Applying Managed Care to Disabled Beneficiaries Poses Additional Challenges

Interest in using prepaid managed care programs for disabled Medicaid beneficiaries has prompted concerns about whether this approach is suitable to meet the needs of disabled beneficiaries. Objectives, Scope, and Methodology

The Chairman and Ranking Minority Member of the Subcommittee on Medicaid and Health Care for Low-Income Families of the Senate Committee on Finance asked us to examine (1) the extent to which states are implementing prepaid Medicaid managed care for disabled beneficiaries and (2) what steps states have taken to safeguard the interests of the three major stakeholder groups—disabled beneficiaries, prepaid health care plans, and the government—with a focus on quality assurance and rate-setting mechanisms. States Are Moving Toward Managed Care for Disabled Medicaid Recipients

Of the 17 states that enrolled some portion of their disabled Medicaid beneficiaries in prepaid managed care plans, enrollment ranged from less than 1 percent to all of a state’s disabled beneficiaries. In addition to the 17 states currently enrolling disabled beneficiaries, more states have plans under way to include them in prepaid managed care. For beneficiaries with Medicare eligibility, 12 states open their Medicaid prepaid programs to participation and 5 do not. Important aspects of states’ quality assurance activities can fall into two main categories: (1) building safeguards into the programs through adequate planning and consensus-building and (2) tailoring various aspects of the program (such as enrollment and monitoring) to meet the specific needs of disabled individuals. These goals and specifications have included developing capacity to serve disabled individuals. Health plans can avoid high-cost recipients by dropping providers that attract high-cost patients. In their provider contracts, plans may limit the incentives to reduce services when their profits will be limited. To date, few states have significant, long-term experience with programs that mandate enrollment by their disabled population. We believe, instead, that given the limited state and health plan experience with serving disabled individuals in prepaid care and the medical complexity of their health care needs, careful attention is required in designing, implementing, and monitoring programs for this population.
Why GAO Did This Study

Pursuant to a congressional request, GAO examined state efforts to include disabled Medicaid beneficiaries in prepaid managed care programs, focusing on the: (1) extent to which states are implementing Medicaid prepaid managed care programs for disabled beneficiaries; and (2) steps that have been taken to safeguard the interests of the stakeholder groups.

What GAO Found

GAO found that: (1) few states have significant experience with prepaid care programs for disabled Medicare beneficiaries; (2) 13 states have submitted proposals to enroll their disabled beneficiaries in prepaid care, and 12 of these states intend to make this enrollment mandatory; (3) half of the states with prepaid enrollment programs rely on disabled individuals to inform them of their dissatisfaction with their plans; (4) states that mandate the enrollment of their disabled beneficiaries in prepaid managed care plans develop more appropriate quality assurance mechanisms; (5) these states build safeguards into health care programs by incorporating adequate planning and consensus-building, and tailoring programs to meet the specific needs of disabled Medicare beneficiaries; (6) it is difficult for states to maintain a financially sound managed care system for disabled individuals; (7) some disabled groups have substantially higher medical costs than other groups; (8) individuals with high-cost disabilities find it more difficult to enroll in managed health care programs and experience limited health care services; (9) a few states are adopting an approach to limit the amount of profit a plan can earn or lose; (10) this approach lessens the incentive to limit service to high-cost beneficiaries; and (11) careful attention should be given when including the disabled population in prepaid health care plans, given their complex health care needs and states' limited experience with serving disabled individuals in prepaid settings.