States may provide Medicaid benefits either by directly reimbursing providers or by paying private health insurance plans or provider groups (called managed care organizations, or MCOs) to provide services to enrollees. This presentation examines the extent to which Medicaid benefits are delivered through MCOs and the reasons for recent growth in enrollment in and spending for managed care. CBO found that although the overwhelming majority of Medicaid beneficiaries are enrolled in MCOs, payments to MCOs account for less than half of all Medicaid spending. As for the increase in the use of managed care programs to provide Medicaid benefits, the agency found that it is largely attributable to MCOs’ expanding the types of beneficiaries, geographic areas, and range of services that they cover. Presentation by Alice Burns, an analyst in CBO’s Budget Analysis Division, and by Ben Layton and Lyle Nelson, both of CBO’s Health, Retirement, and Long-Term Analysis Division, at AcademyHealth’s Annual Research Meeting.

1. Congressional Budget Office
AcademyHealth’s Annual Research Meeting
Seattle, Washington
June 25, 2018
Alice Burns, Ben Layton, and Lyle Nelson
Budget Analysis Division and Health, Retirement, and
Long-Term Analysis Division
Exploring the Growth of Medicaid
Managed Care

2. 1
CBO
Medicaid is a federal-state program
that provides health benefits to
70 million low-income individuals.
In fiscal year 2015, it accounted for
$348 billion in federal spending and
$205 billion in state spending.

3. 2
CBO
States typically use two payment
systems to provide Medicaid benefits:
 Fee-for-service (FFS), and
 Managed care.

4. 3
CBO
Why would states adopt managed
care?
 To make spending for Medicaid
more predictable, or
 To improve the coordination of
care, which may reduce costs or
improve outcomes.

5. 4
CBO
Managed Care’s Enrollment Rate and Share of
Medicaid Spending
Percent

6. 5
CBO
Changes in the Share of Medicaid Spending
Attributable to Managed Care, 1999 to 2014

7. 6
CBO
CBO examined these questions:
 To what extent does managed care
deliver Medicaid services?
 How and why has managed care
grown in recent years?

8. 7
CBO
A major challenge to understanding
the growth of managed care is the
variation in states’ programs and the
lack of systematic data.
CBO constructed, and will soon
publish, a new dataset to make
comparing states’ Medicaid managed
care programs easier.

9. 8
CBO
What Types of Managed
Care Plans Are
Beneficiaries Enrolled in?

10. 9
CBO
CBO used Medicaid Analytic eXtract
data on beneficiaries’ spending and
enrollment from 1999 to 2012 (the
most recent year for which data were
available).
Only data for beneficiaries who were
eligible for full Medicaid benefits were
analyzed.

11. 10
CBO
Comprehensive MCOs:
 General comprehensive
 Long-term services and supports
 The Program of All-inclusive Care for the Elderly (PACE)
Noncomprehensive MCOs:
 Behavioral
 Dental
 Case management
 “Other”
Types of Managed Care Organizations (MCOs)

12. 11
CBO
Medicaid Beneficiaries, by Type of Enrollment, 2012
Millions of Beneficiaries

13. 12
CBO
Rates of Enrollment in Managed Care and
Fee-for-Service Medicaid, by Eligibility Group, 2012
Percent

14. 13
CBO
Why is Spending on
Managed Care Less Than
Spending on FFS?

15. 14
CBO
a. Comprises Medicaid spending and rebates that do not correspond to any particular beneficiary, such as supplemental payments to
providers and prescription drug rebates; those amounts are not included in the data on Medicaid beneficiaries.
Total Medicaid Spending, by Category, 2014
Billions of Dollars

16. 15
CBO
Average Monthly Spending on Managed Care and
Fee-for-Service Medicaid, by Enrollment, 2012
Dollars

17. 16
CBO
Managed Care’s Enrollment Rate and Share of
Medicaid Spending
Percent

18. 17
CBO
Managed Care’s Enrollment Rate and Share of
Medicaid Spending (Continued)
Percent

19. 18
CBO
FFS Spending for Comprehensive Managed Care
Enrollees Who Were Nonelderly and Nondisabled,
2012
Millions of Dollars
Figure shows spending for nonelderly, nondisabled adults and children who were enrolled in comprehensive managed care for their
entire period of eligibility.

20. 19
CBO
Figure shows spending for elderly and disabled beneficiaries and beneficiaries also enrolled in Medicare who were enrolled in
comprehensive managed care for their entire period of eligibility.
FFS Spending for Comprehensive Managed Care
Enrollees Who Were Elderly, Disabled, or Also
Enrolled in Medicare, 2012
Millions of Dollars

21. 20
CBO
How Has States’ Use of
Medicaid Managed Care
Changed Over Time?

22. 21
CBO
a. The Centers for Medicare & Medicaid Services did not collect data on PACE programs as part of its tracking of managed care
programs in 1999, but the agency has done so since at least 2005.
Number of States With Managed Care Programs,
by Type of Program

23. 22
CBO
Number of States With General Comprehensive
Managed Care Programs, by Coverage Area

24. 23
CBO
Number of States With Mandatory Enrollment in
General Comprehensive Managed Care Programs,
by Eligibility Group

25. 24
CBO
Number of States With General Comprehensive
Managed Care Programs, by Services Covered

26. 25
CBO
Key Takeaways

27. 26
CBO
Plan design matters.
Both enrollment in and spending on
Medicaid managed care grew rapidly
from 1999 to 2014, even though the
number of states with general
comprehensive managed care
programs declined over that period.
That discrepancy reflects the
increasing scope of states’ contracts
with MCOs.

28. 27
CBO
Data matters.
By making it possible to compare
states’ managed care programs and
changes in those programs over time,
CBO’s dataset provides a more
nuanced perspective on the growth of
managed care.
Such data will improve future research
and inform expectations about the
future of Medicaid managed care.