Medicaid managed care
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Medicaid managed care is part of the health care system of the United States, and consists of Medicaid and additional services through an arrangement between a state Medicaid agency and managed care organizations (MCOs) that accept a set payment – “capitation” – for these services. The state pays the MCO a monthly premium to cover the services provided to a beneficiary. As of 2014, 26 states have contracts with MCOs to deliver long-term care for the elderly and individuals with disabilities. There are two main forms of Medicaid managed care which are “risk-based MCOs” and “primary care case management (PCCM).” In a PCCM system, the state pays for services on a fee-for-service basis as well as a monthly fee to a contracted primary care provider to coordinate care for the beneficiary.
Managed care delivery systems grew rapidly in the Medicaid program during the 1990s. In 1991, 2.7 million beneficiaries enrolled in some form of managed care. Currently, managed care is Medicaid's most common health care delivery system. In 2007, nearly two-thirds of all Medicaid beneficiaries were enrolled in some form of managed care – mostly, traditional health maintenance organizations (HMO) and primary care case management (PCCM) arrangements. This amounted to 29 million beneficiaries, 19 million of which were covered by fully capitated arrangements and 5.8 million were enrolled in Primary Care Case Management. By 2015, 39 states, including Washington D.C., had contracts with an MCO to serve at least a portion of their Medicaid beneficiaries. Overall, more than half of all Medicaid beneficiaries receive care through an MCO plan, with the majority of beneficiaries being children and parents. MCO enrollment will likely increase as states increasingly rely on their MCO system to enroll newly eligible beneficiaries to expand coverage according to the Medicaid expansion provisions of the Affordable Care Act (ACA).
During this time, states increasingly turned to health plans already serving the public coverage programs, such as Medicaid and SCHIP, to operationalize expansions of coverage to uninsured populations. States used health plans as a platform for expansions and reforms because of their perceived track record and proposed demonstration of controlling costs in public coverage programs with a goal of improving the quality of and access to care.
A variety of different types of health plans serve Medicaid managed care programs, including for-profit and non-profit, Medicaid-focused and commercial, independent and owned by health care providers such as community health centers. In 2007, 350 health plans offered Medicaid coverage. Of those, 147 were Medicaid-focused health plans that specialize in serving the unique needs of Medicaid and other public program beneficiaries. Over 11 million are enrolled in Medicaid focused health plans . The National Council on Disability of the US in July 2015 reaffirmed the "guiding principles of Medicaid Managed Care Plans" in line with the Americans with Disabilities Act of 1990.
In 2011, all states except Alaska, New Hampshire, and Wyoming had all, or a portion of; their Medicaid population enrolled in an MCO. States can make managed care enrollment voluntary, or seek a waiver from CMS requiring certain populations to enroll in an MCO. If a state provides a choice of at least two plans, they can mandate enrollment in managed care.
Healthy children and families make up the majority of Medicaid managed care enrollees, but an increasing number of states are expanding managed care to previously excluded groups, such as people with disabilities, pregnant women, men, and children in foster care. In 2003, Hudson Health Plan implemented a patient-specific pay for performance (healthcare) (P4P) model to increase immunization rates and diabetes care for Medicaid managed care recipients.
Medicaid pays more for mental health services than any other healthcare providers because mental health and substance abuse issues are twice as common among Medicaid customers than in the general population.  The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) required that most insurance plans covering mental health or substance use disorders also cover medical health conditions. In 2013, the Centers for Medicare and Medicaid Services (CMS) issued a letter guiding state MCOs to comply with MHPAEA's parity requirements. All states expanding Medicaid per ACA eligibility using an MCO model are required to provide parity in mental health services. These plans must also provide substance abuse treatment as a benefit under an alternative benefit plan for newly eligible individuals. Similar parity requirements have been proposed by CMS to apply to all Medicaid managed plans. On April 6, 2015, CMS issued a proposed rule that would require Medicaid MCOs to comply with parity requirements outlined in MHPAEA but allowing states to maintain flexibility in rate setting. The final rule was passed on March 29, 2016.
States can design unique models for delivering behavioral and mental health services, but are largely defined by their choice in structure for administrative services. The two main classifications for administrative services are "carved-in" or "carved-out." Carved-in models are the most highly integrated systems, with behavioral health services offered through MCOs alongside physical health services. The MCO supports the state administratively, and each MCO plan provides both physical and behavioral health services. For example, New York uses a carved-in model. Carved-out plans outsource administration of behavioral health services to a behavioral health organization (BHO) or a similar entity with a sole responsibility of mental and behavioral health services administration. Maryland is an example of a state that uses a carved-out model. Both methods may be used by states with Medicaid MCO models, and some states use hybrid models that use both MCOs and BHOs for administrative support. Massachusetts uses both methods.
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- "CMS finalizes mental health and substance use disorder parity rule for Medicaid and CHIP". CMS.gov. CMS. March 29, 2016. Retrieved March 31, 2016.
- Boozang, Patricia (May 2014). "Coverage and Delivery of Adult Substance Abuse Services in Medicaid Managed Care" (PDF). Technical Assistance Brief. Centers for Medicare and Medicaid Services.