Question

Assess how managed care has affected patient flow, incomes, and clinical discretion.

Answer 1

Ans) Certain aspects of managed care, including defined provider networks and incentives to contain costs, may counteract these objectives. Outcomes for access and quality of care not only vary by MCO but they also vary by service and are affected by a variety of factors, as discussed below.

Aspects of Medicaid managed care that may affect access to and quality of care:

• Economic incentives:

- Under the FFS model, the state pays providers directly for each covered service received by a Medicaid enrollee. Under managed care, the state pays a managed care plan a capitation rate—a fixed dollar amount per member per month—to cover a defined set of services for each person enrolled in the plan. In turn, the plan pays providers for all of the Medicaid services an enrollee may require that are included in the plan’s contract with the state. MCOs are at financial risk if spending on services and administration exceeds payments; conversely, they are permitted to retain any portion of payments not expended for covered services and other contractually required activities.

Some suggest that capitation does not provide incentives to overtreat patients as in FFS. Instead, managed care encourages providers to keep enrollees healthy in order to keep costs within the capitation rate, through preventive and appropriate care to avoid expensive hospital stays and emergency department visits. Capitation also provides more certainty when budgeting and encourages the efficient use of services.

Others argue that a capitated payment system that pays MCOs a set amount per enrollee and not on how much treatment is provided may create incentives to undertreat patients to minimize treatment costs. Capitated plans may also seek to enroll as many healthy patients as possible and discourage participation of disabled or high utilizing enrollees.

Incentives may also be influenced by capitation payment rates. For example, adequate payments should be able to provide access to coordinated and effective care while generating savings that can support additional medically necessary services. On the other hand, if capitation rates are set too low, they may create incentives to restrict services through use of gatekeepers, preauthorization policies, or limits on benefits.

Low rates may also motivate plans to pay less for services, which in turn may reduce the number of providers willing to treat enrollees thus impeding their access to care. In Illinois, for example, much of the traditional safety-net provider community boycotted the state’s managed care initiative when it was implemented, arguing that the payment rates were too low and the bureaucratic micromanagement was too high. Providers have also cited low payment rates in the California Medicaid managed care program as a barrier to their participation.

• Network composition:

- FFS Medicaid programs typically contract with any qualified provider willing to accept Medicaid payment rates, and Medicaid beneficiaries who receive services through FFS are entitled to freedom of choice among Medicaid providers. Managed care plans can establish their own provider network qualifications, contract terms, and payment rates (within parameters required by the terms of the contract with the state). They generally limit MCO enrollees to a network of providers. MCO provider networks must be sufficient to provide adequate access to all covered services, taking into account the number, type, and geographic distribution of providers, among other factors, but there are no universal metrics to determine sufficiency.

- The size and scope of the network will affect the types, availability, and quality of services available to enrollees and access can vary substantially within a state, between urban and rural areas, and across states. Networks with a sufficient number of participating providers may help ensure access to services covered under the contract while narrow networks may deter specialty care or other referrals and inhibit beneficiary choice and access to high quality care. Consumer advocacy organizations worry about inadequate provider networks and breaks in long-standing patient-provider relationships, especially for the high-cost populations that have the most vulnerable health status. Geographic variation in provider access, which can be driven by both the breadth of an MCO’s network and the availability of providers in a given geographic area, can also affect the type, quality, and amount of services used by beneficiaries.