Medicaid Managed Care: An Overview and Key Issues for Congress

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In terms of federal spending, Medicaid is one of the largest major domestic entitlement programs
in the U.S. today. During the 1980s and 1990s, steadily rising Medicaid costs were attributed to
the economic incentive to provide more care under the traditional, widespread fee-for-service
(FFS) delivery system in which provider payments are made for each unit of service delivered.
During that time, following the lead in the employer health insurance market, many states began
to turn to managed care for their Medicaid programs. The goal, then and today, is both to rein in
Medicaid costs by making payments on a predetermined, per-person-per-month (PMPM) basis
rather than for each unit of service rendered, and to provide a better, coordinated system of care
for beneficiaries, with an emphasis on preventive and primary care services.
The reality of service delivery under Medicaid is gradually moving along this path. In terms of
beneficiary participation, managed care is the dominant delivery system in Medicaid. Based on
data from FY2003 (the latest available for all states), Medicaid managed care is widely used by
children and adults, but less so among the elderly and those with disabilities. However, there is
still significant penetration of managed care in these latter populations with special health care
needs.
In terms of expenditures, the FFS delivery system still dominates Medicaid spending, largely
because more expensive long-term care services available under Medicaid are seldom offered
through managed care arrangements. Also, many users of long-term care services, the elderly and
those with disabilities, are not enrolled in managed care programs. One of the next big challenges
for Medicaid managed care is to develop and evaluate managed long-term care and holistic
integration of primary, acute, and long-term care for special needs populations.
This report provides an overview of Medicaid managed care. It includes a discussion of the major
features of both the managed care and the traditional fee-for-service delivery systems in
Medicaid. The report also provides a series of tables that illustrate the distribution of people,
services, and dollars across both systems of care. It concludes with a summary of some of the
current policy issues facing Medicaid managed care, and a list of additional CRS resources. This
report will be updated as legislative activity warrants.

Introduc tion ..................................................................................................................................... 1
Medicaid Eligibility and Covered Benefits.....................................................................................2
Eligibility .................................................................................................................................. 2
Standard Benefits......................................................................................................................2
New Benefit Option..................................................................................................................2
Key Concepts in Understanding How Care Is Delivered Under Medicaid.....................................3
Major Features of the Traditional Fee-for-Service Model........................................................4
Major Features of Medicaid Managed Care Models.................................................................4
Plan Types and Benefits......................................................................................................4
Payment Methods...............................................................................................................5
Oversight Responsibilities Under the Medicaid Managed Care and Fee-for-Service
Delivery Systems...................................................................................................................6
Access to and Quality of Care Under Medicaid Managed Care and the Fee-for-
Service Delivery Systems......................................................................................................7
Who Receives What Services at What Costs by Delivery System..................................................7
Enrollment Patterns...................................................................................................................7
Expenditure Patterns.................................................................................................................9
Policy Issues for Medicaid Managed Care: Where do We Go From Here?..................................10
Other Related CRS Resources.......................................................................................................12
Table 1. Number and Percentage of Medicaid Beneficiaries by Type of Managed Care
Payments and Basis of Eligibility, FY2003................................................................................12
Table 2. Number and Percentage of Medicaid Beneficiaries by Type of Managed Care
Payments and State, FY2003......................................................................................................13
Table 3. Number of and Enrollment in Prepaid Inpatient Health Plans (PIHPs) and
Enrollment by Type and State, as of June 30, 2004....................................................................15
Table 4. Number of and Enrollment in Prepaid Ambulatory Health Plans (PAHPs) by
Type and State, as of June 30, 2004...........................................................................................16
Table 5. Expenditures and Percentages by Delivery System and State, FY2003..........................17
Table 6. Expenditures and Percentages for Managed Care by Type and State, FY2003...............19
Table 7. Expenditures and Percentages by Delivery System and Basis of Eligibility,
FY2003 ....................................................................................................................................... 22
Table 8. Expenditures and Percentages for Managed Care by Type and Basis of
Eligibility, FY2003.....................................................................................................................23
Table 9. Summary of Selected Effectiveness of Care Measures from the Health Plan
Employer Data and Information Set (HEDIS), 2005.................................................................24

Author Contact Information..........................................................................................................26

In existence since 1965, Medicaid is a means-tested entitlement program that finances the
delivery of primary and acute medical services, as well as long-term care, to nearly 60 million
people at an estimated cost to the federal and state governments of roughly $333 billion in ¹
FY2006, making it as large as Medicare, the federal health care program for the elderly and
certain individuals with disabilities. Among major domestic entitlement programs, only Social
Security costs more.
Each state designs and administers its own Medicaid program under broad federal guidelines. For
states, it is the second largest spending item after education. Medicaid is expected to represent ²
2.5% of GDP in FY2006. The expenditure growth is even more striking. Program spending
increased by more than 49% between 2000 and 2005, exceeding growth in general and medical
inflation, and the rates of growth in spending for both Medicare and Social Security over the ³
same period. Medicaid spending has grown partly because medical care keeps getting more
expensive, and because over time, federal law has been expanded significantly to cover more
people and more benefits. Certain state financing mechanisms have also played a role in
increased spending under Medicaid.
As Medicaid entered the 1980s and 1990s, more attention—and blame—for steadily rising
Medicaid costs was attributed to the economic incentive to provide more care under the fee-for-
service (FFS) delivery system, in which payments are made for each unit of service delivered.
Under this system, Medicaid budgets were somewhat unpredictable, and outlays were
significantly affected by the quantity and types of care provided. It was also unclear whether state
Medicaid programs were getting good value for their ever increasing Medicaid dollars. Following
the lead in the private sector among large employers, many states began to turn to managed care
for their Medicaid programs. The goal, then and today, is both to rein in Medicaid costs by
making payments on a predetermined, per-person-per-month basis, rather than for each unit of
service delivered, and to provide a better, coordinated system of care for beneficiaries, with an
emphasis on preventive and primary care services.
But Medicaid managed care has not fully achieved either goal yet. Data from FY2003 (most
recent available) indicate that while about two-thirds of Medicaid beneficiaries nationwide
participate in some form of managed care, the majority of expenditures still occur in the FFS
setting, mainly because expensive long-term care services are rarely offered through managed
care. In addition, while there are some data suggesting improvements in the quality of care
delivered in Medicaid managed care, commercial (employer-based) and Medicare managed care
plans continue to do better on some measures of effectiveness.

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Before getting into the specifics of how care is delivered under Medicaid, it is important to ⁴
understand who is eligible for the program and the range of benefits that may be covered.
The Medicaid statute (Title XIX of the Social Security Act) defines more than 50 distinct
population groups as being potentially eligible. Some eligibility groups are mandatory, meaning
that all states must cover them; others are optional. To qualify for Medicaid coverage, applicants’
income (e.g., wages, Social Security benefits) and often their resources or assets (e.g., value of a
car, savings accounts) must meet program financial requirements. These requirements vary
considerably among states, and different rules apply to different population groups within a state.
Medicaid eligibility is also subject to categorical restrictions—generally, it is available only to
specific categories of people, including the elderly, persons with significant disabilities, members
of families with dependent children, and certain other pregnant women and children. Other
individuals (e.g., childless adults with no disability) are not eligible for Medicaid no matter how
poor they are, unless they are covered under a special waiver. In recent years, Medicaid has been
extended to additional groups with specific characteristics, including certain women with breast
or cervical cancer and uninsured individuals with tuberculosis.
Medicaid benefits are identified in the federal statute and regulations as either mandatory or
optional, and include a wide range of medical care, items and services. Examples of benefits that
are mandatory for most Medicaid groups include (1) inpatient hospital services (excluding
services for mental disease), (2) laboratory and x-ray services, (3) physician services, and (4)
nursing facility services for persons age 21 and over. In addition to prescribed drugs that are
offered by all states, other optional benefits covered by many states include for example: (1)
routine dental care, (2) physician-directed clinic services (frequently for mental health care), (3)
therapies (e.g., physical, occupational and speech), and (4) transportation (in order to receive
medical care). In general, most Medicaid beneficiaries, whether covered via a mandatory or an
optional eligibility group, are entitled to all the standard mandatory and optional benefits offered ⁵
by a state Medicaid program.
Under the recently enacted Deficit Reduction Act of 2005⁶ (DRA; P.L. 109-171), as of March, 31,
2006, states may offer new packages of benefits to certain groups of Medicaid beneficiaries. This

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new benefit option includes benchmark and benchmark-equivalent coverage that is nearly
identical to the plans offered through the State Children’s Health Insurance Program (SCHIP),
with some additions. Nearly all states operate their SCHIP programs under managed care
arrangements.
Under DRA, benchmark coverage includes the care and services available through: (1) the
standard Blue Cross/Blue Shield preferred provider plan under the Federal Employees Health
Benefits Plan (FEHBP), (2) health coverage for state employees, (3) health coverage offered by
the largest commercial HMO in the state, and (4) Secretary-approved coverage, which may
include any other package of benefits that the Secretary of Health and Human Services (HHS)
determines will provide appropriate coverage for the targeted population. Benchmark-equivalent
coverage must include certain services, and must have the same actuarial value as one of the
benchmark plans, with at least 75% of the actuarial value for selected services.
A number of groups are explicitly exempted from mandatory enrollment in this new benefit
option, including most individuals with special needs living in both the community and long-term
care settings. Other groups can be required to enroll in the new benefit option, including most
generally healthy children and certain adults (e.g., some parents and childless adults with no
disability).

