services.

The authors’ analysis of other reports investigating whether managed care in Medicaid optimizes costs, access, and quality notes that the use of commercial MCOs may present unique drawbacks that include market instabilities, delivery disruptions, uninformed or confused members, and lack of ties between the MCO and local community. A 2014 report by the Office of Inspector General found that managed care Medicaid enrollees were experiencing difficulties getting physicians’ appointments as well as increased wait times.

While the days of unmanaged FFS models is gone, what replaces them remains to be worked out, Dr Keast and colleagues conclude. It remains for the scientific literature to provide more effective models for managing the challenging Medicaid population.