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

Enrollment and Disenrollment Policies
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<strong>Medicaid</strong> law requires that beneficiaries retain full freedom of choice or providers As a result.
mandatory enrollment in HMOs requires a waiver. Further, <strong>Medicaid</strong> law generally limits enrollment
lock-ins to one month, although a six-month lock-in is allowed for an HMO meeting certain federal
requirements. Under a Section 11 15 waiver, lock-ins may be extended to 12 months. Where mandatory
enrollment is in place, states must also determine whether to establish an annual open enrollment
season or to allow continuous enrollment. These policies can become especially complex for <strong>Medicaid</strong>,
where beneficiaries can gain and lose eligibility for benefits multiple times during a year.
A majority of states now have some type of mandatory enrollment policies, although details vary
considerably. According to the NASHP survey, 31 of 38 states with risk-based programs have
mandatory enrollment. Those not choosing a plan are assigned one. Most states with PCCM programs
also have mandatory enrollment. Apparently, most states have maintained the monthly right to
disenroll. Nine states, however, reported using a six-month lock-in, and five (all Section Il15 waiver
states) set a 12-month lock-in period (Horvath and Kaye 1997).
NASHP, however, found no connection between different enrollment policies and rates of
disenrollment or auto-assignment. It also found little use of disenrollment data as a program
management tool (Horvath and Kaye 1996). None of the studies, however, drew conclusions about the
broader effects of extending lock-ins beyond requirements in current law.
Competitive Selection of Plans
The use of competitive bidding to select plans for participation in managed-care programs is a
significant trend in <strong>Medicaid</strong>, with eight states now using it in some way (Horvath and Kaye 1997).
Arizona has used this approach for more than a decade, and it has been credited with helping to keep
costs down (GAO 1995a). In several other states, the use of competitive bidding is much more recent.
It is probably too early, therefore, to draw any conclusions. Competitive bidding is thus an ideal
candidate for further research.
In 1994, Arizona sought bids for three-year contracts with plans. The state described its general
requirements in a request for proposals and received 95 bids for 42 contracts it was making available in
15 counties. Arizona had previously developed capitation rate ranges based on historical utilization
data. These ranges, not shared with the bidders, were used to evaluate the bids. Low bids received
higher scores, but bids that were excessively below the range were considered unacceptable. If an
initial bid was above the range, the bidder was allowed to submit a second bid. Arizona also evaluated a
plan's provider network, its management, and its past experience. Ultimately, the 42 contracts were
awarded to 14 plans (GAO 1995a).
California is implementing a new system for selecting plans in 12 of its largest counties. In each case,
two plans are permitted to enroll beneficiaries. One is called a local initiative plan and is normally
443 Physician Payment Review Commission