There are two major types of service delivery systems under Medicaid—fee-for-service and
managed care. These two approaches to delivering services to Medicaid beneficiaries differ in
important ways across several key dimensions, including:
• choice of providers for beneficiaries,
• how much professional management and coordination of medical care is
provided,
• which entity has direct oversight responsibilities for service delivery,
• how states pay providers for services rendered, and
• assuring access to and quality of care.
In many cases, these two delivery systems are not entirely independent approaches to providing
medical care under Medicaid. In a number of states, there are hybrid models that combine various
features of fee-for-service and managed care for a given population or set of interrelated services.
At a given point in time, beneficiaries may obtain all their services under a single system of care,
or different sets of services under each system simultaneously (e.g., primary and acute care under
managed care arrangements, and long-term care such as home health services or on-going
rehabilitative services under the fee-for-service delivery system). Each of these features of
delivery systems is described in more detail below.

The fee-for-service (FFS) delivery system was the predominant system of care both within and
outside of Medicaid until about the mid-1990s. Under FFS, beneficiaries have unrestricted
provider choice; that is, they can seek services from any Medicaid participating provider. Hence,
beneficiaries are largely responsible for their own medical care management and coordination.
The term “fee-for-service” evolved as a short-hand way to describe the method used to reimburse
providers for services rendered. For Medicaid, payment rates for each type of service are set by
the state within broad federal guidelines. The state directly (or through a fiscal intermediary) pays
each participating provider for each covered service received by a Medicaid beneficiary. That is,
each individual service rendered is paid a specified amount or rate. In essence, there is a one-to-
one correspondence or “match” between payments and the quantity and types of care actually
delivered.
Until the late 1990s, states had to obtain waivers of certain Medicaid rules to require that
Medicaid beneficiaries get their services through managed care. For example, authority provided
by Section 1915(b) of the Social Security Act was used by many states to waive the requirements
that services be available statewide (so that managed care could be implemented in specific sub-
state regions), and that beneficiaries have freedom of choice among all Medicaid providers (so
that managed care enrollees could be required to receive certain services from a specified subset
of managed care providers). Section 1115 of the Social Security Act provides additional
flexibility to test benefit package and service delivery innovations. This authority has also been
used to implement managed care demonstrations. In FY1998, nearly all states had at least one ⁷
such waiver for some population subgroups or regions.
The Balanced Budget Act of 1997 (BBA-97; P.L. 105-33) eliminated the need for waivers that
many states complained were unnecessarily complex and time-consuming. BBA-97 also included
managed care provisions that established standards for quality and solvency, and provided
additional protections for beneficiaries (described below).
Under Medicaid managed care, beneficiaries choose (or are assigned to) a primary plan as a
“medical home.” In turn, these plans provide care coordination and management. State Medicaid
agencies must contract with at least two plans, or may offer one plan with a choice of at least two
plan providers.
Comprehensive, traditional plans like health maintenance organizations (HMOs) make available
to enrolled beneficiaries a broad range of preventive, primary and acute care services. Under
primary care case management (PCCM) plans, primary care physicians provide basic medical
care, and serve as case managers or gate-keepers (via referrals) to specialty care (e.g., mental
health services, dental care). Such specialty care may be provided by another managed care entity

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that offers only specialty care, called prepaid health plans (PHPs), or by providers in the FFS
delivery system. PHPs may be limited to certain ambulatory services (prepaid ambulatory health
plans or PAHPs) or specific types of inpatient care (prepaid inpatient health plans or PIHPs). A
beneficiary’s choice of provider under managed care is restricted; that is, beneficiaries must seek
care for specified services from a specified list of plan providers.
Between 1990 and 2002, states increased their use of comprehensive managed care contractors
with primarily public enrollment (i.e., more than one-half of the plan’s enrollment was made up
of Medicaid, Medicare and SCHIP enrollees) and decreased the use of such plans serving a
primarily commercial population (i.e., one-half or less of the plan’s enrollment was comprised of ⁸
Medicaid, Medicare and SCHIP beneficiaries). As of June of 2004, data from CMS show that
despite these trends, nationwide, commercial MCOs outnumbered Medicaid-only MCOs (156
versus 131), and more Medicaid beneficiaries were enrolled in commercial plans than Medicaid-⁹
only plans (9.7 million versus 7.8 million).
Paying for services under most Medicaid managed care arrangements is significantly different
from methods used under the FFS delivery system.
Traditional managed care plans, such as HMOs, agree to make available a specified set of
services for which the State Medicaid Agency pays a fee on a “per member per month” (PMPM)
basis, called a premium or capitation rate. These rates typically reflect the average FFS cost of
providing care to specified groups (or subgroups) of beneficiaries expected to enroll in the plan.
Such premiums are paid each month, regardless of the quantity or types of contracted care
actually rendered to enrolled beneficiaries. Because the PMPM rates and the number and type of
beneficiaries to be enrolled are generally known in advance, managed care expenditures, for both
the plans and the State Medicaid Agency, are more predictable than FFS payments and budgets
can be set accordingly. PHPs also involve capitated payments, but for limited benefit packages
(e.g., inpatient substance abuse treatment, dental care, transportation).
Traditional managed care plans and PHPs must actively “manage” care for plan beneficiaries to
control their financial risk. Such plans face a financial loss if more care is rendered than the
agreed upon capitation rate accommodates. Conversely, if less care is rendered than is assumed in
the premium, the plan will experience a financial gain. Overall, the economic incentive is to
deliver less care or less costly care, so long as beneficiary health is not compromised as a result.
That incentive may be passed on to contracted medical providers, such as physicians and
hospitals, via what is sometimes called sub-capitation (i.e., when plans pay their contracted

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providers a capitation rate for all or a selected subset of services) or via other kinds of financial
rewards/penalties for performance.
In contrast, the payment methods under the PCCM model are a blend of both FFS and traditional
managed care. The majority of expenditures associated with PCCM programs are FFS ¹⁰
payments. The case manager (i.e., an internist or pediatrician) is paid a small, pre-set monthly
fee (e.g., $2 to $3) per enrolled beneficiary to handle coordination of, and referral for, other
services, particularly specialty care. In addition, the case manager is typically paid on a FFS basis
for direct delivery of basic primary care to his/her enrolled beneficiaries, as are the medical
specialists to whom a referral is made.
The PCCM model of managed care has sometimes served as a first step toward more traditional
models of managed care such as HMOs. In addition, PCCM programs have been implemented in
rural areas where no traditional managed care plans operate, given few potential beneficiaries.
PCCM programs may also be used for populations that frequently need a broad range of specialty
care services (e.g., individuals with disabilities).
Under managed care, oversight responsibilities are shared among the State Medicaid Agency, the
managed care plans, and the plan providers. The State Medicaid Agency has direct oversight of its
contracted managed care plans, and establishes payment rates for these entities, as well as the
parameters governing the amount, duration and scope of benefits covered in these contracts, in
accordance with federal and state requirements. Similarly, the managed care plans have direct
oversight of the plan providers. These plans set medical care and referral policies, in accordance
with the contractual agreement negotiated with the State Medicaid Agency. The plans also
determine payment methods and rates for plan providers. The providers deliver or prescribe
medically necessary care to plan beneficiaries within the guidelines specified by the managed
care plan. The specific details of a given state/plan/provider arrangement may vary from this
generic scenario. Also, State Medicaid Agencies typically directly oversee PCCM programs as
well, although some states contract with administrative service organizations (ASOs) to help ¹¹
administer these programs.
Under the FFS delivery system, there is no plan “middle man.” Generally, the State Medicaid
Agency deals directly with all Medicaid participating providers statewide, in terms of both
medical care policies (e.g., amount, duration and scope of covered benefits) and setting payment
methods and rates specific to different types of providers (e.g., hospitals versus physicians versus
physical therapists).

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There are several requirements in federal statute to assure access to and quality of care under both
the Medicaid FFS and managed care delivery systems. Some of these requirements are very
general and broad, while others, particularly for nursing facilities, are detailed and specific.
Examples of such assurances include the following:
• Services must be provided in a manner consistent with simplicity of
administration and in the best interest of the recipients (Section 1902(a)(19));
• States must assure that payments are consistent with efficiency, economy, and
quality of care, and are sufficient to enlist enough providers so that care is
available at least to the same extent that such services are available to the general
population in the geographic area (Section 1902(a)(30)(A));
• A medical evaluation and a written plan of care is required for certain people and
services (Section 1902(a)(26)); and
• States must regularly survey and certify nursing facilities to ensure that such care
meets certain standards for staffing and service delivery, as well as to assure that
resident rights are protected (Section 1919).
When BBA-97 was passed, there was a lot of concern that beneficiaries may be harmed under
managed care without additional significant safeguards. Thus, there are many additional
requirements for assuring access to and quality of managed care under Medicaid. For example,
the federal statute includes provisions requiring plans to
• assure coverage of emergency services under managed care (Section 1932(b)(2));
• have a system in place to address grievances (Section 1932(b)(4));
• demonstrate adequate capacity and services (Section 1932(b)(5)); and
• meet a series of quality assurance standards (Section 1932(c)).

