“Medicaid Managed Care: Improvements Needed to Better Oversee Payment Risks,” Government Accountability Office

“Almost half—$171 billion—of Medicaid spending in 2017 went to managed care organizations (MCO). In Medicaid managed care, states pay a set periodic amount to MCOs for each enrollee, and MCOs pay health care providers for the services delivered to enrollees. Used effectively, managed care can help states reduce Medicaid costs. However, managed care still is at risk of making incorrect payments, such as duplicate payments or payments for ineligible patients. We identified 6 types of payment risks: 4 related to state payments to MCOs, and 2 related to MCO payments to providers. We recommended ways to improve oversight of managed care payments.”

LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):

State Medicaid programs love managed care because it relieves them of the effort and responsibility to manage care well and cost-effectively. The problem is it adds a middle man between the payer and the provider with a financial incentive to cut costs leaving providers in a bind. A further problem is that government, in this case Medicaid, tends to make generous offers to draw the private sector in and then reduce reimbursements. The end result in the quality of care received by Medicaid recipients is an open question.

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