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

Defining <strong>Managed</strong> <strong>Care</strong>
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Although managed care organizations vary, they generally feature a focus on
primary, preventive health care and care coordination. That focus is believed to improve
care and access for enrollees. It is also thought to promote cost containment, thus slowing
the rate of increase in health care spending.
The managed care organizations enrolling <strong>Medicaid</strong> beneficiaries can generally be
defined as fitting into one of two basic types: health maintenance organizations and feefor-service
primary care case management (PCCM) programs. Both types feature
coordinated care. But each carries a different level of financial risk. Health maintenance
organizations (hereafter referred to as health plans or plans) are full-risk plans that
contract with <strong>Medicaid</strong> for a fixed fee per person and provide comprehensive services. 38
PCCM programs comprise providers, usually primary care physicians, willing to serve as
gatekeepers and take responsibility for approving and coordinating enrollees' care.
<strong>Medicaid</strong> pays PCCM providers on a fee-for-service basis, but they receive a case
management fee to cover their added responsibilities. Thus PCCM providers are at no
financial risk.
Some agencies also contract with plans separately for certain aspects of care, such
as mental health, substance abuse, and dental care. The arrangements for these "carveouts'
vary in terms of the services included and the level of financial risk the plan
assumes.
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