Trends in Medicaid Managed Care Spending

25 Jan Trends in Medicaid Managed Care Spending

Government expenditures for Medicaid managed care embodied more than one-third of the total government Medicaid spending in 2014, according to a government report (GAO-16-77) released Jan. 19 that highlights exactly how states are increasingly relying on managed care as they expand Medicaid coverage within the Affordable Care Act.

The Government Accountability Office report said federal spending on Medicaid managed care increased from $27 billion in fiscal year 2004 to $107 billion in FY 2014. Managed care as a proportion of total federal Medicaid spending was actually higher in seven of eight selected states in fiscal year 2014 compared to fiscal year 2004, yet total and average per beneficiary payments by states to managed care organizations (MCOs) varied.

The importance of managed care in Medicaid– under which states contract with MCOs to provide a specific set of programs– has increased as states increase eligibility for Medicaid under the ACA and increasingly shift people with complex health needs into managed care, the report said. States have flexibility inside broad federal parameters to develop and execute their Medicaid programs, and as a result play a vital role in overseeing managed care.

Medicaid managed care plans serve some or all Medicaid enrollees in 39 states and DC, and more than half of all Medicaid beneficiaries receive all or some of their care from risk-based managed care organizations.