Medicaid Managed Care

Since the mid-1990s, the states have accelerated the enrollment of children with special needs in capitated Medicaid managed care programs, which provide medical care to beneficiaries for a fixed, per-person fee. States view capitated care, with its emphasis on primary care, restricted access to specialists, and control of services, as a way to contain cost growth and provide the general Medicaid population with consistent preventive and primary care. However, these same features may be less appropriate for children with special needs, who often require highly specialized and costly medical services. The Balanced Budget Act of 1997 requires states to obtain federal approval before enrolling these children in capitated Medicaid managed care programs; state Medicaid agencies can mandate enrollment for most other beneficiaries without seeking such approval. This report: (1) presents data on the extent to which states are enrolling children with special needs, as defined by the act, in capitated managed care plans, and (2) assesses the scope and effectiveness of safeguards that states have introduced to ensure that children with special needs receive appropriate care within Medicaid managed care.

GAO noted that: (1) following the general trend of serving more Medicaid beneficiaries through managed care delivery systems, many states are enrolling a range of children considered to have special needs in capitated managed care programs; (2) however, the number of children involved is uncertain, because many of the states could not readily report the number of affected children; (3) the 36 states GAO surveyed enroll some or all of the BBA categories of children in capitated managed care: (a) 14 states mandated enrollment; (b) 11 states allowed families to make a choice between capitated managed care and some form of fee-for-service coverage; and (c) another 11 states had both mandatory and voluntary enrollment for children in different categories or in different parts of the state; (4) of the 6 categories of children with special needs identified by the BBA, Supplemental Security Income (SSI) children are the most likely to be enrolled in capitated plans; (5) between 1996 and 1999, the number of states enrolling SSI children in capitated health plans increased from 17 to 31; (6) Katie Beckett state plan children were the least likely to be enrolled; (7) adoption and implementation of safeguards for these children vary significantly across the 36 states GAO surveyed; (8) some types of safeguards have been more widely adopted by states than others; (9) 31 of the 36 states have at least one measure designed to ensure adequate pediatric provider capacity; (10) however, 18 states do not inform health plans of the presence of special needs when enrolling children, and 18 do not require health plans to conduct a needs assessment soon after enrollment; and (11) additionally, some safeguards may be less effective because states have made them optional rather than mandatory, have not adopted rigorous approaches in their design and use, or do not target the safeguard specifically for children with special needs.