Nationwide, enrollment in Medicaid managed care has increased considerably over time. In June
of 1996, 40.1% of 33.2 million Medicaid enrollees, at that point in time, participated in some

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form of managed care. Eight years later, that proportion had increased to 60.7% among 44.4 ¹³
million Medicaid eligibles enrolled in June of 2004.
Counting the number of Medicaid beneficiaries enrolled in various forms of managed care is
difficult for several reasons. Beneficiaries may receive managed care services under multiple
arrangements within one year. For example, some individuals may be enrolled in a PCCM
program for part of the year, then switch to an HMO for the remainder of the year. Other
individuals may be enrolled in an HMO or PCCM program for their primary care and
simultaneously receive specialty services from one or more PHPs (e.g., for mental health care
and/or dental services). A variety of other scenarios are also possible. To obtain unduplicated
counts of beneficiaries by type of managed care experience, we examined person-level patterns of
payments using a special FY2003 Medicaid claims database provided to CRS by the Centers for
Medicare and Medicaid Services (CMS), the federal agency that administers the Medicaid
program.
In descending order of frequency, among the roughly 52 million Medicaid beneficiaries
nationwide that had any payments made on their behalf in FY2003:
• 64% (33.3 million individuals) had managed care expenditures,
• 22% (11.5 million beneficiaries) had managed care payments made for HMOs
only,
• 18% (9.5 million people) had managed care expenditures for both HMOs and
PHPs,
• 11% (5.9 million) had managed care payments for PCCMs only,
• 10% (5.0 million) had managed care expenditures for PHPs only, and
• 3% (1.6 million) had managed care payments for other combinations of the three
types of managed care.
Table 1 provides national data on the unduplicated number and percentage of Medicaid
beneficiaries by type of managed care payments and basis of eligibility for FY2003. Among the
elderly, a little less than one-third had any managed care experience, and the predominant form of
that care was PHPs only (about 19%). Slightly more than one-half of individuals with disabilities
had managed care experience, mostly through PHPs only (17%) or both HMOs and PHPs (15%).
Among children, nearly 80% had managed care experience, most with HMOs only (31%) or both
HMOs and PHPs (22%). Finally, 61% of adults had managed care experience, and like children,
most adults were enrolled in HMOs only (25%) or both HMOs and PHPs (21%).
Table 2 displays state-by-state data on the percentage of Medicaid beneficiaries by type of ¹⁴
managed care experience. In eleven states, roughly 85% or more of beneficiaries had managed
care experience, and in eight of these eleven states (excluding South Dakota, Kentucky and
Iowa), beneficiaries were primarily enrolled in HMOs and PHPs, or PHPs alone. With some

¹³^Cen^t^{ers f}^o^{r M}^e^dⁱ^{care an}^d^M^e^dⁱ^c^aⁱ^d^S^e^rvi^ces,²⁰^{04 M}^e^dic^a^{id M}^aⁿ^age^{d C}^a^r^e^Enr^o^llm^eⁿ^t^Re^por^t^{, ta}^b^l^e^eⁿ^title^d
^“M^an^aged^{Care T}^r^en^d^s^.^”
¹⁴^T^h^e^s^e^s^t^a^t^e^s^inc^l^ude^A^r^iz^ona^{, Co}^lora^do^{, D}^e^la^w^a^re^{, Io}^w^a^{, K}^e^ntuc^k^y^{, Mic}^h^ig^aⁿ^{, O}^r^e^g^on,^P^eⁿⁿ^s^y^lvaⁿ^ia^{, So}^uth^D^a^k^o^ta^,
^T^e^nne^s^s^e^e^,^a^{nd U}^t^a^h^.

exceptions, among all remaining states with lower concentrations of beneficiaries with managed
care experience, there was substantial enrollment in HMOs only or PCCMs only.
In order to provide more information on the types of Medicaid PHPs, a different data source was
analyzed. Tables 3 and 4 show additional detail on the types of PHPs available by state as of
June, 2004. Prepaid Inpatient Health Plans (PIHPs; see Table 3) provide less than comprehensive
services and deliver or arrange for inpatient hospital or institutional services. In June of 2004,
there were 119 PIHPs in 18 states. The majority of such plans provided either mental health
services only (63 plans with 3.2 million beneficiaries), or a combination of mental health and
substance abuse services in an institutional setting (34 plans with 3.4 million beneficiaries).
Prepaid Ambulatory Health Plans (PAHPs; see Table 4) provide less than comprehensive services
and deliver or arrange for services outside of an institutional setting. In June of 2004, there were
34 PAHPs in 13 states. While half of these plans (17) were for dental services, most PAHP
beneficiaries (2.4 million individuals) were enrolled in a PAHP providing transportation services.
Data limitations related to the PCCM experience hinder a fully accurate accounting of managed
care versus fee-for-service spending patterns under Medicaid. The monthly fees paid to case
managers for care management and coordination under PCCM programs are counted as managed
care expenditures. However, the medical services delivered by case managers are paid on a FFS
basis, as are the payments made for related specialty care received as a result of referrals by case
managers. The available data do not provide a means to treat payments for PCCM-related
primary and specialty care services as managed care expenditures. With these data caveats in
mind, Medicaid expenditure patterns are summarized below.
Despite the fact that nearly two-thirds of Medicaid beneficiaries have experience with some form
of managed care, expenditures for managed care services are dwarfed by benefit expenditures
under the FFS delivery system. As shown in the bottom row of Table 5, in FY2003, total federal
and state spending on Medicaid services reached $233.2 billion. The vast majority of service
spending—nearly 84%—was for care provided under the FFS delivery system. A little over one-
third of total benefit expenditures was for long-term care, including both institutional and non-
institutional services. Prescription drugs, one of the fastest growing categories of expenditures,
accounted for nearly 15% of total service spending. All other FFS care, mostly acute and primary
care services (e.g., inpatient and outpatient hospital, physician services, clinic care), accounted for
nearly one-third of total benefit expenditures.
Managed care accounted for just 16% of total Medicaid service expenditures in FY2003. As
shown in Table 5, in Arizona, nearly 85% of all Medicaid benefit spending was for managed care.
Unlike other states, Arizona has had a statewide managed care waiver in place since the
beginning of its Medicaid program in 1982. In all remaining states, less than one-half of total
service expenditures was made for managed care, and there was considerable variation across
these states in the proportion of total service spending on managed care.
Table 6 provides additional detail on Medicaid benefit expenditures by type of managed care and
state. HMO plans account for the bulk of Medicaid managed care expenditures in most states.

Expenditures for PHPs exceeded 20% of total managed care spending in twelve states.¹⁵ Finally, ¹⁶
in seven states, all Medicaid managed care spending was for PCCM programs.
Table 7 provides details on national Medicaid benefit expenditures by delivery system and type
of beneficiary. Expenditures under the FFS delivery system dominate service spending by basis of
eligibility in FY2003. For the elderly and individuals with disabilities, 90 to 95% of all Medicaid
benefit spending involved care in the FFS delivery system, and most of the expenditures for these
two groups was for long-term care services. In addition, nearly 30% of benefit spending for
persons with disabilities was for other FFS care, mostly acute and primary care services. (For the
elderly, Medicare, not Medicaid, is the principal payor for primary and acute care services.) For
adults and children, about two-thirds of total benefit expenditures occurred under the FFS
delivery system, and much of that spending was for acute and primary care services (as shown in
the all other FFS column of Table 7).
Total benefit expenditures by type of managed care and beneficiary for FY2003 are shown in
Table 8. For each type of beneficiary, the majority of Medicaid managed care expenditures was
for HMO plans. In addition, nearly 30% of managed care expenditures made on behalf of
individuals with disabilities was for services delivered by PHPs.

