Managed Care and Medicaid Term Paper

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Reduce Medicaid Program Costs and Enhance Utilization and the Quality of Care Through Medicaid Managed Care

Medicaid is a type of health insurance provided and funded by the federal government and states to provide coverage to all Americans who are eligible low-income adults, children, elderly adults, pregnant women, and individuals with disabilities. Managed Care is a health care delivery system that was organized to manage cost and quality. The use of managed care in Medicaid is to deliver Medicaid health benefits and additional services through contracted arrangements that are between state Medicaid agencies and managed care organizations. By contracting with different types of managed care organizations, states can reduce Medicaid program costs and better manage the use of health services as well as enhance health care quality (Medicaid.gov).

Medicaid Managed Care is a federal government sponsored medical care system designed to deliver quality care and to reduce cost of health care. It is jointly funded by Federal and state governments. Medicaid has increased access to care and reduced the cost of care by providing the covered individuals with basic health care services and other health benefits through MCOs (managed care organizations). MCOs accept payments from state Medicaid agencies for the health care services rendered. The main objectives of Medicaid are to enhance health care quality, to improve health care performance and to better health care outcomes for American citizens (Medicare and Medicaid, 2014).

There are four basic types of managed care plans that are used by Medicaid which include Health Maintenance Organization, Preferred Provider Organization, Point of Service, or Exclusive Provider Organization (Nourie, 2013). Each have their certain rules and regulations which stirs up the competition. For example, under an HMO plan you must have a primary care doctor, you can only use doctors or hospitals who are approved by your plan, and you need referrals to see specialists (Nourie, 2013). As compared to a PPO plan which is more flexible, there is no need for a primary care doctor and you can see any doctor you want even outside of your plan for an extra cost (Nourie, 2013). The differences in each of these types of managed care plans offered through Medicaid causes competition which has an effect on costs, quality, and the use of different health care services.

The majority of Medicaid enrollees are part of a Medicaid managed care plan. In fact, seventy percent of the sixty million Medicaid beneficiaries are in a Medicaid managed care plan (Charlson, Wells, Balavenkatesh, Dunn & Michelen, 2014).). Even with the increase in Medicaid managed care plan participants the results on cost savings haven't been well. There are specific Medicaid managed care plans that have shown signs of cost savings by reducing inpatient use but according to an analysis about Medicaid managed care mandates in fifty states from 1991-2003 the effect on overall costs has been insignificant (Charlson et al., 2014). It is important to research the cause behind the negligible effect that Medicaid managed care plans have had on costs. According to an analysis done by BMC Health Services, patients with higher comorbidity incur higher costs which suggests that high comorbidity patients may be a good start for cost savings in Medicaid Managed Care plans (Charlson et al., 2014). A limitation to this analysis was that it was based on only one Medicaid Managed Care plan at one hospital in New York City (Charlson et al., 2014).

Other studies on the savings impact of Medicaid managed care plans have produced mixed results. They have shown that there could be two potential sources of savings from Medicaid managed care plans which include reduced use of hospitals and other high-cost health services due to the improved primary care access and care management (The Henry J. Kaiser Family Foundation, 2012). In some states the fee for service payment rates are so low that it is difficult to produce savings, the studies showed that in the same states Medicaid managed care contracting did not reduce costs to result in savings either (The Henry J. Kaiser Family Foundation, 2012). As for states with high fee for service payment rates, Medicaid managed care contracting did show a reduction in spending and therefore a result of savings (The Henry J. Kaiser Family Foundation, 2012). Therefore, the main goal for Medicaid managed care plans should be to not only focus on high comorbidity but also on providing better access to preventative and primary care in order to reduce the risk of hospitalization and other high cost medical services.

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Their focus should also be headed toward more effective management of individuals with chronic illnesses since these conditions are long lasting and require a lot of spending. As Medicaid, Managed Care plans grow and expand in the future cost reductions and savings are evident over the long run (The Henry J. Kaiser Family Foundation, 2012).

One of the main causes of adding Managed Care to Medicaid was to reduce costs and enhance quality and access. The two general models among others that were implemented were primary care case management and risk-based capitation programs (Ae-Sook & Jennings, 2012). Risk-based capitation enrollment has been increasing at a much faster rate than primary care case management enrollment. In a primary care case management plan the enrollee must choose a primary care doctor who is responsible for the enrollee's care in return for a monthly fee which is in addition to payments provided for medical services (National Council on Disability, 2013). This can also be considered a fee for service plan. The risk-based capitation model follows a different framework such as the HMO framework in which the plan receives a fixed payment from the state per member per month (National Council on Disability, 2013). This puts the risk of any extra expenses on the health plan or the participating provider. The risk-based capitation model is considered more widespread than the other model because it showed more efforts to control cost and utilization while enhancing access and quality (Ae-Sook & Jennings, 2012). The majority of enrollees in 2008 for Medicaid Managed Care plans especially among children and adults chose comprehensive risked-based plans; whereas primary care case management plans had the least enrollees across the board (National Council on Disability, 2013). Risk-based capitation plans are better at controlling costs, improving quality, and enhancing access because the physicians under their plans are rewarded based on how much health care costs they cut by controlling patients' overutilization behaviors (Ae-Sook & Jennings, 2012). Whereas primary care case management physicians are not so much worried about providing less expensive and more effective services since they are paid based on services they provide (National Council on Disability, 2013). The same ease of accessibility to good heath care facilities stands true for those individuals who have Medicaid insurance as compared to those who dont.

Past research has shown that individuals with Medicaid coverage are better off with regards to health care utilization, access to care, and meeting their health care needs compared to the uninsured. An increasing body of research reveals that Medicaid covered children from poor socioeconomic backgrounds are much more likely to have better child care and to have a USOC (Usual Source of Care) and much less likely to have delayed or unmet health care needs, prescription drugs or dental care compared to uninsured children due to costs (Dayaratna, 2012).

Studies that have investigated Medicaid benefits among children also show the same trends as those revealed among children. A meta-analysis of literature on the benefits of Medicaid among pregnant woman revealed that Medicaid expansions have resulted in better use of prenatal care services among groups that were targeted by the expansions (Committee on the Consequences of Uninsurance, Board on Health Care Services, Institute of Medicine, 2002). Another study shows that mothers insured by Medicaid have a higher likelihood of having a USOC, a dental visit, and being screened for cancer compared to uninsured mothers (Long S. et al., 2005). The same study also shows that young adults are likelier to have more health care visits and to report receiving timely care compared to uninsured adults (Long S. et al., 2012). A similar study recently concluded that if the individuals covered by Medicaid were uninsured they would have a much smaller likelihood of having a usual source of care, and that their frequency of visits to health care facilities for specific services would decrease considerably. The report also concluded that these individuals would also have to use more of their own money to supplement their medical expenses (Coughlin T. et al., 2013). Researchers have also concluded that low income individuals who were previously uninsured reported significant increase in access to care and medical care use after they gained Medicaid coverage courtesy of the state expansions of eligibility.

Improvements in self-reported health, healthcare use and access to health care have also been reported under the latest state expansions of Medicaid system. To be more specific, about twelve months.....

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