Medicaid Managed Care - U.S. Senate Special Committee on Aging

Sooce Medica Health Plant.
108
Communicating With Vulnerable Populations: <strong>Medicaid</strong> 165
MEDICAID IN MINNESOTA
Minnesota was ahead of most stares in enrolling people on <strong>Medicaid</strong> in managed care plans,
which is why Allina Health System-through its health plan, Medica Health Plans-has a
longer history serving <strong>Medicaid</strong> recipients than many other HMOs around the country.
Minnesota's <strong>Medicaid</strong> program, referred to as the Medical Assistance Program, or MA, is
administered through the state's Department of Human Services. From 1965, when the
<strong>Medicaid</strong> program was first enacted, until 1985, Minnesota, like other states, administered
MA only through a fee-for-service system, except for a few, very small voluntary managed
care options. Under the fee-for-service system, an MA recipient obtains care from a medical
provider, who then submits a claim to the state for direct reimbursement.
In 1985, however, Minnesota became one of the first states to contract with HMOs and
other managed care plans to enroll MA recipients on a mandatory basis. It did so under a
program originally referred to as the Minnesota Prepaid <strong>Medicaid</strong> Demonstration Project,
which was one of the original five demonstration projects authorized by the U.S. Health
<strong>Care</strong> Financing Administration, the federal Medicare/<strong>Medicaid</strong> agency. The program, now
known as the Minnesota Prepaid Medical Assistance Program ( PMAP), is a prepaid, capitated
managed care program. It currently operates in sixteen Minnesota counties, and state
officials plan to expand it into all areas of the state within the next few years. Under this
program, MA recipients obtain care from their health plan providers, who submit claims to
the health plan rather than to the state for payment. Contracting health plans are prepaid
capitation amounts from the state each month to cover MA-covered services for enrolled
members. Thus, the health plan carries the financial risk for the health care provided to each
MA member. If health care costs exceed the capitation payment, it's the health plan that
bears the loss. Of course, the reverse is also true: if the costs are less than the payment, the
health plan reaps the gain.