Nationally, most Medicaid beneficiaries participate in some form of managed care. However,
benefit expenditures under Medicaid, especially for long-term care services, still largely occur in
the FFS delivery system. State variation in the proportion of beneficiaries and expenditures
associated with managed care is the rule rather than the exception. Such variation is likely due at
least in part to political, geographic, and market considerations unique to each state.
States continue to redesign their Medicaid programs and experiment with managed care via
waiver authority. In addition, states may rely on managed care delivery systems for the new
Medicaid benefit package option now available through DRA (described above). Recent
examples include new programs in Florida using Section 1115 waiver authority, and Idaho,
Kentucky and West Virginia, all using the DRA benefit option. Whether via waiver or the DRA
option, these new programs provide access to a different set of tailored benefits for different
groups of beneficiaries, based on their anticipated health care needs, rather than giving all
beneficiaries access to the full range of Medicaid services covered in each state.
Groups participating in these new programs include not only healthy children and adults, but in
some cases, also the elderly and individuals with disabilities living in the community and those
needing institutional care. Most programs will start off in a subset of counties. Some programs
will allow beneficiaries to “opt out” of the new Medicaid benefit plans and enroll in employer-
sponsored or private health insurance subject to capped payments (e.g., Florida, Kentucky) or
remain in traditional Medicaid (e.g., Idaho). Incentives such as access to additional benefits or

¹⁵^T^h^{ese 1}²^st^at^{es i}ⁿ^cl^ud^{e A}^l^ab^a^m^a^,^Co^l^o^rad^o^,^Io^w^a^,^M^a^ssach^u^s^et^t^s^,^Mⁱ^chⁱ^g^an^,^Oregoⁿ^,^P^eⁿⁿ^sy^l^v^anⁱ^a^,^S^o^u^t^h^Car^o^lⁱⁿ^a,
^Sout^{h D}^a^k^o^ta^{, T}^e^nne^s^s^e^e^,^U^t^a^h^{, a}^{nd W}ⁱ^s^c^onsⁱⁿ^.
¹⁶^T^h^{ese 7}^st^at^{es i}ⁿ^cl^u^d^e^A^r^kan^s^as,^G^e^o^r^gi^a,^Id^ah^o^,^L^o^uⁱ^si^an^a,^M^aⁱⁿ^e^,^M^oⁿ^t^an^a,^aⁿ^d^V^e^rm^oⁿ^t^.

credits for purchasing other goods and services may be offered to encourage healthy behaviors
(all four states). Access to enhanced benefits may be subject to certain conditions such as signing
a member agreement to fully comply with recommended medical treatment and wellness
behaviors (e.g., West Virginia). All four states expect to use managed care delivery systems in
these new programs.
Although managed care under Medicaid holds the potential for providing coordination and
management of a variety of medical and related health services for beneficiaries, that potential
has been largely limited to sub-populations of generally healthy adults and children. Significant
challenges still remain for serving the elderly and individuals with disabilities under traditional
models of managed care, most likely because of the wide range and intensity of services they
require to meet their on-going special health care needs. Relative to other services, long-term care
is expensive and an individual’s need for such care may change repeatedly over time. For states
that want to save money on long-term care under Medicaid, these factors make setting adequate
per-person-per-month payment rates difficult, in turn leading to an inability to attract managed
care plans to this market. In addition, many mainstream managed care plans lack experience with
both these special needs populations and with delivering long-term care services.
How successful has Medicaid managed care been in reducing program costs and providing
beneficiaries with better, coordinated care? This report is not intended to provide a detailed
review of this literature. However, there is some evidence that savings can be achieved through
Medicaid managed care. For example, in one analysis synthesizing results from 14 studies, the ¹⁷
Lewin Group concluded that (1) comprehensive, prepaid managed care plan models typically
yield cost-savings compared to program costs under a FFS model, (2) savings can be gained in
programs that serve individuals with disabilities, and (3) although cost savings is largely
attributable to decreases in inpatient utilization, some savings is also associated with moving
prescribed drugs from the FFS setting into managed care.
There is also some evidence that Medicaid managed care plans are not as effective as employer-
based or Medicare plans, but some improvements have been observed in recent years. For
example, the National Committee for Quality Assurance (NCQA) regularly publishes reports for
commercial (i.e., employer-based), Medicare and Medicaid managed care plans. Table 9 shows a
few examples of the 40+ measures voluntarily reported to NCQA by more than 500 health plans ¹⁸
for 2005. In general, higher percentages represent greater effectiveness of care and member
satisfaction.
On the selected effectiveness of care measures for preventive services, acute medical care and
mental health services, the ratings for commercial and Medicare plans exceed those for Medicaid
plans. Nonetheless, very similar (high) ratings were observed for both Medicaid and commercial
plans on two acute care measures—appropriate treatment for children with upper respiratory
infection and persistence of beta-blocker treatment after a heart attack. All three types of plans
struggled with antidepressant medication management, probably reflecting the challenges of
helping persons with severe mental illness regardless of the public or private sector health care
system involved. Member satisfaction measures were consistently high for Medicaid plans.

¹⁷^T^h^e^L^e^wⁱⁿ^G^r^oup,^M^e^dic^a^{id M}^a^nage^{d C}^a^r^e^C^o^s^t^S^a^vⁱⁿ^g^s^—^A^Sy^nt^he^sⁱ^s^{of F}^our^te^eⁿ^St^udie^s^,^p^r^ep^ared^f^o^{r Am}^eri^c^a’s
^H^e^a^{lth I}ⁿ^s^u^r^a^nc^e^P^l^aⁿ^s^,^Fi^na^{l R}^e^p^o^r^t^{, J}^u^ly²⁰⁰⁴^.
¹⁸^Na^tiona^{l C}^o^m^m^itte^e^f^o^{r Qua}^lity^A^s^sura^nc^e^,^The^St^ate^O^f^H^e^a^{lth C}^a^r^e^Q^uali^t^y^,²⁰⁰⁶^{, I}ⁿ^d^u^s^t^r^y^Tr^eⁿ^d^s^an^{d An}^aly^s^is^,
^W^a^shing^t^{on, DC,}²⁰⁰⁶^a^t^ht^tp://w^ww^.nc^q^a^.^org^/^Com^m^unic^a^tions/S^OHC200^6/^SOHC_20^06.^pdf^{. T}^h^e^bre^a^k^dow^{n of}^the
^num^be^r^of^plaⁿ^s^by^ty^pe⁽ⁱ^.e^{., Me}^dic^aⁱ^{d, c}^o^m^m^e^r^cⁱ^a^l^{, Me}^dic^a^r^e⁾^w^a^s^not^pr^ov^ide^dⁱⁿ^th^is^r^e^por^t^.

NCQA noted that regional differences in plan performance are large as are variations within each
plan type (e.g., among Medicaid plans). Thus, attaining high quality in managed care is an on-
going, continuous process for Medicaid, commercial and Medicare plans.
Building on the reforms introduced in BBA-97, what additional role can Congress play with
respect to managed care under Medicaid? For example, Congress could elect to expand the use of
Medicaid managed care to address some of the issues identified in this report, in particular with
respect to managed long-term care, and with holistic integration of primary, acute and long-term
care for special needs populations. Congress could also choose to monitor and evaluate access to
and quality of Medicaid managed care programs, as well as assess the short- and long-term costs
and savings attributable to various forms of managed care for different sub-populations of
Medicaid beneficiaries.

CRS Report RL33495, Integrating Medicare and Medicaid Services Through Managed Care.
CRS Report RL33357, Long-Term Care: Trends in Public and Private Spending.
CRS Report RL32219, Long-Term Care: Consumer-Directed Services Under Medicaid.
CRS Report RL32977, Dual Eligibles: A Review of Medicaid’s Role in Providing Services and
Assistance.
Table 1. Number and Percentage of Medicaid Beneficiaries by Type of Managed Care
Payments and Basis of Eligibility, FY2003
^{Basis of}^Total^Any^HMO^HMO^PCCM^PHP^{PCCM and}
^Eligibilit^y^{Beneficiaries}^managed^only^and^only^only^{HMO and/or}
^care^PHP^PHP
^{Aged 4,04}^1,00⁴^31.9%^3.6%^7.3%^1.7%^18.8%^0.4%
^Blind/D^{isabled 7,66}^8,59⁸^52.5%^8.1%^15.1%^9.2%^17.0%^3.2%
^{Children 24,8}^31,4⁰⁷^79.3%^30.9%^22.1%^15.6%^6.3%^4.4%
^{Adults 11,6}^91,8⁵⁹^61.4%^24.8%^20.6%^8.2%^5.8%^2.0%
^{Unknown 3,74}^2,81³^35.8%^4.5%^4.4%^8.9%^17.9%^0.2%
^{National Total}^51,9^75,6⁸¹^64.5%^22.1%^18.3%^11.4%^9.6%^3.1%
^Source:^{CRS analysis of FY200}³^{Medicaid Person Summary File (provided by CMS).}
^Note:^Al^{l percentages a}^{re bas}^{ed on und}^{uplicated counts of}^ben^{eficiaries in each row. Ma}^{naged car}^{e includes}
^{health mainte}^{nance orga}^{nizations (HMOs), pre}^{paid health}^{plans (P}^{HPs), and primary ca}^{re case}^man^agement
^{(PCCM) programs. Ex}^{cludes the}^{territories. Includes Medicaid-exp}^{ansion State Children’s Health I}ⁿ^suran^ce
^{Program (M-SCHIP) beneficiaries}^{. A beneficiary is a}^{Medicaid enrollee for whom at least one pay}^me^{nt was made}
^{during the}^year.

