Medicaid Managed Care Works
Medicaid managed care represents a foundational component of our country’s health care delivery system, serving millions of individuals and families with diverse and often complex needs. It provides states with the flexibility to address the holistic needs of Medicaid enrollees by emphasizing preventive and comprehensive care, all while helping states manage costs. Medicaid managed care organizations (MCOs) have the flexibility to deliver services and care coordination beyond what is available under a fee-for-service (FFS) model. Key components contributing the value of Medicaid managed care include:
Access to Health Care & Services – Establishing access and connecting consumers to high quality, appropriate, and timely care is central to the mission of Medicaid MCOs. Today, more than 99 million people live in a federally designated primary care shortage area; 70 million live within dental shortage areas; and 158 million live in areas with a shortage of mental health professionals. Efforts utilized by Medicaid MCOs to help mitigate systemic barriers include facilitating appointments, arranging transportation, providing care navigation, providing nurse consultation, and offering telehealth appointments.
Care Management & Coordination – Recognizing that the range of care and services needed by Medicaid enrollees varies among individuals and over time, Medicaid MCOs utilize a whole-person approach that meets the unique needs and circumstances of individuals. Care coordination supports access to providers and improved health outcomes through engagement with enrollees, their families, providers, and state and local social service agencies.
Quality of Care – Medicaid MCOs are subject to robust quality and performance measures to ensure beneficiaries receive the care to which they are entitled, including federal requirements for quality assessment and performance improvement. Medicaid MCOs are also held accountable to their state partners through a federally mandated state monitoring system for all managed care programs and the annual submission of a Managed Care Program Annual Report (MCPAR) to the Centers for Medicare & Medicaid Services (CMS). States that partner with Medicaid MCOs are required to create a quality strategy and conduct external quality reviews with quality and performance standards incorporated into Medicaid MCO contracts. Other state efforts to monitor and measure performance include collecting and publishing Healthcare Effectiveness Data and Information Set (HEDIS) measures and Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys. As of FY 2024, Medicaid MCOs must report to states on the core set of health care quality measures for children enrolled in Medicaid and the Children’s Health Insurance Program and the core set of behavioral health measures for adults enrolled in Medicaid. All these requirements are intended to provide enrollees with more transparency and choice.
Financial Predictability & Medicaid Program Sustainability – While nearly three quarters of all Medicaid beneficiaries receive their care through Medicaid MCOs, payments to Medicaid MCOs account for just over half of total national Medicaid spending. Unlike payments under a fee-for-service approach that are based on utilization of services, payments to Medicaid MCOs are for a specific amount per member per month providing states with greater predictability for state budgets under managed care arrangements. Other financial benefits for states contracting with Medicaid MCOs include aligned financial incentives, accountability, and limited financial risk that also contribute to the long-term sustainability of their Medicaid programs.
Medicaid managed care is not simply an alternative delivery system, it is a mature, evolving model that reflects the realities of modern health care. It brings together coordination, accountability, and innovation in ways that meet the needs of the individuals and communities Medicaid serves.