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

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Excluding PCCM participation reduces the enrollment in <strong>Medicaid</strong> managed care to 8.8 million
beneficiaries, 26.5 percent of the <strong>Medicaid</strong> population."' The comparable figure in 1995 was
16.8 percent. Using this definition, <strong>Medicaid</strong> moved to about double the level of Medicare managed
care enrollment in 1996, after closely mirroring Medicare's enrollment level for the previous several
years. <strong>Medicaid</strong> enrollment in full-risk plans is somewhat lower than the level of commercial
enrollment in HMOs only and much lower than the level of enrollment in full-risk plans (see
Chapter 1, Figure 1-14).
Like the national totals, state managed-care enrollment levels are affected by the inclusion of PCCM
arrangements (Figure 20-9 and Table 20-5). There are 10 states-nearly all rural states in the South or
Midwest-where PCCM is essentially the only type of managed care in use. In another 10 states and
the District of Columbia, PCCM enrollment represents a substantial proportion of the managed-care
involvement. With PCCM excluded, there are 9 states where managed-care enrollment exceeds
50 percent of the state's <strong>Medicaid</strong> beneficiaries. In 20 states, enrollment is below 10 percent.
Counting Spending on <strong>Managed</strong> <strong>Care</strong>. Although state <strong>Medicaid</strong> programs have enrolled a
substantial portion of their beneficiaries in managed-care arrangements, the impact on <strong>Medicaid</strong>
spending is far smaller. As noted previously, <strong>Medicaid</strong> spending is generated disproportionately by the
two smaller segments of the beneficiary population: disabled and elderly beneficiaries. Because nearly
all of the managed-care enrollment is drawn from children and adults in low-income families, it follows
that the proportion of all <strong>Medicaid</strong> dollars that goes to HMOs is smaller than the proportion of
beneficiaries enrolled.
According to 1994 data, HMOs received 5 percent of state and federal <strong>Medicaid</strong> dollars, while they
enrolled 22 percent of beneficiaries that year. 22 Out of the spending on acute care services alone, nearly
10 percent went to HMOs. In only four states (Arizona, Florida, Oregon, and Tennessee) did managed
care represent over 10 percent of all <strong>Medicaid</strong> dollars in 1994. 3
Although this result is probably a rough indication of managed care's share of program dollars, the
details may be somewhat unreliable or at least not fully comparable from state to state. <strong>Medicaid</strong>
program spending data are collected and summarized by individual states and reported to HCFA.
Although HCFA performs certain edits to improve consistency and accuracy and Urban Institute
researchers have further refined the data, state reports frequently include both errors and
inconsistencies.
2 There are about 230,000 enrollees in PHPs, HMOs, or other arrangements that are labeled as partial-risk
arrangements in HCFA's database. They represent fewer than I percent of all <strong>Medicaid</strong> beneficiaries. Questions have been
raised, however, about the accuracy of HCFA's ctassification of plans as partial-risk arrangements (Lewin-VHI t995). To
avoid basing adjustments on inaccurate data, these beneficiaries are left in the counts used in this chapter.
I The spending data analyzed here come from Urban Institute's analysis of 1994 data states reported to HCFA (Liska
et al. 1996). Although HCFA has released more recent data, this analysis takes advantage of certain data cleaning performed
by the Urban Institute researchers. As a result, 1994 data are the most recent available data that have been cleaned.
' Similar results are found in the analysis of <strong>Medicaid</strong> spending by Lewin-VHI (1995).
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