Table 2. Number and Percentage of Medicaid Beneficiaries by Type of Managed Care
Payments and State, FY2003
^Any^HMO^HMO^PCCM^PHP^{PCCM and}
^State^{Number of}^{Beneficiaries}^managed^only^and^only^only^{HMO and/or}
^care^PHP^PHP
^{Alabama 780,}⁶¹⁶^70.0%^0.0%^0.0%^3.6%^13.3%^53.1%
^{Alaska 116,}²¹¹^0.0%^0.0%^0.0%^0.0%^0.0%^0.0%
^{Arizona 1,01}^4,81³^96.8%^7.4%^77.9%^0.0%^11.6%^0.0%
^Arkansas^704,³²²^66.8%^{0.0% 0.0% 66.8%}^0.0%^0.0%
^{California 9,31}^9,14⁷^69.4%^5.3%^38.0%^0.0%^26.2%^0.0%
^Colorad^{o 459,}²⁰⁹^92.0%^0.0%^31.4%^0.0%^41.6%^18.9%
^{Connecticut 496,}⁶⁷⁹^72.4%^72.4%^0.0%^0.0%^0.0%^0.0%
^{Delaware 149,}⁸⁶³^93.4%^0.2%^76.3%^0.0%^16.9%^0.0%
^{District of}
^{Columbia 158,}¹⁷⁹^67.3%^67.3%^0.0%^0.0%^0.0%^0.0%
^{Florida 2,74}^3,36⁸^74.5%^33.4%^0.0%^33.2%^0.0%^7.9%
^Georgia^1,73^2,20⁵^69.6%^{0.0% 0.0% 69.6%}^0.0%^0.0%
^{Hawaii 208,}⁹⁸⁵^80.2%^73.5%^6.7%^0.0%^0.0%^0.0%
^Idaho^193,³⁰¹^68.8%^{0.0% 0.0% 68.8%}^0.0%^0.0%
^{Illinois 1,83}^0,23⁸^11.0%^9.4%^0.2%^0.0%^1.4%^0.0%
^{Indiana 895,}⁹⁷²^76.7%^37.4%^0.0%^37.8%^0.0%^1.5%
^{Iowa 361,}⁷⁵⁹^84.0%^0.0%^24.0%^0.6%^31.1%^28.3%
^{Kansas 316,}⁴¹⁰^70.1%^29.7%^0.0%^36.9%^0.0%^3.4%
^{Kentucky 847,}⁹⁴²^93.3%^0.6%^17.7%^1.6%^20.6%^52.9%
^Louisiana^995,³⁶²^58.8%^{0.0% 0.0% 58.8%}^0.0%^0.0%
^Maine^307,²⁷⁸^53.0%^{0.0% 0.0% 53.0%}^0.0%^0.0%
^{Maryland 727,}⁵⁷⁶^82.2%^82.2%^0.0%^0.0%^0.0%^0.0%
^Massach^{usetts 1,04}^2,12²^63.9%^13.5%^2.5%^0.0%^47.9%^0.0%
^{Michigan 1,58}^9,50⁰^96.0%^0.2%^69.0%^0.0%^26.7%^0.0%
^{Minnesota 667,}⁴⁹⁹^74.7%^74.7%^0.0%^0.0%^0.0%^0.0%
^{Mississippi 717,}⁴³⁵^0.0%^0.0%^0.0%^0.0%^0.0%^0.0%
^{Missouri 1,08}^1,49⁵^47.7%^47.7%^0.0%^0.0%^0.0%^0.0%
^Montana^110,⁴⁰²^66.9%^{0.0% 0.0% 66.9%}^0.0%^0.0%
^Nebras^{ka 253,}⁷²⁸^37.5%^16.5%^0.0%^20.1%^0.0%^1.0%
^{Nevada 220,}⁴¹⁶^56.4%^56.4%^0.0%^0.0%^0.0%^0.0%
^New
^Hamps^{hire 112,}⁰⁴³^13.9%^13.9%^0.0%^0.0%^0.0%^0.0%
^{New Jers}^ey^949,⁷⁴⁵^75.9%^71.5%^0.0%^0.0%^4.3%^0.0%
^{New Me}^xico^452,¹¹⁹^74.0%^74.0%^0.0%^0.0%^0.0%^0.0%
^{New York}^4,44^9,95¹^54.5%^49.6%^0.6%^0.0%^4.3%^0.0%

^Any^HMO^HMO^PCCM^PHP^{PCCM and}
^State^{Number of}^{Beneficiaries}^managed^only^and^only^only^{HMO and/or}
^care^PHP^PHP
^North^Carolina^1,41^6,93²^72.6%^{1.1% 0.0% 70.2%}^0.0%^1.3%
^North^Dakota^76,7⁵³^58.8%^{5.6% 0.0% 52.8%}^0.0%^0.4%
^{Ohio 1,77}^8,32⁴^33.8%^33.8%^0.0%^0.0%^0.0%^0.0%
^{Oklahoma 625,}⁸⁷⁵^80.0%^42.8%^1.4%^0.4%^34.9%^0.5%
^{Oregon 598,}¹⁰⁹^92.2%^4.1%^66.9%^0.1%^18.6%^2.5%
^Pennsylvania^1,72^1,70⁶^84.0%^{5.4% 65.3% 10.2%}^2.1%^1.1%
^{Rhode Island}^201,⁸⁷⁴^71.2%^71.2%^0.0%^0.0%^0.0%^0.0%
^{South Carolina}^861,²¹⁶^11.6%^8.9%^0.1%^0.0%^2.7%^0.0%
^{South Dakota}^123,⁵⁸⁹^96.7%^0.0%^0.0%^0.0%^49.5%^47.3%
^{Tennessee 1,72}^9,58⁸^94.5%^0.5%^93.5%^0.0%^0.5%^0.0%
^{Texas 3,33}^9,79⁶^48.3%^25.2%^6.6%^11.2%^2.0%^3.3%
^{Utah 285,}³⁶⁹^84.6%^4.4%^47.6%^0.0%^32.6%^0.0%
^Vermont^154,⁶⁶³^67.8%^{0.0% 0.0% 67.8%}^0.0%^0.0%
^{Virginia 709,}⁴⁸⁸^69.1%^55.3%^0.0%^4.1%^0.0%^9.6%
^{Washington 1,07}^7,06⁹^59.7%^59.1%^0.0%^0.5%^0.0%^0.0%
^{West Virginia}^373,¹⁵³^53.5%^18.5%^0.0%^33.6%^0.0%^1.4%
^{Wisconsin 829,}²⁸⁷^55.8%^54.3%^0.0%^0.0%^1.4%^0.0%
^{Wyoming 67,0}⁰⁰^0.0%^0.0%^0.0%^0.0%^0.0%^0.0%
^{National Total}^51,9^75,6⁸¹^64.5%^22.1%^18.3%^11.4%^9.6%^3.1%
^Source:^{CRS analysis of FY200}³^{Medicaid Person Summary File (provided by CMS).}
^Note:^Al^{l percentages a}^{re bas}^{ed on und}^{uplicated counts of}^ben^{eficiaries in each row. Ma}^{naged car}^{e includes}
^{health mainte}^{nance orga}^{nizations (HMOs), pre}^{paid health}^{plans (P}^{HPs), and primary ca}^{re case}^man^agement
^{(PCCM) programs. Ex}^{cludes the}^{territories. Includes Medicaid-exp}^{ansion State Children’s Health I}ⁿ^suran^ce
^{Program (M-SCHIP) beneficiaries}^{. A beneficiary is an}^{Medicaid enr}^{ollee for whom at least one paym}^{ent was}
^{made during th}^{e year.}

Table 3. Number of and Enrollment in Prepaid Inpatient Health Plans (PIHPs) and
Enrollment by Type and State, as of June 30, 2004
^{Mental H}^{ealth and}
^{Medical Only}^{Mental H}^{ealth Only}^{Substance Ab}^use^{Long-Term C}^are
^Disorders
^Number^Number^Number^Number^Number^Number^Number
^State^Number^{of Plans}^of^{of Plans}^of^{of Plans}^of^{of Plans}^of
^Enrollees^Enrollees^Enrollees^Enrollees
^Alabama¹^423,¹¹²
^Arizona¹^75,5⁴⁸
^Colorad^{o 1}^12,0⁴²⁸^369,²⁷⁰
^{District of}¹^3,19⁸
^Columbia
^Florida²^95,2⁸⁷
^Georgia¹^2,23⁵
^Hawaii²⁶⁷³
^Iowa¹^262,⁴⁸⁷
^Massach^usetts¹^325,³⁴⁴
^Michigan¹⁷^1,21^9,62⁶¹^35,4⁴¹
^New^York¹²^9,84⁹
^Oregon¹⁰^291,⁴⁸⁰
^Pennsylvania³²⁹²²⁵^1,03^0,36¹
^Tennessee²^1,34^5,13¹
^Texas¹^292,⁶²³
^{Utah 3}^63,8⁵⁰⁹^174,³⁰²
^Washington¹⁴^1,07^7,31²
^Wisconsin²⁶⁴⁰¹^8,71³
^Totals⁹^502,⁴⁹⁴⁶³^3,23^0,18^{5 34}^3,36^7,57^{5 13}^18,5⁶²
^Source:^Prepa^{red by CRS, based}^{on data from the}^{2004 Medicaid Managed Ca}^{re Enrollment Report}^{, by the}
^{Centers for}^{Medicare and}^{Medicaid Services, available}^{online at http://www.cms.hhs.gov/}
^{MedicaidDataS}^ourcesGe^nInfo/^do^{wnloads/mmcer04.pdf. A PI}^{HP pr}^{ovides less than compre}^he^{nsive s}^{ervices on an}
^{at-risk or other tha}^{n state}^{plan r}^eimbursem^ent^{basis; and p}^{rovides, arranges}^{for, or otherwise has}^{responsibility}
^{for the}^{provision of any in}^patient^{hospital or institutional services.}

