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

Principal Findings
Few States Have
Significant Experience
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capitation rates on average costs for large segments of statewide <strong>Medicaid</strong>
populations, such as families with children or disabled individuals.
However, within the disabled population some groups, such as
quadriplegics or AIDs patients, have substantially higher medical costs
(sometimes more than $50,000 in a given year), while others, such as
mildly disabled individuals, may have few or no additional costs beyond
those of the general population. The ability to identify individuals with
iigh-crst disabilities could lead nimaged caie plais to try to avoid
enrolling them or to encourage them to disenroll by limiting services
inappropriately. The development of more appropriate rate-setting
approaches that link rates more closely to individuals' likely costs is still in
the experimental stage. States are further along in adopting methods to
share the risk of losses experienced by plans that enroll a relatively large
number of high-cost individuals. For example, reinsurance programs are
the most common form of sharing such losses. A few states are adopting
an approach called a 'risk corridor,' which limits the amount of profit that
health care plans can earn as well as the amount of loss they could face,
thereby reducing the incentive to inappropriately limit services or to avoid
enrolling high-cost individuals.
Arizona, Delaware, Oregon, Tennessee, Utah, and Virginia are the only
states requiring some or all of their disabled beneficiaries to participate in
prepaid care programs. These states enroll disabled beneficiaries in
prepaid managed care plans that also cover other types of <strong>Medicaid</strong>
recipients. Arizona's program, established in 1982 and currently enrolling
more than 70,000 disabled, is the only mandatory program more than 3
years old. In contrast, Massachusetts, Ohio, Wisconsin, and the District of
Columbia have small-scale voluntary programs solely for disabled
individuals, none of which serves more than 3,000 beneficiaries. Seven
other states (California, Colorado, Florida, Maryland, Michigan, New
Jersey, and Pennsylvania), as well as Massachusetts, allow disabled
beneficiaries to enroll voluntarily in plans open to other <strong>Medicaid</strong>
beneficiaries. In these states, less than 20 percent of the disabled
population have chosen to enroll.
One problem identified thus far in states with federal approval to restrict
beneficiaries' freedom to change providers has been coordinating
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