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

ees are more likely to be poor, less well educated, very young
or very old, and physically or mentally disabled; e) <strong>Medicaid</strong>
beneficiaries who have complex needs may receive care
from several distinct components of the health care system
such as: child welfare agencies, alcoholism and addiction
treatment and prevention programs, local public health agencies,
school health systems, or chronic disease specialty
clinics; and f) because they tend to lose their <strong>Medicaid</strong> coverage
frequently, <strong>Medicaid</strong> beneficiaries need coordination
between managed care organizations and sources of care
when they are uninsured.
3. The Legal Framework for <strong>Medicaid</strong> <strong>Managed</strong> <strong>Care</strong>
The organizational and legal framework in which <strong>Medicaid</strong>
managed care arrangements operate is complex. The
framework can be thought of as a pyramid with multiple layers,
each of which is essential to the proper functioning of
the managed care system.
Self-regulation
At the base of the pyramid are self-regulating activities
such as industry accreditation and codes of conduct, professional
training and education, collection and analysis of
performance data, and other efforts to control and promote
quality. Many of these efforts tend to be adopted by the
industry in response to consumer concems.
Contracts
At the next organizational layer are the agreements
which establish the operational structure of the managed
care arrangements purchased by the state. It is the contract
that brings to life the transformation of <strong>Medicaid</strong> from a mimbursement
program to a managed care purchaser. Under
principles of contract law and interpretation, clanty and precision
are crucial. This is particularly true for the drafter of
the agreement, since courts will interpret ambiguities against
the party who drafted the document. For public agencies,
this rule represents a marked departure from the wules governing
judicial review of agency regulations, which call for
broad discretion to be given to regulatory agency interpretstons
of law.
State and Federal statutory and regulatory law
At the top levels of the pyramid are the many federal
and state laws that govern the provision of managed care
services to <strong>Medicaid</strong> beneficiaries. Beyond <strong>Medicaid</strong> laws,
state insurance, business licensure, and public health laws
may contain numerous requirements which apply to both
managed care companies and <strong>Medicaid</strong> agencies.
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[I, The Four Major Elements of <strong>Medicaid</strong> <strong>Managed</strong>
<strong>Care</strong> Contracts and Key Findings
1. Defining the <strong>Managed</strong> <strong>Care</strong> Service System
Contracts between states and managed care plans identiy:
a) the attributes and structure of the purchased health
care system states expect plans to make available to their
clients; b) the methods that plans will employ in delivering
services; and c) the process for verifying the attributes of
plan service systems and measunng plans' performance.
There is no real precedent for this large-scale and detailed
effort to articulate in writing agencies' expectations of how
the entire health care system will operate for beneficiaries.
In this regard, state <strong>Medicaid</strong> agencies are charting an innovative
and unequaled course in attempting to address how
health care arrangements for poor people (many of whom
have special health care needs) should function.
Findings on Contract Provisions Related to Medic
aid <strong>Managed</strong> <strong>Care</strong> Service Systems
This study found that:
' States are not buying "off-the-shelf products. Instead
they ame either designing or requinng plans to design
custom delivery systems for <strong>Medicaid</strong> enrotlees.
9 Contract delivery specifications tend to deal with
the overwhelmingly prmary health care needs of a
relatively healthy, young family population.They are
only beginning to address in depth the specific
capabilities plans will need in order to serve high
need sub-populations (e.g. disabled children or
adults, persons with HIV/AIDS, or the elderly).
' States vary substantially in the amount of discreton
they accord to plans in structuring service delivery
systems. Some states provide detailed speciffcations
on network composition, access, and other
measure, while others provide more discretion to
plans.
2. Translating <strong>Medicaid</strong> Benefit and Administrative
Requirements Into Contract Language
<strong>Medicaid</strong> managed care contracts identity which federal
and state benefit and administrative dutes state agencies
desire to have contractors to carry out on their behalf.
Contracts between state agencies and managed care plans
generally do not cover all of the sermces and benefits included
in a state's <strong>Medicaid</strong> plan. This means that <strong>Medicaid</strong> managed
care enrollees have two sources of coverage: 1) their
managed care membership, which covers the classes and
levels of services included in the agency's service agreement
with the contractor; and 2) their basic <strong>Medicaid</strong> cover-