Issues in Managed Care

Review includes a collection of articles on managed care topics in the public programs of Medicaid and Medicare. The first article looks at developments in Medicaid in the broader context of overall changes in the managed care marketplace, while the remaining articles examine specific topics that have significant policy implications for the public sector programs. Leading off this issue, Hurley and Draper provide an overview of the current direction of managed care in the commercial sector and the implications for Medicaid of the changes that have taken place. As the authors point out, Medicaid was an active participant in the " managed care revolution " : more than one-half of Medicaid beneficiaries are in managed care arrangements. The authors note that this level of participation partly reflects what might be termed " managed-care-friendly " features that are particular to Medicaid—such as the reality of limited provider access even in fee-for-service (FFS) Medicaid, and the ability to mandate enrollment. Medicaid and managed care have also been a felicitous pairing because of similar benefit structures—or what were once similar benefit structures— consisting of a comprehensive benefit package and limited cost sharing. Though the authors state that there has not been turmoil in Medicaid managed care on a par with the turmoil in the commercial sector and in Medicare, there have been certain changes in Medicaid. Managed care continues to predominate as the preferred approach, but States increasingly have had to rely on Medicaid-only plans. Commercial plans have backed away from participation in Medicaid after their involvement peaked in 1998. Although there continue to be some commercial insurers with a presence in Medicaid, and there are what the authors call " investor-owned Medicaid focused plans, " market factors do not point towards a resurgence of interest in Medicaid contracting among commercial health maintenance organizations (HMOs). As described by Hurley and Draper, the commercial managed care marketplace and Medicaid managed care appear to be heading in divergent directions—or perhaps it would be better to say that the Medicaid model has remained static while major changes have occurred in the private sector, changes which appear incompatible with the Medicaid managed care model. For example , in the commercial sector, in response to consumer preferences, health plans are offering greater choice of providers through larger panels, or through the use of point-of-service or preferred provider organization products. This has led to less utilization management , and …