MANAGED CARE

Managed Care

Managed Care

Introduction

Managed care is an approach to financing and delivering health care that seeks to control costs and ensure or improve the quality of care through a variety of methods, including provider network management, utilization management and quality assurance.

Managed care is a payment method that provides incentives for health plans to improve care outcomes and reduce unnecessary use of high cost services. Under a managed care program, states pay health plans a pre-established amount for each person enrolled in the plan and in exchange the plans provide all the necessary medical services to members. This payment method provides greater budget predictability for states and gives providers incentives to coordinate and manage services in a cost effective way.

Historically, Medicaid services for disabled beneficiaries, including mental health services, have been provided on a fee-for-service basis where providers are paid for each billable service provided. In contrast, managed care Medicaid programs pay for some or all services at a prepaid rate, often based on enrollment. States rely heavily on managed care for Medicaid beneficiaries. In 2008, 71 percent of enrollee's were in care, but the majority of Medicaid managed care enrollee are children and families, whose costs tend to be much lower than for elderly and disabled enrollee. Today, states are increasingly looking to managed care as a strategy to contain costs for individuals with complex needs, including children and adults who live with serious mental illness. Whether managed care plans improve, or impair, access to and quality of care depends on a variety of factors. To help advocates access and influence state Medicaid mental health care programs, NAMI's Resource Guide on Managed Care, Medicaid and Mental Health provides essential information, advice and tools.

Discussion

Managed care has become a leading model for the delivery and payment of health care services in state Medicaid programs across the county. The number of Medicaid beneficiaries in some form of managed care doubled from 17.8 million in 1999 to 33.4 million in 2008. The percentage of Medicaid members in managed care also increased from 56% to 71% during this time (Kaiser Commission, 2010). All states except Alaska and Wyoming have Medicaid members enrolled in some kind of managed care. Although nationally more than two thirds of Medicaid members are in some form of managed care program, only about 20% of state Medicaid dollars are spent in managed care (AHCPR, 2008).

This reflects the fact that most states have focused their managed care initiatives on parents and children, where costs are lower. Fewer states have included many of the higher cost Medicaid beneficiaries (e.g. older adults and adults with disabilities) and services (e.g. long term care services such as nursing home care) (Kaiser Commission, 2010). Many members in this higher cost group are also dually eligible for Medicaid and Medicare services. Designing managed care programs for dually eligible members presents more challenges to states (Chandra, 2005).

Why Managed Care?

States implement managed care programs to meet multiple policy goals. Initially states moved to managed care programs to increase access to ...