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

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Several states reported annual spending per enrollee of $100 or less, including some that showed no
spending on HMOs. The vast majority of these states' managed-care programs were organized on the
fee-for-service PCCM model in 1994. Apparently they report only the case-management fees paid to
physicians as managed-care expenses-if they even report those. Other services are presumably
accounted for on a fee-for-service basis.
If all fee-for-service PCCM enrollment is eliminated from the accounting, managed-care spending per
enrollee is estimated at about $1,200, far lower than <strong>Medicaid</strong>'s overall 1994 level of about $4,000
spending per beneficiary (Table 20-1). But because most managed-care enrollees are not from the
higher-spending groups in the program (the elderly or disabled), the average 1994 spending of $1,550
per beneficiary among low-income adults and children would be a better comparison. The difference
between this $1,550 average and the $1,200 average for those enrolled in managed care could reflect
savings accomplished in managed care. It could also reflect factors such as risk selection or differences
in average spending or benefits covered between states with low and high managed-care penetration.
The Bottom Line on Counting <strong>Managed</strong>-<strong>Care</strong> Enrollment and Spending. The Commission's
analysis leads to two conclusions about managed-care enrollment and spending. First, using available
data, it is possible to estimate the levels of enrollment in any <strong>Medicaid</strong> managed care and in full-risk
managed-care plans. Very rough estimates of spending in the typical <strong>Medicaid</strong> managed-care program
have also been made. These estimates are important for understanding the dimensions of the role
managed care is playing in <strong>Medicaid</strong>.
More importantly, however, the data are extremely unreliable, so that the estimates reported here are
quite approximate. If the role of managed care in <strong>Medicaid</strong> is to be understood fully, better data should
become a priority for the program.
IMPLEMENTATION OF MEDICAID MANAGED CARE
States that have moved actively into <strong>Medicaid</strong> managed care have made a number of different
decisions about how to structure program features such as enrollment and disenrollment, marketing,
use of enrollment brokers, selection of plans, and capitation payments to plans. Examination of these
decisions is important for at least two reasons. First, as more states opt to move more <strong>Medicaid</strong>
beneficiaries into managed care, they will face a similar set of decisions. It would be helpful if these
states could avoid repeating mistakes made by their predecessors.
Second, the <strong>Medicaid</strong> experience may offer lessons for the Medicare program. If future changes in
Medicare should call for a rapid expansion of managed-care enrollment, then the <strong>Medicaid</strong> experience
could be instructive, especially to the extent that both programs have sizeable populations with no
managed-care experience. In some cases, the <strong>Medicaid</strong> experience appears to reinforce previous
Commission conclusions about policies for Medicare, for example, that the availability of comparative
information on plan options is critical for beneficiaries to make meaningful choices among competing
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