Table 4. Number of and Enrollment in Prepaid Ambulatory Health Plans (PAHPs) by Type and State, as of June 30, 2004
^{Medical - Only}^{Mental H}^ealth^{Substance Use}^Disorders^{Dental Transp}^ortation^Disease^Management
^Number^Number^Number^Number^Number^Number^Number^Number^Number^Number^Number
^State^Number^{of Plans}^of^{of Plans}^of^{of Plans}^of^{of Plans}^of^{of Plans}^of^{of Plans}^of
^Enrollees^Enrollees^Enrollees^Enrollees^Enrollees^Enrollees
^Arkansas¹^386,³⁹⁵
^California²⁹⁹⁷⁹^296,¹⁸³
^Florida⁴^88,6⁹⁸
^Georgia¹^1,27^3,13³
^Kentucky¹^625,⁸⁰⁷
^Mississippi¹^73,4⁴⁵
ⁱ^{ki/CRS-RL33711}^New^York¹^6,72⁵
^g/w^Oklahoma¹^348,⁵³⁸
^s^.or^Oregon¹^8,08⁴⁷^295,⁴¹¹
^le^ak^South¹^16,4⁸⁰
^://wiki^Carolina
^h^ttp^South¹^95,5⁷⁷
^Dakota
^Utah¹^154,⁷³⁰
^Washington²^129,¹¹⁰
^Totals^{4 366,}⁰¹^{5 1}^6,72⁵¹^8,08⁴¹⁷^687,¹⁷^{1 4}^2,44^0,06⁵⁷^291,²⁵³
^Source:^Prepa^{red by CRS, based}^{on data from the}^{2004 Medicaid Managed Ca}^{re Enrollment Report}^b^y^{the Ce}^{nters for}^{Medicare a}^{nd Medicaid Services at}
^{http://www.cms.hhs.gov/}^Medicaid^{DataSourcesGenI}^nfo/^downloads/^mmcer0^{4.pdf. A PAHP p}^{rovides less tha}^{n compre}^he^{nsive services}^{on an}^{at-risk or other}^tha^{n state}^plan
^reimbur^sement^{basis; and does n}^{ot provide, arrange for, or other}^{wise have res}^{ponsibility for the}^p^{rovision of any inpatient}^hos^{pital or institutional services.}

Table 5. Expenditures and Percentages by Delivery System and State, FY2003
^{Fee-For-Service}
^States^{Total Expenditures}^{(In Millions)}^{Managed Care}^Long-Term^Prescribed^Unknowⁿ
^Total^Care^Drugs^{All Other}
^{Alabama 3,47}¹^18.8%^71.2%^31.2%^15.5%^24.5%^10.1%
^{Alaska 836}^0.0%^100.^0%^33.6%^11.9%^54.4%^0.0%
^{Arkansas 2,21}²^0.7%^99.3%^37.0%^14.7%^47.6%^0.1%
^{Arizona 3,28}⁵^84.6%^15.4%^0.8%^0.1%^14.5%^0.0%
^{California 25,8}¹²^21.1%^78.9%^34.7%^15.6%^28.7%^0.0%
^Colorad^{o 2,26}⁹^18.1%^80.4%^39.2%^11.1%^30.2%^1.5%
^{Connecticut 3,35}⁹^18.4%^81.6%^57.4%^12.0%^12.2%^0.0%
^{District of Columbia}^1,20⁰^21.5%^78.5%^26.1%^6.9%^45.5%^0.0%
ⁱ^{ki/CRS-RL33711}^{Delaware 750}^28.9%^70.8%^35.4%^14.8%^20.6%^0.4%
^g/w^{Florida 11,1}⁰⁴^11.5%^88.5%^32.7%^18.6%^37.2%^0.0%
^s^.or^{Georgia 5,35}⁸^0.5%^99.3%^23.8%^18.7%^56.8%^0.1%
^le^ak^{Hawaii 753}^35.7%^64.3%^33.7%^12.8%^17.8%^0.0%
^://wiki^{Iowa 1,99}⁶^9.5%^90.3%^45.7%^16.3%^28.4%^0.1%
^h^ttp^{Idaho 867}^0.5%^99.5%^40.4%^15.8%^43.2%^0.0%
^{Illinois 9,39}¹^2.1%^97.9%^33.5%^13.4%^51.0%^0.0%
^{Indiana 3,95}¹^10.3%^89.7%^44.1%^16.6%^29.0%^0.0%
^{Kansas 1,61}⁵^7.0%^93.0%^48.3%^14.6%^30.2%^0.0%
^{Kentucky 3,55}⁸^12.8%^87.2%^28.7%^19.5%^39.0%^0.0%
^{Louisiana 3,61}⁵^0.4%^99.6%^34.9%^21.7%^43.1%^0.0%
^Massach^{usetts 6,39}²^10.1%^89.9%^46.5%^14.7%^28.7%^0.0%
^{Maryland 4,39}⁸^29.7%^69.8%^40.0%^8.6%^21.2%^0.4%
^{Maine 2,07}⁴^0.2%^99.8%^31.4%^13.4%^54.9%^0.0%
^{Michigan 6,47}⁹^44.8%^55.1%^20.9%^11.6%^22.6%^0.1%
^{Minnesota 4,70}²^24.7%^75.3%^53.5%^7.2%^14.7%^0.0%

^{Fee-For-Service}
^States^{Total Expenditures}^{(In Millions)}^{Managed Care}^Long-Term^Prescribed^Unknowⁿ
^Total^Care^Drugs^{All Other}
^{Missouri 4,40}⁷^15.5%^84.5%^32.4%^21.6%^30.4%^0.0%
^{Mississippi 2,57}⁰^0.0%^100.^0%^28.7%^22.1%^49.2%^0.0%
^{Montana 536}^0.3%^99.7%^38.4%^16.2%^45.1%^0.0%
^{North Carolina}^6,52¹^0.8%^99.2%^31.8%^19.4%^48.0%^0.0%
^{North Dakota}⁴⁴⁵^1.2%^98.8%^60.4%^12.7%^25.8%^0.0%
^Nebras^{ka 1,28}³^4.9%^95.1%^45.0%^15.4%^34.7%^0.0%
^{New Ham}^pshire⁷⁸⁶^2.2%^97.8%^47.5%^14.9%^35.4%^0.0%
^{New Jers}^ey^6,03⁰^19.7%^80.3%^48.0%^12.6%^19.7%^0.0%
^{New Me}^xico^2,03³^44.0%^55.4%^30.7%^5.3%^19.4%^0.6%
ⁱ^{ki/CRS-RL33711}^{Nevada 881}^15.4%^84.6%^32.8%^12.5%^39.3%^0.0%
^g/w^{New York}^35,2⁰⁷^11.9%^88.1%^47.7%^11.4%^29.0%^0.0%
^s^.or^{Ohio 10,2}³⁵^7.6%^92.4%^48.6%^15.3%^28.5%^0.0%
^le^ak
^{Oklahoma 2,12}⁹^18.1%^81.9%^44.1%^13.6%^24.2%^0.0%
^://wiki^{Oregon 2,11}⁶^39.3%^60.6%^31.9%^11.9%^16.8%^0.0%
^h^ttp^{Pennsylvania 9,45}⁰^45.9%^54.1%^35.4%^8.1%^10.6%^0.0%
^{Rhode Island}^1,33⁸^15.8%^84.2%^51.7%^10.5%^22.0%^0.0%
^{South Carolina}^3,64²^2.1%^97.9%^24.6%^15.3%^58.0%^0.0%
^{South Dakota}⁵⁴²^1.6%^98.3%^48.1%^13.4%^36.8%^0.1%
^{Tennessee 5,45}⁹^9.7%^90.3%^21.7%^32.5%^36.1%^0.0%
^{Texas 12,5}²⁵^10.4%^89.5%^33.2%^15.3%^41.0%^0.0%
^{Utah 1,20}¹^20.7%^78.9%^23.2%^12.2%^43.5%^0.3%
^{Virginia 3,18}¹^22.2%^77.8%^31.2%^15.9%^30.7%^0.0%
^{Vermont 642}^0.6%^99.2%^33.6%^20.1%^45.4%^0.2%
^{Washington 4,52}⁴^15.0%^74.0%^32.5%^13.2%^28.3%^10.9%
^{Wisconsin 3,92}¹^21.6%^78.3%^41.1%^15.6%^21.7%^0.0%

