As Anthem’s Public Policy Institute outlines in its new whitepaper, more states are turning to managed care as a solution for their Medicaid programs – which is not surprising given it is shown to improve the quality of care, enhance member experience, and manage costs.

Managed care is an approach in which managed care organizations (MCOs) contract with state Medicaid agencies to deliver healthcare benefits and services for a set payment amount per member per month. This approach stands in stark contrast to the more traditional fee-for-service (FFS) model that bases payments on individual services rendered. By replacing the traditional FFS model with a risk-based MCO, state Medicaid programs – and consumers – have a lot to gain.

The full text of the whitepaper is available here for download, and key themes are outlined below.

Managed care is growing in popularity among states

A number of states have taken up MCOs as their primary mode of care delivery for Medicaid. While historically managed care has been reserved for pregnant women and children, the widespread benefits of this approach have encouraged states to greatly expand eligibility.

  • Among the 38 states and the District of Columbia that enroll Medicaid members in managed care, 15 direct over 50 percent of their Medicaid funding to these programs.
  • The most recent year of enrollment data show that a majority of Medicaid beneficiaries received their care and services through managed care rather than through FFS.
  • Eligible groups in a number of states now include older adults and adults with disabilities. Also, many states are now using managed care to support high-cost, high-need populations that require long-term services and supports (LTSS).

Managed care improves quality of care

Numerous surveys have found that MCOs improve quality of care for Medicaid beneficiaries, in part because of the high value MCOs place on preventative care. By and large, the states that have implemented managed care for their Medicaid populations have enjoyed high scores on quality measures, indicating improved health outcomes for state Medicaid populations, especially for those members with chronic conditions, who require regular care and/or LTSS.

  • In Texas, managed care has been shown to help reduce hospitalization rates, particularly in the case of children with chronic conditions.
  • In Kentucky, the implementation of managed care for state Medicaid populations has fostered vast improvements in chronic care, and the state has seen an increase in smoking cessation consultations, flu vaccines for children, HPV vaccines and a marked decrease in amputations—which are usually caused by untreated diabetes.

Managed care enhances member experience

The American healthcare system can be difficult to navigate, even for those well-versed in its intricacies. MCOs can make it easier for patients to get the care they need. The most compelling piece of evidence to this point is the consistency with which MCO members reported reduced emergency room visits and improved access to regular physician visits.

Increasingly, managed care integrates medical and behavioral healthcare, as states move to “carve-in” behavioral health benefits to MCO contracts, improving members’ experience. For example, in one of Ohio’s Medicaid managed care plans, follow-up counseling is provided for members who have undergone an inpatient stay for behavioral health services. A survey of that program found that by offering care coordination for those patients, they increased follow up visits significantly, ensuring a positive member experience and reducing the risk of inpatient readmission.

Managed care controls costs

The third finding of this whitepaper is simple: managed care approaches help states control Medicaid spending. In multiple states, managed care has been shown to produce greater cost savings than the traditional FFS model. Given the budget pressures that states face and the limited resources available to cover a range of priorities, the ability of MCOs to more efficiently use state dollars is good news.

  • Substantial cost savings can be found when prescription drug benefits are carved-in to MCOs. Prescription costs are better controlled and MCOs have higher rates of dispensing generic drugs.
  • Overall, average annual growth in Medicaid spending per enrollee was lower for MCOs compared to that for commercial health insurance and Medicare enrollees.

As the American healthcare systems evolves, it is clear that Medicaid managed care provides a strong foundation on which future Medicaid reforms can be built. It improves quality of care, enhances member experience and manages costs. By following this model, states can establish innovative, value-driven and cost-effective delivery systems for their beneficiaries.

For more details, read the full whitepaper here.

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