Modernizing Medicaid Managed Care

The expansion of the Medicaid program under the Affordable Care Act (ACA) is one of the most consequential and controversial changes in the history of US health policy. During the struggle over ACA implementation, attention has largely focused on partisan disagreements about whether states should expand Medicaid coverage. The states have also been the site of a quieter struggle to modernize Medicaid’s managed care programs, in which many new Medicaid beneficiaries will be required to enroll.

A central issue in state modernization efforts involves data collection. On June 1, 2015, the Centers for Medicare & Medicaid Services (CMS) proposed a long-overdue overhaul of Medicaid managed care that, among other provisions, will implement ACA requirements for states to collect a standard set of encounter data—detailed records of services delivered to beneficiaries—from Medicaid managed care organizations (MCOs). Encounter data are the only way to know whether the majority of Medicaid enrollees are receiving the care they need, that the care is of adequate quality, and that it is delivered at the lowest possible cost. These data are especially important because Medicaid covers 70 million people, including a large share of vulnerable populations (approximately 37% of children and 46% of pregnant women) in the United States and has an average annual cost of $475 billion to federal and state taxpayers.¹ Approximately 74% of Medicaid enrollees are enrolled in MCOs, with mandatory enrollment in many states; however, standardized encounter data are largely unavailable for the populations served by these programs.²

Although the proposed rule could be finalized as early as 2016, many challenges remain for its implementation. States have been slow to adapt their data collection systems to the growth of managed care. According to a July 2015 report by the Office of Inspector General, 11 of 21 states with comprehensive managed care programs did not report encounter data from all managed care entities, and 8 states did not report any encounter data to CMS by the required deadline.³ In states like Illinois, no managed care entities report encounter data files involving long-term care or prescription drugs, leaving major gaps in what is known about the quality of care in these programs.³

Gaps in federal regulations have allowed this situation to persist. CMS currently allows states to define the types of MCO encounter data they will provide and imposes no penalties on states or MCOs that do not submit these data (Table). This is in stark contrast to what has been required of Medicare Advantage plans since 2008—plans that enroll a smaller share of beneficiaries on a voluntary basis. Medicare Advantage plan sponsors must report encounter data for a variety of elements specified by CMS, including diagnoses, as well as the amounts charged and paid for services.

read more at JAMA