Lessons Learned From Medicaid Managed Care Approaches

Prologue: With increasing frequency, the phrase “managed care” is appearing in the lexicon of individuals and organizations caught up in changing America's traditional health care delivery system. Like any generic label, the phrase means a lot of different things to different interests, but it essentially combines delivery and financial dimensions of medical care in a variety of ways. Insurance companies consider as parts of managed care the employment of utilization review and preadmission certification to keep their beneficiaries' medical costs—and premium rates—in check. Physicians and hospitals have become involved in the emerging phenomenon through case management and capitation agreements. The federal government has introduced man-aged care into Medicare by encouraging elderly beneficiaries to enroll in health maintenance organizations (HMOs) and by creating new economic incentives through its hospital reimbursement system—prospective payment. States, too, have incorporated managed care approaches in Medicaid as a way to constrain expenses. In this paper, Maren Anderson and Peter Fox of Lewin and Associates, Inc., a Washington, D.C.-based consulting firm, track the experience of several states with Medicaid managed care, in the form of both fee-for-service and partially capitated primary care case management, HMOs, and health-insuring organizations. Anderson, who holds a master's degree in public policy from the University of California, Berkeley, previously worked at the Health Care Financing Administration (HCFA). Recently she completed a two-year study of California's Medicaid selective contracting and preferred provider legislation. Her associate, Fox, holds a doctorate in business from Stanford University. Previously he worked at the Department of Health and Human Services in several policy-related positions within HCFA and the Office of the Assistant Secretary for Planning and Evaluation. He recently published a book for DHHS entitled Determinants of HMO Success—which some say is the In Search of Excellence of the HMO world.