Medicaid

Rising enrollment and spiraling costs are severely straining the government's main health care program for the poor. Although Medicaid was intended to make health care more accessible to the poor, program beneficiaries today often cannot find doctors willing to treat them. Nearly all states are trying to establish managed care programs, which rely on the primary care physician to provide, or arrange for, health care in a cost-conscious way. GAO surveyed Medicaid offices across the country and did detailed work in the following six states: Arizona, Kentucky, Michigan, Minnesota, New York, and Oregon. Managed care has the potential for improved access and quality, but questions persist about whether Medicaid beneficiaries actually achieve better outcomes under this system. Certain measures of access--such as office wait times and emergency room use--show improvements under managed care, and the quality of care provided to beneficiaries generally matches that of traditional Medicaid fee-for-service care. But better measures of medical outcomes still need to be developed and refined before the question of quality can be answered with any certainty. Finally, states report significant cost savings compared to fee-for-service programs, although some experts dispute these claims. Given the direction that states have chosen, their current challenge is to establish comprehensive data collection and monitoring systems to oversee their program. Safeguards need to be in place to identify health care providers who may be taking excessive financial risks and reduce needed services to beneficiaries. GAO summarized this report in testimony before Congress; see: Medicaid: States Turn to Managed Care to Improve Access and Control Costs, by Janet L. Shikles, Director of Health Financing and Policy Issues, before the Subcommittee on Oversight and Investigations, House Committee on Energy and Commerce. GAO/T-HRD-93-10, Mar. 17, 1993 (14 pages).

GAO found that: (1) from 1987 to 1992, states' enrollment of Medicaid beneficiaries into managed care programs doubled; (2) two-thirds of all states have managed care programs and nearly all states are expected to have at least one managed care program by 1994; (3) states are choosing primary care case management programs because providers are more willing to participate in these fee-for-service programs; (4) states have struggled to attract providers to capitated-based reimbursement models of managed care because of low-reimbursement rates and assumption of financial risk and administrative burdens; (5) states have reported difficulties in implementation of managed care that involved planning, mandatory enrollment, setting capitation rates, and education of beneficiaries about the program, regardless of the managed care model used; (6) managed care has improved access to care and beneficiary satisfaction, but quality of care has stayed about the same as traditional Medicaid fee-for-service programs; (7) state cost savings have been inconclusive; and (8) the Health Care Financing Administration has established a quality assurance initiative that would subject Medicaid managed care plans to current Medicare and private-sector quality assurance standards.