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

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Figure 20-5. Status of Section 1115 State <strong>Medicaid</strong> Waivers, December 1996
SOURCE: Liska et al. 1996.
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NOTE: Information has been updated to reflect approval of Alabama's waiver.
HMOs provide comprehensive health services to <strong>Medicaid</strong> beneficiaries in return for a capitated
payment that is based on expenditures for comparable beneficiaries in fee-for-service <strong>Medicaid</strong>. Of the
511 entities participating in some type of <strong>Medicaid</strong> managed care in 1996, well over half (349) were
HMOs.
Prepaid health plans have several variants. They include certain community, migrant, or Appalachian
health centers located in medically underserved areas; organizations that contract with the state
<strong>Medicaid</strong> agency for a specific list of services (e.g., behavioral health) or on a nonrisk basis; and
comprehensive at-risk organizations that are statutorily exempt from HMO requirements. There were
89 PHPs contracting with <strong>Medicaid</strong> in 1996.
HlOs pay for services of subcontracting providers and plans and assume all financial risk in exchange
for a premium. The HIO organizes a provider network and establishes preauthorization and utilization
review to control the volume of services. Network providers serve as case managers and, in some HlOs,
receive capitated payments. The extensive use of 1115 waivers has generally eliminated the need to use
HlOs, although new ones have been authorized in California. There are only seven HlOs.
1997 Annual Report to Congress/Chapter 20 426