Achieving State Medicaid Goals Through Managed Care

posted by AHIP

on October 26, 2018


Medicaid is one of the largest government health programs in the U.S, serving 74 million low-income individuals as of 2018. 38 states use Medicaid managed care organizations (MCOs) to serve Medicaid enrollees. More than a dozen states have at least 90% of their Medicaid enrollees in MCOs

Research shows that enrollee satisfaction with Medicaid equals or exceeds that of private health insurance. People who receive their benefits through a Medicaid MCO had higher satisfaction with their benefits (85%) than people enrolled in traditional Medicaid fee-for service programs (81%).

States rely on managed care to make budgeting more predictable and use taxpayer funds more efficiently. But managed Medicaid programs are complex. They require thoughtful and deliberate planning and engagement, and commitment of ample time and resources to achieve success.


Medicaid is one of the largest government health programs in the United States, serving 74 million low-income individuals as of 2018. The program is structured as a federal state partnership, with states administering the program within a federal framework and states and the federal government sharing the costs. States use one of two major structural models for their Medicaid programs: fee for service, in which providers bill the state or an administrative contractor directly for each service provided; and managed care, in which the state contracts with managed care health plans to administer benefits, arrange and coordinate care and services, and pay providers.

Medicaid managed care (MMC) has become an increasingly appealing option for states looking to improve beneficiary outcomes while controlling costs over time. There is growing evidence of its effectiveness in demonstrating value and addressing the challenges states face in caring for more complex populations. These and other advantages have led to steady growth in MMC over the past two decades. Today, over two-thirds of Medicaid beneficiaries are enrolled in MMC.i Of the 56 million Medicaid managed care enrollees, many receive all their clinical services through these capitated payment arrangements providing states with a predictable and coordinated foundation for addressing the needs of vulnerable populations. Each year additional states adopt MMC, and more and more services are brought into these arrangements.

Managed care organizations (MCOs) provide state Medicaid agencies with essential tools and expertise in areas such as healthcare service delivery, care coordination, behavioral health services, and long-term services and supports (LTSS)1. Many MCOs also provide experience gained across different states and serving different populations. Successful MMC programs typically include strong state- MCO partnerships combined with state leadership in establishing a clear vision and goals.

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