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

507
precisely what beneficiaries need. Compared to current fee-for-service
arrangements, managed care offers the potential to improve beneficiary outcomes
and control expenditures.
Many states are working on programs that would integrate acute and long term care
for special populations. It is important to point out that integration itself is not a
goal, but an approach that many believe will improve outcomes and control costs.
Improve Consumer Outcomes
Many believe that replacing the fragmented fee-for-service system with a managed,
seamless system will result in a user-friendly system with better outcomes. States
also report improved access to certain services, particularly primary care and dental
services. States believe a good managed care program should:
* emphasize prevention and early intervention services;
* reduce overuse of institutional services in favor of expanded homeand
community-based services;
* add flexibility to benefits, allowing care to be highly individualized;
* enhance accountability by holding a single contractor responsible for
care over time and place; and
* strengthen coordination of care.
Control Expenditures
States also hope that expenditures can be controlled through the fixed capitation
payment method. Budgets continue to grow from year to year in managed care
systems, but the growth is a negotiated, predictable increase in rates paid to a
contractor, as opposed to unpredictable, open-ended provider reimbursement paid
on a fee-for-service basis. Moreover, the capitated payment gives the contractor a
strong incentive to manage services closely.
For special populations, states see greater opportunities to substitute less expensive,
more desirable home- and community-based care for more expensive institutional
care. The evaluators found this to be the case in Arizona's Long Term <strong>Care</strong> System,
where contractors are mostly county-based, but Experton's San Diego study, in which
home care was reduced and hospitalization increased for frail older people, is an
important reminder that commercial HMOs may not automatically move to
increase home- and community-based care in response to a capitated payment.
The National Academy for State Health Policy * 0 8/97 IV-4
44-098 97-17