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

Executive Summary
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Thim osPrepaid managed care plans, which deliver medical services for a fixed (or
Purpose capitated") per-person fee, are an increasingly common part of <strong>Medicaid</strong>,
the nation's largest health care program for the poor. With their emphasis
on primary care, restricted access to specialists, and control of services,
prepaid plans are seen as a way to help control spiraling <strong>Medicaid</strong> costs,
which totaled $159 billion in fiscal year 1995. Thus far, states have
extended prepaid care largely to low-income families-about 30 million
individuals-but to few of the additional 6 million <strong>Medicaid</strong> beneficiaries
who are mentally or physically disabled. <strong>Managed</strong> care's emphasis on
primary care and control of service use differs from the care needs of
disabled beneficiaries-many of whom need extensive services and access
to highly specialized providers, which in some cases are essential to
prevent death or further disability. However, because over one-third of all
<strong>Medicaid</strong> payments go for their care, greater attention is being focused on
whether disabled individuals can be integrated successfully into managed
care.
These efforts affect three key stakeholder groups: disabled beneficiaries,
who include a small number of very vulnerable individuals who may be
less able than others to effectively advocate on their own behalf for access
to needed services; the prepaid care plans, which are concerned about the
amount of financial risk involved in treating people with extensive medical
needs; and the states and federal government, which run <strong>Medicaid</strong>. The
Chairman and Ranking Minority Member of the Subcommittee on
<strong>Medicaid</strong> and Health <strong>Care</strong> for Low-Income Families, <strong>Senate</strong> <strong>Committee</strong> on
Finance, asked GAO to examine (I) the extent to which states are
implementing <strong>Medicaid</strong> prepaid managed care programs for disabled
beneficiaries and (2) the steps that have been taken to safeguard the
interests of all three stakeholder groups. GAO's review of safeguards
focused on two areas-efforts to ensure quality of care and strategies for
setting rates and sharing financial risk.
Background <strong>Medicaid</strong> is funded jointly by the states and the federal government and
Background operated mainly by the states. It provided health care coverage for
40 million people in fiscal year 1995, about one in seven of whom was
disabled. Some categones of mildly disabled individuals have health care
costs that closely mirror those of the general population, but others, such
as those with cystic fibrosis or end-stage acquired immunodeficiency
syndrome (AImS), have costs that are much higher.
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GAOLEHSqEIS- S hledaid Mtrged C.e r the. Disbled