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

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Risk pools are usually used to provide plans with protection against adverse
selection relative to other contractors. In other words, to share financial risk among
all plans. Oregon, for example, uses this approach to accommodate for an unequal
distribution of pregnant women (and the resulting cost of delivery) in health plans.
This State retains a small portion of each capitation payment made to plans during
the year. This retained money becomes the 'pool'. At the end of the year the State
determines the number of births to <strong>Medicaid</strong> beneficiaries that each plan paid for.
Then the state distributes the money in the 'pool' to plans in proportion to the
percent of total <strong>Medicaid</strong> births each plan paid for. This strategy could be used for
other easily measurable conditions, such as the number of plan members who
receive protease inhibitors.
Highlights
* States may wish to change their capitation payment systems to pay those
plans that serve more expensive populations more.
* Methods for adjusting payments based on diagnosis or ability to perform the
activities of daily living are just being developed and states will need to make
extensive changes to their payment processing system to accommodate these
new systems.
* States should consider how to best set financial solvency standards and
monitor contractor compliance with these standards. Particularly if the state
is contracting with plan that does not have a commercial license.
* Risk-sharing can not only protect contractors from excessive losses, but may
enable states to recoup excessive profits.
Quality Improvement
In general state <strong>Medicaid</strong> agencies cite improving the quality of care provided to
enrollees as one of the most important reasons for moving <strong>Medicaid</strong> beneficiaries
into managed care. As reported in previous volumes, some states (e.g., Rhode
Island) have measured improvements in the quality of care and health outcomes
produced by managed care for AFDC (TANF) beneficiaries. In large part, states
attribute these improvements, to the activities they undertake to make sure that
individual health plans and the program as a whole provide access to quality care. 34
34 Several other publications from the National Academy of State Health Policy also address
the issue of ensuring quality in <strong>Medicaid</strong> managed care programs. The publication most pertinent to
programs that serve members of special populations is: Maureen Booth, Look Before You Leap:
Assuring the Quality of <strong>Care</strong> of <strong>Managed</strong> <strong>Care</strong> Programs Serving Older Persons and Persons with
Disabilities, (Portland, ME: The National Academy for State Health Policy, 1996).
The National Academy for State Health Policy * 0 8/97
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