People with complex needs could find themselves squeezed out of the most appropriate long-term care settings as Medicaid beneficiaries become enrolled in programs from private sector companies, The New York Times reported in a lengthy Page 1 examination of the subject Friday.

Medicaid managed care is spreading quickly throughout the country, with 26 states introducing mandatory programs for people who need these public dollars to fund their long-term care. In managed long-term care, a private insurer enrolls beneficiaries and receives state and federal Medicaid money to cover the costs of care. The theory is that a private insurer will have the freedom and incentives to provide high-quality care at the lowest cost, such as through home- and community-based options.

In reality, plans may limit options to contain costs, and those who develop complex needs might find they are not eligible for care that would have been covered by Medicaid “under the old system,” the Times reported in an article titled, “Pitfalls Seen in a Turn to Privately Run Long-Term Care.”

The newspaper zeroed in on managed care in Tennessee, which has been touted by some as a national model. While expanding homecare options, the state also tightened requirements for nursing home admission. After a new scoring system was put in place in 2012, the rejection rate for applications for high-level care increased from 13% to 41%, according to the article.

One 79-year-old profiled in the expansive article was denied skilled nursing placement despite losing his vision and developing dementia. Only after sustaining injuries and threats of legal action by the family was he granted coverage.

Privately held managed care companies might be limiting choices and under-serving those with costly needs to maximize investor profits, suggested article author Nina Bernstein.

Skilled nursing operators have been wary of managed care, partly because expanded homecare could hurt their bottom line, Bernstein noted. However, long-term care leaders also have stated publicly that managed care also presents an opportunity for getting people the most appropriate care at the most reasonable costs.

“We believe that Medicaid managed care is a new way to use the money and use the resources much better in every community,” LeadingAge President and CEO Larry Minnix said at the provider association’s annual conference in November.