How is managed care funded

Learn more about Medicaid managed care payment. Program integrity activities are meant to ensure that taxpayer dollars are spent appropriately on delivering accessible, quality, necessary care and preventing fraud, waste, and abuse. Both the federal and state agencies that oversee Medicaid are statutorily responsible for ensuring program integrity. While states that contract with Medicaid MCOs cannot delegate their federally mandated responsibilities, under managed care, MCOs generally conduct many of the traditional program integrity activities such as monitoring for false or improper claims submission by providers, while states assume responsibility for oversight of the MCOs.

Learn more about the specific managed care program integrity responsibilities of managed care organizations, states, and the federal government. Data reported by states and managed care plans provide important information for answering key policy and program accountability questions.

For example, data are necessary to monitor trends and make projections on spending, service use, and the quality and appropriateness of care.

However, data submitted by managed care plans to states and by states to CMS have varied in their consistency, availability, and timeliness. In addition, there are many different types of data on managed care programs including encounter data, enrollment data, and program information. This creates challenges for analyzing and monitoring managed care programs and limits the ability to compare states. Learn more about the data used for program accountability and the limitations of those data.

Federal and state policymakers alike want to ensure that Medicaid beneficiaries have sufficient access to necessary care. That is, are providers available, to what extent do beneficiaries receive appropriate care, and barriers to receiving services. There is no single federally mandated method for states to monitor and evaluate access to Medicaid-covered services.

However, rules promulgated in require states to include network adequacy requirements in their managed care contracts. These new network adequacy standards went into effect on July 1, Learn more about the managed care access requirements and current monitoring practices. As enrollment and spending on Medicaid managed care grow, it is important for federal and state governments to know whether they are paying appropriately for adequate quality care and whether enrollees have sufficient access to necessary care.

Managed care offers states the opportunity to improve access to appropriate services, better coordinate care for Medicaid enrollees, and measure performance with regard to quality. Medicaid managed care plans link each enrollee with regular source of primary care, provide access to a contracted network of providers, and provide support services such as care coordination and health education.

However, other features of managed care plans may limit their ability to address the needs of certain populations or geographic areas. The same financial incentives that encourage plans to direct enrollees to preventive care can also discourage utilization of expensive services.

States may also lack the data and tools to effectively monitor quality and access outcomes. Learn more about findings on program outcomes in Medicaid managed care. In the Robert Wood Johnson Foundation published a synthesis of external research on the effects of Medicaid managed care on cost savings, access to care, and quality of care.

Managed Care Types of managed care arrangements State Medicaid programs use three main types of managed care delivery systems: Comprehensive risk-based managed care. In such arrangements, states contract with managed care organizations MCOs to cover all or most Medicaid-covered services for their Medicaid enrollees. Plans are paid a capitation rate—that is, a fixed dollar amount per member per month—to cover a defined set of services. Primary care case management PCCM.

In a PCCM program, each enrollee has a designated primary care provider who is paid a monthly case management fee to assume responsibility for managing and coordinating his or her basic medical care. Individual providers are not at financial risk and continue to be paid on a fee-for-service basis for delivering services.

Limited-benefit plans. Some states contract with limited-benefit plans to manage specific benefits, such as inpatient mental health or substance abuse benefits, non-emergency transportation, oral health, or disease management. Enrollment and spending on Medicaid managed care While about 90 percent of Medicaid beneficiaries are enrolled in some form of managed care, the proportion of beneficiaries enrolled in managed care, the rate of enrollment growth, and spending on managed care varies among the major Medicaid eligibility groups non-disabled children and adults, individuals with disabilities, and individuals age 65 and older.

The MCO share of spending ranged from a low of 0. As states expand Medicaid managed care to include higher-need, higher-cost beneficiaries, expensive long-term services and supports, and adults newly eligible for Medicaid under the ACA, the share of Medicaid dollars going to MCOs will continue to increase.

Figure 6: Payments to comprehensive MCOs account for almost half of total national Medicaid spending. Of the 17 parent firms, eight are publicly traded, for-profit firms while the remaining nine are non-profit companies. Federal rules require that states establish network adequacy standards. States have a great deal of flexibility to define those standards.

The CMS Medicaid managed care final rule included specific parameters for states in setting network adequacy standards, although regulations proposed by the Trump administration in would loosen these requirements. KFF conducted a survey of Medicaid managed care plans in 14 and found that responding plans reported a variety of strategies to address provider network issues, including direct outreach to providers, financial incentives, automatic assignment of members to PCPs, and prompt payment policies.

However, despite employing various strategies, plans reported more challenges in recruiting specialty providers than in recruiting primary care providers to their networks.

Plans reported that these challenges were more likely due to provider supply shortages than due to low provider participation in Medicaid. To help ensure participation, many states require minimum provider rates in their contracts with MCOs that may be tied to fee-for-service rates. In a KFF survey of Medicaid directors, about one-half of MCO states indicated that they mandate minimum provider reimbursement rates in their MCO contracts for inpatient hospital, outpatient hospital, or primary care physicians.

For providers in states that rely heavily on managed care, states are making payments to plans but those funds may not be flowing to providers where utilization has decreased. States can direct that managed care plans make payments to their network providers using methodologies approved by CMS to further state goals and priorities, including response to the COVID pandemic.

For example, states could require plans to adopt a uniform temporary increase in per-service provider payment amounts for services covered under the managed care contract, or states could combine different state directed payments to temporarily increase provider payments Figure More than three quarters of MCO states 34 of 40 reported having initiatives in place in FY that make MCO comparison data publicly available up from 23 states in Over three quarters of MCO states 31 states reported using chronic disease management metrics when rewarding or penalizing plan performance Figure In response to the COVID pandemic, states may need to revisit MCO contract provisions , including quality measurement requirements, as the pandemic is likely to affect clinical practices and timely reporting of quality data.

Figure States are implementing an array of quality initiatives within MCO contracts and linking these initiatives to a variety of performance measure focus areas. More than half of MCO states 21 of 40 set a target percentage in their MCO contracts for the percentage of provider payments, network providers, or plan members that MCOs must cover via alternative payment models in FY Figure Fewer plans reported using bundled or episode-based payments or shared savings and risk arrangements.

Figure An increasing number of states identify a specific target for the percentage of provider payments or plan members MCOs must cover via alternative payment models APMs.

Many states are leveraging MCO contracts to promote strategies to address social determinants of health. For FY , over three-quarters 35 states of the 41 MCO states reported leveraging Medicaid MCO contracts to promote at least one strategy to address social determinants of health Figure For FY , about three-quarters of MCO states reported requiring MCOs to screen enrollees for social needs 31 states ; providing enrollees with referrals to social services 31 states ; or partnering with community-based organizations 28 states.

Although federal reimbursement rules prohibit expenditures for most non-medical services, plans may use administrative savings or state funds to provide these services.