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

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is moving in this direction now that its managed care program (and
managed care marketplace) has matured. 12
* Large Risk Pools. In general, a large portion of the total cost of caring
for vulnerable populations is due to the cost of caring for a small
number of people within these populations. Some states have found
that spreading the risk of subpopulations across the broader <strong>Medicaid</strong>
population better accommodates this situation. The more 'average'
costing enrollees a plan has, the less likely it is that a few enrollees with
very expensive conditions will cause financial difficulties (with its
potential effect on access and quality of care). These states tend to use
large, usually commercial, plans instead of small specialty plans.
* Existing Relationships. Most states began their managed care programs
with TANF beneficiaries and expanded their programs (or plan to
expand them) to special populations. Some states find it practical to
build on successful relationships with existing contractors, rather than
developing separate relationships for special populations.
* Preserving a Role for Traditional Providers. Many states wish to
preserve a role for traditional-providers generally, and this issue
becomes more significant when special populations are involved.
Community-based long term care providers, developmental disability
services providers, and county mental health systems may all be
valued as critical to the success of any managed care program.
Target Group and Services Purchased
The type of contractor desired will also depend on the target population and services
included in the program. A state will want any potential contractor to demonstrate
experience working with the target group and network adequacy in all services
included in the capitation. If a state is including long term care in its program,
commercial HMOs may not be able to show network adequacy, especially in terms of
home- and 'community-based LTC services. Subpopulations may need very
specialized services currently available only through traditional providers. States
constructing risk-based programs may want to consider combining the insurance
expertise of an HMO with the service expertise of a specialty provider.
Availability
Even if the state is willing to do business with certain contractors, those contractors
may not be interested in taking on the perceived risk of special populations,
12 It is interesting to note that in at least one state (Minnesota) the managed care
marketplace has become so consolidated that this State is considering moving away from purchasing from
commercial HMOs and instead purchasing from county-based or network models.
The National Academy for State Health Policy * 0 8/97
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