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

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Chapter 5
Observations, Conclusions, and Comments
Enrolling disabled beneficiaries in prepaid managed care is a growing
trend in <strong>Medicaid</strong>. Moreover, because much of the proposed expansion is
directed toward mandatory managed care, the future expansion of prepaid
care for disabled <strong>Medicaid</strong> beneficiaries appears likely to be even more
sweeping in its effect Thus far, two-thirds of the states providing prepaid
care for disabled beneficiaries otter it on a voiuxlay basis. By contrast, 12
of the 13 states with newly approved or pending <strong>Medicaid</strong> managed care
waivers intend to mandate participation by disabled beneficiaries.
The implications of this shift toward mandatory programs are substantial.
Prepaid care has operated in both the public and private arenas as a
system based on averages. For example, populationwide averages drive
the expectations of what services should be provided and how much they
will be used. Likewise, prepaid rates are calculated on average costs, and
quality has been monitored, in part, using aggregated average utilization
rates. To adequately safeguard the interests of disabled beneficiaries,
however, state programs must recognize that these beneficiaries are quite
distinct from the general <strong>Medicaid</strong> population. Not only are their health
needs greater than those of the general population, but included among
them are a small number of highly vulnerable individuals whose needs are
extensive and critical to the prevention of death or further disability. Not
addressing these differences heightens the risk that prepaid care plans will
try to hold down their costs by (I) discouraging enrollment from high-cost
segments of the disabled population or (2) inadequately serving those
high-cost beneficiaries they cannot avoid.
Thus far, actions at the state level do not reflect a widespread
acknowledgment of the changes in approach that should occur when
applying managed care to disabled beneficiaries rather than the general
population. In most states, the level of effort to anticipate and
acconumodate the needs of the various stakeholder groups (disabled
individuals and their advocates, the health care plans, and the
government) in their current programs has been limited largely because
participation in these programs has been voluntary. The efforts have
tended to be most extensive in those few states that have already put
mandatory or targeted programs in place.
No clear blueprint has yet emerged for how to incorporate disabled
beneficiaries into <strong>Medicaid</strong> managed care plans. The limited efforts to date
have not been in place long enough to allow definitive conclusions about
how effective they are. At this relatively early stage, however, several key
areas are emerging that merit consideration by all parties seeking to
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