Managed Care Context

Many states have long looked to managed care programs as a way to deliver Medicaid health care services for children and families.  When a state contracts with a managed care organization (MCO), the state is responsible for a predictable and stable “per-member-per-month” capitated payment to the MCO.  The MCO then is responsible for providing Medicaid covered services such as primary and specialist care and prescription treatments, to its enrolled members.  In most states, long-term services and supports (LTSS) have not been included in the benefit packages Medicaid MCOs are required to provider.  Instead, they have been provided on a fee-for-service (FFS) basis, in which the state is directly responsible for the billable services provided by eligible providers.

Over the last few years, two very significant trends have emerged.  First, states have sought to widen the population of Medicaid beneficiaries served by MCOs to include seniors and persons with disabilities, who generally have much more significant health needs and costs.  Many states have sought and received permission from the federal Centers for Medicare and Medicaid Services (CMS) to make enrollment in MCOs mandatory for these Medicaid beneficiaries.  Second, states have increasingly considered expanding the role of MCOs to include a partial or full range of LTSS. Most, but not all, states pursuing a Medicaid managed LTSS program are doing so in the context of integrating care for dual eligibles (people who qualify for both Medicare and Medicaid).

These two trends together create a situation of both significant risk, and considerable opportunity, for Medicaid beneficiaries of all ages who have, or are at risk of acquiring, various or multiple mental and physical impairments and chronic conditions.


The risks arise, in part, because most MCOs have limited experience providing LTSS and working with the populations that have the greatest LTSS needs.  Among the biggest risks of shifting responsibility for beneficiaries and LTSS to MCOs:

  • Beneficiaries will experience disruptions in continuity of care (COC).  Individuals that rely on LTSS often have relationships with trusted providers that extend for decades.  The loss of access for even a few days to appropriately experienced medical providers, critical treatments and prescriptions, and personal assistance providers, can compromise functional capacity and the ability to live safely and as independently as possible in the community.
  • Home and community-based services (HCBS), and especially personal assistance services, will have to be medically justified.  In many states, HCBS consumers and advocates have fought over many decades to develop a web of consumer directed, Medicaid-funded, non-traditional health care services, but consumer direction and independence in the community are not commonly recognized as goals of primary or acute medical care.
  • In an effort to decrease costs in the short term, MCOs will deny needed services and/or decrease provider rates to levels that threaten access for beneficiaries.


The opportunities of providing LTSS in a managed care program arise from a recognition that the desire most individuals have to live and receive the supports they need at home or in other small community settings is also usually the most cost-effective strategy for providing care. Opportunities of a managed LTSS program include:

  • Potentially improving overall service and care coordination for beneficiaries who receive both LTSS services and medical services for chronic medical conditions, resulting in higher quality of life outcomes as well as cost efficiencies achieved through reduced hospitalizations and emergency room use.
  • Potentially shifting the focus and funding from more costly institutional care to less costly HCBS by placing responsibility for both institutional care and HCBS with one managed care entity.

For more background on managed care and the delivery of LTSS see, “Examining Medicaid Managed Long-Term Service and Support Programs: Key Issues to Consider,” Kaiser Commission on Medicaid and the Uninsured.

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