Medicaid Managed Care

The Medicaid program was established to make health care more accessible to the poor. In many communities, however, beneficiaries' access to quality care is far from guaranteed. Too few doctors and other health care providers choose to participate in Medicaid because of low payment rates and administrative burdens. To address the access problem, as well as rising costs and enrollment in its $15 billion Medi-Cal program (which serves about 5.4 million beneficiaries), California intends to increase its reliance on managed-care delivery systems. This report (1) describes California's current Medicaid managed-care program, (2) reviews the state's oversight of managed-care contractors with a focus on financial incentive arrangements and the provision of preventive care for children, (3) describes the state's plans for expansion, and (4) identifies key issues the state will face as it implements the expanded program.

GAO found that: (1) California plans a major expansion of its Medi-Cal managed care program in selected counties; (2) by the end of 1996, the number of enrollees in California managed care plans will total over 3.4 million, almost four times the number currently enrolled; (3) enrollment will be mandatory for women and children, who will choose from one of two plans, unlike the current voluntary system with several choices; (4) mandatory enrollment could magnify the problems already associated with California's Medi-Cal program, such as availability and quality of services, capabilities of management staff, and providers' financial incentives to limit care; and (5) any benefits of competitive managed care could be lessened by California's decision to limit beneficiaries to two health plans.