Association of Medicaid-Focused or Commercial Medicaid Managed Care Plan Type With Outpatient and Acute Care

“Managed care is the dominant method for financing and delivering services in the Medicaid program, with more than 71 million individuals (74% of all Medicaid beneficiaries) enrolled in a managed care plan in 2016. Under most managed care arrangements, state Medicaid programs negotiate a prepaid, capitated rate with a managed care plan to provide comprehensive services rather than directly reimbursing health care providers (eg, hospitals, physician groups, and clinics). By transferring financial risk to managed care plans, capitated payments increase predictability in costs for state Medicaid programs and provide an incentive for plans to reduce spending on hospitalization and emergency department (ED) visits through greater use of preventive and outpatient care. However, some policy observers have noted that capitated payments may lead Medicaid managed care plans to restrict access to care, particularly for individuals with complex health care needs and social risk factors. Moreover, evidence that contracting with managed care plans decreases state government spending is lacking.

Two major models of managed care organizations serve more than two-thirds of Medicaid beneficiaries: Medicaid-dominant plans, which are plans that primarily (or exclusively) enroll Medicaid beneficiaries, and commercial plans, which are predominantly national, for-profit plans that enroll Medicaid beneficiaries alongside commercial enrollees. Medicaid-dominant plans may benefit from strong relationships with safety-net care sites and a specialized focus on the Medicaid population. Commercial plans may benefit from their experience facilitating care for commercially insured populations, a more robust administrative and quality management infrastructure, and larger physician networks.

[..] we evaluated a policy experiment in the Medicaid program in a Northeastern US state. After the exit of a large managed care plan, Medicaid beneficiaries enrolled in the exiting plan were randomly assigned to either a Medicaid-dominant plan or a for-profit national commercial plan. We used this random assignment to evaluate the association of plan type with the use of outpatient services, ED visits, and hospitalizations. We also examined how plan type was associated with ambulatory care–sensitive (ACS) admissions, an indicator of population-level access to effective outpatient care.

[..] A total of 8010 patients were included in the analysis: 4737 were assigned to a Medicaid-focused plan (2795 female patients [59.0%]; 687 Hispanic patients [14.5%]; 497 non-Hispanic Black patients [10.5%]; mean [SD] age, 17.8 [3.2] years) and 3273 to a commercial plan (1915 female patients [58.5%]; 547 Hispanic patients [16.7%]; 350 non-Hispanic Black patients [10.7%]; mean [SD] age, 17.9 [3.3] years). [..] There were no significant differences in the proportion of patients with a chronic health condition or reason for Medicaid eligibility, primary language, or comorbidities at baseline.

[..] After randomization, the use of outpatient visits was consistently higher among those randomly assigned to the commercial plan. In contrast, rates of ED use and hospitalizations appeared similar among those randomly assigned to the 2 plans. The rate of ACS admissions, although variable, was not consistently higher among those assigned to either type of managed care plan. The increased use of outpatient care in the commercial plan relative to the Medicaid-focused plan was particularly evident for office-based specialty care. Changes were minimal for office-based primary care and hospital outpatient clinic visits.

[..] First, qualitative work found that the Medicaid-focused plan had a strong organizational tie to community health centers and directed enrollees without an established primary care provider to receive primary care at community health centers. Medicaid beneficiaries receiving usual care from community health centers have less intensive patterns of care relative to other beneficiaries. Second, we found that the increased use of outpatient services in the commercial plan was associated primarily with an increase in specialty care visits. This may be because commercial health plans often have larger networks for specialty care or because they provide less comprehensive primary care than Medicaid-focused plans. Overall, although we found a relative increase of 22% in outpatient visits and 61% in outpatient specialty care visits in the commercial plan, the absolute difference in the use of outpatient care between the 2 plans was modest. The small absolute difference was perhaps due to considerable overlap in providers; 68% of the providers who delivered outpatient care participated in both plans.

[..] Our findings do not support the concern that enrollment of Medicaid beneficiaries in commercial plans necessarily erodes access to care. On the other hand, the increased use of outpatient care in the commercial plan was not accompanied by lower use of ED or hospital care, suggesting that enrollment in a commercial plan could increase total health care spending without a clear health benefit for beneficiaries. Increased spending may be transferred to the state Medicaid program, if greater per capita spending results in increases in subsequent payment rates that plans negotiate with the state. It is unclear whether state Medicaid programs can impose market discipline on managed care plans. Managed care insurers may have particular leverage in negotiating payment rates when there are few plans participating in Medicaid or when states are concerned about the possibility of plans exiting the market. The minimal differences in the use of health services between the 2 types of plans also supports the viability of Medicaid-focused plans to deliver a product similar to that of large commercial insurers.”

Full article, Swaminathan S, Ndumele CD, Gordon SH et al. JAMA Internal Medicine 2020.10.19