Medicaid Managed Care

During the past decade, Medicaid's expenditures have soared, reaching $160 billion in fiscal year 1996. To control costs, states are increasingly requiring Medicaid recipients to enroll in managed care programs. As of June 1996, about 11 million Medicaid beneficiaries were enrolled in "capitated" managed care programs, under which states contract with managed care plans, such as health maintenance organizations, and pay them a monthly--or capitated--fee per Medicaid enrollee for the costs of their medical care. This report reviews states' efforts to hold managed care plans accountable for meeting Medicaid program goals and for providing beneficiaries in capitated managed care plans with the care that they need. GAO focuses on the difficulties that purchasers, including states, have had in monitoring managed care programs and on states' efforts to (1) ensure that Medicaid beneficiaries have access to appropriate providers, (2) assess the adequacy of medical treatment provided through contracted plans, and (3) determine beneficiary satisfaction with their plans.

GAO noted that: (1) ensuring that managed care plans provide enrollees the care that they need is a formidable task for private and public purchasers alike; (2) the four states GAO visited, Arizona, Pennsylvania, Tennessee, and Wisconsin, have built access and data collection requirements into their contracts with managed care plans; (3) a number of these states' requirements aim to ensure managed care plans develop and maintain provider networks that are sufficient to meet the needs of Medicaid beneficiaries; (4) some are criterion-based, such as patient-to-primary-care-physician ratios; (5) patient-to-primary-care-physician ratios generally do not consider the number of networks a primary care physician participates in or a physician's capacity or willingness to see Medicaid patients; (6) the four states also require plans to provide a full range of specialty services, even if this means beneficiaries must be referred to providers outside the plan's network; (7) however, because there are no established standards for specialists, these states have not specified the types and numbers of specialists to include in plan networks, making it difficult for these states to measure the adequacy of plan specialist networks before awarding a contract; (8) given the difficulties associated with gauging the adequacy of a provider network, the four states GAO visited have taken additional steps to assess the adequacy of the medical care that beneficiaries enrolled in managed care receive; (9) Arizona, Tennessee, and Pennsylvania also have invested in developing encounter data, the individual-level data on all services provided to all patients; (10) all four states also use data from plan-conducted clinical studies to help assess patient care; (11) the four states also have sought to assess the adequacy of patient care by tapping into information provided directly by Medicaid beneficiaries enrolled in managed care, such as patient satisfaction surveys and data gathered from grievance processes; (12) while it is important to gauge patients' satisfaction with the care they receive, satisfaction data generally are not reliable measures of quality; and (13) regardless, GAO found that if the states it visited improved certain methodologies for designing satisfaction surveys and stratified their survey grievance data, they would have a better understanding of the needs and concerns of their Medicaid beneficiaries enrolled in managed care, especially those with special needs or chronic illnesses who may experience problems in accessing services.