What is comprehensive Medicaid managed care?

Answer 1

In order to answer "What is Medicaid managed care," we must define both what Medicaid is, and then what managed care is.

Medicaid is a combined state and federal program to provide health care to poor people in the US.

The states and the US government split the costs for Medicaid. Usually the Federal government pays a higher share than the states do. This share varies from state to state, and also fluctuates from year-to-year. Certain special situations within Medicaid qualify for short term increases in the proportion that the Federal government pays.

The Federal Government, through the Center for Medicare and Medicaid Services (referred to as CMS), which is a part of the US Department of Health & Human Services (HHS), sets the broad guidelines as to what states must do in order to qualify to pariticipate (and thereby receive the federal funding). The programs are then designed and administered by each state. States often have to get federal approval to make certain changes in their specific Medicaid program. These are referred to as Waivers.

Benefits under Medicaid vary significantly from state to state. Eligibility is largely defined by the financial status of the potential recipient, and this also varies significantly from state to state.

It is sometimes mistakenly believed that just about anyone can qualify to receive Medicaid benefits. While qualification may be somewhat easy in some states, it is very difficult in other states. For example, in Texas, it is nearly impossible to get Medicaid if you are an able-bodied adult that is not pregnant and not a senior citizen. While it is generally not perceived as such, in reality Medicaid is (at least in some states) primarily for poor children, poor pregnant women (only while they are pregnant), and the "Aged/Blind/Disabled" (ABD) populations. In many states, children have to be from extremely poor families in order to qualify.

Sometimes Medicaid is confused with Medicare. Medicare is completely a federal program; states are not involved. Medicare eligibility is almost entirely based on age. With some exceptions, you generally have to be of retirement age in order to get Medicare. If Medicare didn't exist, most people would have no health care insurance when they retired.

Medicaid is administered by the states in various ways. Some states use managed care (such as HMOs) to provide Medicaid, and sometimes there is the more traditional "fee-for-service" method (where a beneficiary goes to a doctor or other health provider, with no organization telling him/her where they can go). Some states use both methods. And there are variations on managed care (Primary Care Case Management, or PCCM, versus capitated Health Maintenance Organizations, also called Managed Care Organizations).

While the traditional fee-for-service method may sound better to the person receiving the care, the organizations paying for the care often find that managed care is less expensive. This is true outside of Medicaid as well; companies that provide health benefits to their employees generally have shifted away from fee-for-service, over to either HMOs or PPOs.

Under capitated Medicaid managed care (such as HMOs), the HMO is paid a flat fixed fee per month, per beneficiary. The amounts vary by the type of beneficiary (e.g., a pregnant woman would have different costs than a five-year-old child). The amounts are usually adjusted annually by the state. The HMO is then responsible for providing all required care for all beneficiaries. Thus, the HMOs are "at risk" for the program. If the services cost more than what the state pays them, the HMO loses money. If the HMO can contract with various hospital and other providers at lower costs, then they may make a profit.

One of the reasons that managed care saves money is that the medical consumer must get permission to go to a specialist or receive certain tests, etc. This "prior authorization" tends to eliminate some unnecessary or duplicative medical services. If the prior authorization funciton is performed by a Doctor Who has no financial stake in the outcome (e.g., the doc does not work for an HMO), then it usually does not result in any significant denial of services. However, when the prior authorization function is performed by an HMO, which by nature of the business arrangement may stand to gain from cutting back services, then the result may be what many people believe is a denial of service method of controlling costs.

HMOs are quick to point out that they are able to save money by contracting at lower rates, and doing other things to increase the efficiency of controlling medical expenses. However, they also add a layer of overhead costs, and profits, to what would have been the stand-alone cost of the medical services. This overhead and profit tends to offset much of the other savings that an HMO may generate.

Thus, managed care is somewhat controversial. Some people say it is the answer to cost control; other people hate it. Like many things in life, facts are often distorted according to the bias of the speaker.

There are two primary types of Medicaid managed care organizations: "hospital model" and "corporate model." Hospital model Medicaid HMOs are owned by hospital systems, and one of their goals is to help supply patients to their parent hospitals. They can sometimes operate at little or no profit, as they provide a benefit to their owners by supplying patients. Corporate model HMOs do not own, and are not owned by, hospitals. Corporate model HMOs are usually for-profit organizations, and often operate in a number of states; some of them are publicly-traded corporations that are listed on stock exchanges. Hospital model HMOs are often non-profit, and usually only operate in a single state.

Medicaid managed care is hugely complex, and becoming more and more important in our country's situation. Health care expenditures are eating up an ever increasing portion of our state's budgets, straining the taxpayer. Medicaid is what most of that is about. And managed care is what most Medicaid is starting to shift towards.

Many irate taxpayers want to cut Medicaid off. What most people don't realize, is that whether health services are paid for by Medicaid or not, we still end up paying for most of it. If someone isn't covered by Medicaid, and they show up at the emergency room, the hospital has to take them in. The hospital has to cover the expense. They do this through a combination of receiving more tax money, or charging other patients higher rates, etc. So unless we, as a society, decide to let people die under bridges, etc. (i.e., not allow them into the emergency room unless they can pay), then we are really only talking about HOW it will be paid for, not WHETHER it will be paid for. And treating people who can't afford care at the emergency room is the most expensive, inefficient manner of providing medical care.

So it is a difficult problem. Clearly something needs to be done to reduce Medicaid and other health care costs. Simply getting rid of Medicaid, managed care or not, won't have the desired effect of significantly reducing costs (including insurance premiums and tax burdens) to the rest of us, unless something better can be put in Medicaid's place. Other countries have solved this problem; we should consider what some of them have done in searching for a solution. And we should be wary of what we hear, as the vested interests are spending lots of money to protect the status quo. They don't want change.