^{Fee-For-Service}
^States^{Total Expenditures}^{(In Millions)}^{Managed Care}^Long-Term^Prescribed^Unknowⁿ
^Total^Care^Drugs^{All Other}
^{West Virginia}^1,83⁰^4.1%^95.9%^40.3%^18.6%^37.0%^0.0%
^{Wyoming 325}^0.0%^100.^1%^49.2%^13.1%^37.8%^-0.1%
^{National 233,}²⁰⁶^16.1%^83.5%^37.3%^14.5%^31.7%^0.4%
^Source:^{CRS analysis of FY200}³^{CMS MSIS State Summary DataM}^{art (downloaded April, 2006).}
^Note:^Al^{l percentages a}^{re bas}^{ed on grand total expe}^{nditures. Ma}ⁿ^{aged Care includes H}^{MOs, Healt}^{h In}^suring^Orga^{nizations (HIOs), prepai}^{d health}^{plans (PHPs) a}^nd
^{primary ca}^{re case ma}^nageme^{nt (}^{PCCM) programs. Long-Term Ca}^{re includes institutional services (}^{inpatient me}^{ntal health se}^rvices^f^{or those over 6}⁴^a^{nd unde}^{r 2}^1,
^{intermediate care facilities for th}^{e mentally retarded, and n}^ursing^f^acilit^{ies) and non-institutional services (home health, pe}^{rsonal care}^{, targeted case manage}^ment,
^{rehabilitation, and private duty}ⁿ^{ursing). Ex}^{cludes the}^{territories, disproportionate share}^{hospital (DSH) payments, p}^{rogram ad}^minis^{tration, and Medicare pre}^miums.
^{Includes e}^xpe^{nditures for}^Medica^{id-expansion State Children’s He}^{alth Ins}^uran^{ce Program (M-SCHI}^{P) beneficiaries.}
Table 6. Expenditures and Percentages for Managed Care by Type and State, FY2003
ⁱ^{ki/CRS-RL33711}^{Managed Care}
^g/w^{% of T}^otal
^s^.or^States^{Total Expenditures}^{(in Millions)}^{Expenditures for}^{Total Managed Care}
^le^ak^{Managed Care}^Expenditures^{% HMO/HIO}^{% PHP}^{% PCCM}
^{(in Millions)}
^://wiki^{Alabama 3,47}¹^18.8%⁶⁵¹^0.2%^96.3%^3.5%
^h^ttp
^{Alaska 836}^0.0%⁰^0.0%^0.0%^0.0%
^{Arizona 3,28}⁵^84.6%^2,77⁸^88.5%^11.5%^0.0%
^{Arkansas 2,21}²^0.7%¹⁵^0.0%^0.0%^100.^0%
^{California 25,8}¹²^21.1%^5,44⁷^86.6%^13.4%^0.0%
^Colorad^{o 2,26}⁹^18.1%⁴¹¹^62.3%^37.2%^0.5%
^{Connecticut 3,35}⁹^18.4%⁶¹⁹^100.^0%^0.0%^0.0%
^{Delaware 750}^28.9%²¹⁶^96.5%^3.5%^0.0%
^{District of Columbia}^1,20⁰^21.5%²⁵⁷^93.6%^6.4%^0.0%
^{Florida 11,1}⁰⁴^11.5%^1,27⁴^95.9%^2.0%^2.1%
^{Georgia 5,35}⁸^0.5%²⁹^0.0%^0.0%^100.^0%

^{Managed Care}
^{% of T}^otal
^States^{Total Expenditures}^{(in Millions)}^{Expenditures for}^{Total Managed Care}
^{Managed Care}^Expenditures^{% HMO/HIO}^{% PHP}^{% PCCM}
^{(in Millions)}
^{Hawaii 753}^35.7%²⁶⁹^96.8%^3.2%^0.0%
^{Idaho 867}^0.5%⁴^0.0%^0.0%^100.^0%
^{Illinois 9,39}¹^2.1%¹⁹⁶^86.0%^14.0%^0.0%
^{Indiana 3,95}¹^10.3%⁴⁰⁸^97.9%^0.0%^2.1%
^{Iowa 1,99}⁶^9.5%¹⁹⁰^51.7%^47.5%^0.8%
^{Kansas 1,61}⁵^7.0%¹¹³^98.3%^0.0%^1.7%
^{Kentucky 3,55}⁸^12.8%⁴⁵⁶^87.4%^9.1%^3.5%
^{Louisiana 3,61}⁵^0.4%¹³^0.0%^0.0%^100.^0%
^{Maine 2,07}⁴^0.2%⁴^0.0%^0.0%^100.^0%
ⁱ^{ki/CRS-RL33711}^{Maryland 4,39}⁸^29.7%^1,30⁸^100.^0%^0.0%^0.0%
^g/w
^s^.or^Massach^{usetts 6,39}²^10.1%⁶⁴⁵^54.0%^46.0%^0.0%
^le^ak^{Michigan 6,47}⁹^44.8%^2,90⁴^53.9%^46.1%^0.0%
^://wiki^{Minnesota 4,70}²^24.7%^1,16¹^100.^0%^0.0%^0.0%
^h^ttp^{Mississippi 2,57}⁰^0.0%⁰^0.0%^0.0%^0.0%
^{Missouri 4,40}⁷^15.5%⁶⁸⁴^100.^0%^0.0%^0.0%
^{Montana 536}^0.3%^{2 0.0%}^0.0%^100.^0%
^Nebras^{ka 1,28}³^4.9%⁶³^97.1%^0.0%^2.9%
^{Nevada 881}^15.4%¹³⁵^100.^0%^0.0%^0.0%
^{New Ham}^pshire⁷⁸⁶^2.2%¹⁷^100.^0%^0.0%^0.0%
^{New Jers}^ey^6,03⁰^19.7%^1,18⁷^99.5%^0.5%^0.0%
^{New Me}^xico^2,03³^44.0%⁸⁹⁵^100.^0%^0.0%^0.0%
^{New York}^35,2⁰⁷^11.9%^4,17⁷^87.8%^12.2%^0.0%
^{North Carolina}^6,52¹^0.8%⁵²^39.4%^0.0%^60.6%
^{North Dakota}⁴⁴⁵^1.2%⁵^87.7%^0.0%^12.3%

^{Managed Care}
^{% of T}^otal
^States^{Total Expenditures}^{(in Millions)}^{Expenditures for}^{Total Managed Care}
^{Managed Care}^Expenditures^{% HMO/HIO}^{% PHP}^{% PCCM}
^{(in Millions)}
^{Ohio 10,2}³⁵^7.6%⁷⁷⁴^100.^0%^0.0%^0.0%
^{Oklahoma 2,12}⁹^18.1%³⁸⁴^92.4%^7.6%^0.0%
^{Oregon 2,11}⁶^39.3%⁸³²^73.8%^26.1%^0.1%
^{Pennsylvania 9,45}⁰^45.9%^4,33^{9 73.5%}^26.4%^0.1%
^{Rhode Island}^1,33⁸^15.8%²¹¹^100.^0%^0.0%^0.0%
^{South Carolina}^3,64²^2.1%⁷⁸^79.7%^20.3%^0.0%
^{South Dakota}⁵⁴²^1.6%⁹^0.0%^82.8%^17.2%
^{Tennessee 5,45}⁹^9.7%⁵³²^30.6%^69.4%^0.0%
^{Texas 12,5}²⁵^10.4%^1,30⁷^96.2%^3.0%^0.9%
ⁱ^{ki/CRS-RL33711}^{Utah 1,20}¹^20.7%²⁴⁹^35.1%^64.9%^0.0%
^g/w
^s^.or^{Vermont 642}^0.6%⁴^0.0%^0.0%^100.^0%
^le^ak^{Virginia 3,18}¹^22.2%⁷⁰⁶^99.7%^0.0%^0.3%
^://wiki^{Washington 4,52}⁴^15.0%⁶⁸¹^100.^0%^0.0%^0.0%
^h^ttp^{West Virginia}^1,83⁰^4.1%⁷⁵^95.3%^0.3%^4.4%
^{Wisconsin 3,92}¹^21.6%⁸⁴⁹^74.7%^25.3%^0.0%
^{Wyoming 325}^0.0%⁰^0.0%^0.0%^0.0%
^{National Total}^233,²⁰⁶^16.1%^37,6¹⁴^82.4%^17.0%^0.6%
^Source:^{CRS analysis of FY200}³^{CMS MSIS State Summary DataM}^{art (downloaded April, 2006).}
^Note:^{Within state sums may}^{not add to 100%}^{due to rou}^{nding. Managed care}^{includes H}^{MOs, H}^{ealth Ins}^{uring O}^{rganizations (HI}^{Os), prepai}^{d health}^{plans (PHPs)}^and
^{primary ca}^{re case ma}^nageme^{nt (}^{PCCM) programs. E}^{xcludes ter}^{ritories, disproportionate share hos}^{pital (DSH) payments, program a}^d^m^{inistration, and Medicare pre}^miums.
^{Includes e}^xpe^{nditures for}^Medica^{id-expansion State Children’s He}^{alth Ins}^uran^{ce Program (M-SCHI}^{P) beneficiaries.}

