Report: Managed care reaches 'tipping point'

More than 65% of Medicaid now is managed care, long-term care programs to expand, PricewaterhouseCoo
More than 65% of Medicaid now is managed care, long-term care programs to expand, PricewaterhouseCoo

Medicaid managed care may have reached a “tipping point” in 2014, with the number of managed care beneficiaries swelling while fee-for-service enrollment actually dropped, according to a recently released report from PricewaterhouseCoopers.

In the last year, the number of people on a private managed care plan increased by 9.3 million, while the number in traditional fee-for-service or a public managed care plan decreased by 300,000, the PwC analysis determined. The proportion of beneficiaries in private managed care increased from 59% to 66%.

Managed care growth can be attributed to two main factors, according to the report. States that are expanding Medicaid eligibility through the Affordable Care Act are opting for private managed care to handle the new populations. And states increasingly are under fiscal pressure, causing them to rely more heavily on private plans to “better control costs and deliver services.”

States typically achieve these cost controls by providing capitated payments to the private plans, which then seek efficient ways of administering benefits, including through more robust care coordination. However, some long-term care and other providers have protested that managed care organizations in some instances prioritize efficiency over quality care. And they have expressed concern that MCOs do not have expertise in working with specialized beneficiary populations, such as people utilizing long-term services and supports.

This point was backed up by the PwC report, which noted that these populations have “significant, often bespoke, requirements” that call for “skill sets and capabilities not traditionally found in health plans.” However, managed care for the long-term care population grew at a modest rate in 2014 and “the future will see more,” author Ari Gottlieb wrote.

Click here for the complete document, which was commissioned by the Medicaid Health Plans of America. The trade association announced the findings Wednesday.