Table 7. Expenditures and Percentages by Delivery System and Basis of Eligibility, FY2003
^{Fee-For-Service}^{Total Expenditures}
^{Basis of Eligibility}^{(in Millions)}^{Managed Care}^Unknowⁿ
^Total^{Long-Term C}^are^{Prescribed Dru}^gs^{All Other}
^{Aged 55,2}⁷¹^4.6%^95.4%^69.6%^15.0%^10.8%^0.0%
^Blind/D^{isabled 102,}⁰¹⁴^10.5%^89.5%^41.4%^18.6%^29.4%^0.0%
^{Children 39,8}⁷¹^36.5%^63.5%^10.7%^8.1%^44.6%^0.0%
^{Adults 26,8}⁰⁰^33.1%^66.9%^1.6%^11.4%^53.9%^0.0%
^{Unknown 9,25}¹^9.8%^80.4%^17.0%^2.1%^61.3%^9.9%
^{National Total}^233,²⁰⁶^16.1%^83.5%^37.3%^14.5%^31.7%^0.4%
^Source:^{CRS analysis of FY200}³^{CMS MSIS State Summary DataM}^{art (downloaded May, 2006).}
^Note:^Al^{l percentages a}^{re bas}^{ed on grand total expe}^{nditures. Ma}ⁿ^{aged Care includes H}^{MOs, Healt}^{h In}^suring^Orga^{nizations (HIOs), prepai}^{d health}^{plans (PHPs) a}^nd
^{primary ca}^{re case ma}^nageme^{nt (}^{PCCM) programs. Long-term}^car^{e includes institutional services (inpatient m}^{ental health}^services^{for those over}^{64 a}^{nd u}^nder^21,
^{intermediate care facilities for th}^{e mentally retarded, and n}^ursing^f^acilit^{ies) and non-institutional services (home health, pe}^{rsonal care}^{, targeted case manage}^ment,
ⁱ^{ki/CRS-RL33711}^{rehabilitation, and private duty}ⁿ^{ursing). Ex}^{cludes the}^{territories, disproportionate share}^{hospital (DSH) payments, p}^{rogram ad}^minis^{tration, and Medicare pre}^miums.
^g/w^{Includes e}^xpe^{nditures for}^Medica^{id-expansion State Children’s He}^{alth Ins}^uran^{ce Program (M-SCHI}^{P) beneficiaries.}

^s^.or
^le^ak
^://wiki
^h^ttp

Table 8. Expenditures and Percentages for Managed Care by Type and Basis of Eligibility, FY2003
^{Managed Care}
^{% of T}^otal^{Total Managed}
^{Basis of Eligibility}^{Total Expenditures}^{(in Millions)}^{Expenditures for}^Care
^{Managed Care}^Expenditures^{% HMO/HIO}^{% PHP}^{% PCCM}
^{(in Millions)}
^{Aged 55,2}⁷¹^4.6%^2,55⁰^85.1%^14.7%^0.1%
^Blind/D^{isabled 102,}⁰¹⁴^10.5%^10,7²⁰^70.9%^28.8%^0.3%
^{Children 39,8}⁷¹^36.5%^14,5⁶⁶^87.7%^11.4%^0.9%
^{Adults 26,8}⁰⁰^33.1%^8,87⁴^91.0%^8.7%^0.3%
^{Unknown 9,25}¹^9.8%⁹⁰⁴^41.8%^56.2%^2.0%
^{National Total}^233,²⁰⁶^16.1%^37,6¹⁴^82.4%^17.0%^0.6%
^Source:^{CRS analysis of FY200}³^{CMS MSIS State Summary DataM}^{art (downloaded April, 2006).}
ⁱ^{ki/CRS-RL33711}^Note:^{Within basis of elig}^ibility^{, sums may}^{not add to 10}^{0% d}^{ue t}^o^{rounding. Managed Care}^includ^{es HMO}^{s, Health I}^nsu^{ring Orga}^nization^{s (HIOs), prepaid health}^pla^ns
^g/w^{(PHPs), and primary care}^{case ma}^{nagement (PCCM)}^{programs. E}^x^c^{ludes territories, disproportionate share}^{hospital (DSH) payments,}^{program administration, and Me}^dicare
^s^.or^{premiums. I}^{ncludes e}^xpe^nditures^{for Medicaid-expansion State Chi}^{ldren’s Health In}^sura^{nce Program}^{(M-SCHIP) beneficiaries.}

^le^ak
^://wiki
^h^ttp

Table 9. Summary of Selected Effectiveness of Care Measures from the Health Plan Employer Data and Information Set
(HEDIS), 2005
^{HEDIS Measure}^{Medicaid Commercial}^Medicare
^{Examples of Preventive Care}
^{Childhood Immunization Status (combination 2)}^70.4%^77.7%^NA
^{Timeliness of Prenatal Care}^{79.1% 91.8%}^NA
^{Breast cance}^{r scre}^ening^{53.9% 72.0%}^71.6%
^{Examples of A}^{cute Medical Care}
^Approp^{riate Treatment}^{for Children with U}^ppe^{r Respiratory I}^nfec^{tion (URI)}^82.5%^82.9%^NA
^{Persistence of Beta-Blocker Treatment Afte}^{r a Hea}^{rt Attack}^69.8%^70.3%^65.4%
^{Controlling High Blo}^{od Pressure}^{61.4% 68.8%}^66.4%
^{Examples of Mental Health S}^ervices
ⁱ^{ki/CRS-RL33711}^Antidepressa^{nt Medication Mana}^gement—E^{ffective Contin}^{uation Phase Treatment}^30.3%^45.0%^41.0%
^g/w^Foll^{ow-Up After Hospitalizati}^{on for Mental Illness within}³⁰^days^56.8%^75.9%^59.3%
^s^.or^{Examples of Member Satisfaction Measures}
^le^ak^{Rating of Health Plan}^{72.0% 65.2%}^79.9%
^://wiki^{Getting Needed Care}^{73.9% 80.2%}^87.1%
^h^ttp^{Rating of Personal Doctor or Nu}^rse^{77.0% 77.2%}^85.5%
^Source:^{National Committee for Quality Assu}^rance^(NCQA),^{The State of Health Ca}^{re Quality: 200}^6,^{NCQA, Washington, DC, 20}⁰^6.
^Notes:^{The definiti}^{ons of each ef}^{fectiveness of ca}^{re meas}^{ure a}^{re p}^{rovided below.}
^{Childhood immunization status}^—pe^{rcentage of c}^{hildren who t}^urn^{ed 2 years old during t}^{he meas}^urem^{ent year a}^{nd received a s}^{pecified num}^{ber of doses of vac}^cines^{to p}^revent
^{diphtheria-tetan}^{us, polio, measles}^-mumps-r^{ubella, Haemophilus in}^{fluenzae ty}^{pe b,}^{hepatitis B, and ch}^{icken pox.}
^{Timeliness of}^{prenatal care}^{—percentage of women}^beginning^pr^enat^{al care during t}^{heir first trimest}^er^{or with 4}²^{days of en}^{rollment if already pregna}^{nt at}^t^{he time of}
^enrollment.
^{Breast cancer screening}^—percenta^{ge of women aged 5}²^{- 6}⁹^e^{nrolled in a health}^{plan who}^{had at least one mammogram in}^the^{past t}^{wo years.}
^{Appropriate treatment for children}^{with upper respiratory infection (URI)}^—perce^{ntage of c}^{hildren 3 mon}^{ths to 1}⁸^years^{of age who we}^re^{diagnosed with an URI and did n}^ot
^{receive an a}^{ntibiotic prescription}^{for that e}^{pisode of care within th}^{ree days of the}^{visit. Higher rates}^{indicate more app}^ropri^{ate use}^{of antibiotics.}
^Persistence^{of beta-blocker treatment after a hea}^{rt attack}^{—percentage of membe}^{rs 3}⁵^yea^{rs of age a}ⁿ^d^{older who are hospitalized and discharged from the}^{hospital afte}^r
^{surviving a}^{heart attack}^{and w}^{ho received one or more}^prescri^{ptions for a}^{beta-blocker covering}^a^{period of at least six months}^afte^{r discharge.}

^{Controlling high blood pressure}^—^{estimates whethe}^{r blood press}^ure^{was controlled in adults aged 46}^{- 85 yea}^{rs of age w}^{ho have diagn}^{osed hyperte}^{nsion. Adequate}^c^on^trol
^{was defined as a blood press}^ure^{of 14}^0/90^{mmHg or lower. Both}^{the systolic and diastolic pressur}^{e must}^{be at or}^under^{these t}^h^r^e^{sholds for blood pressure}^{to be}
^{considered controlled.}
^{Antidepressant medication manage}^{ment/effective continuation phase treatment}^—^perce^{ntage of eligible members}^{who were}^{treated with}^antidepressa^{nt medication and r}^emained
^{on anti-depressa}^{nt medication for six mont}^{hs afte}^{r diagnosis of a new episode of depre}^ssion.
^{Follow-up after hospitalization for mental illness within 30 days}^—perce^{ntage of health}^{plan me}^mbe^{rs 6}^y^{ears of age and older who re}^{ceived inpatient treatm}^{ent for}^{a men}^tal
^{health disorder and had a}ⁿ^am^bul^{atory or other s}^{pecified types of}^follow^{-up within 3}⁰^{days af}^ter^{hospital discharge.}
^Each^{member sati}^{sfaction measure}^{shows the}^perce^{ntage of me}^mber^{s who gave a rati}^{ng of 8, 9}^{or 1}⁰^{(highest) or who indicated “always” or “usually” depe}^{nding on}^t^he
^measure.

ⁱ^{ki/CRS-RL33711}
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^{Elicia J}^.^Her^z
^Specialis^{t i}ⁿ^Healt^h^C^a^{re Fi}ⁿ^aⁿ^c^ing
^eh^erz@^crs^.^l^o^c.g^o^v^,^7-¹³⁷⁷