A fact sheet, Q&A and resource list prepared for a briefing held for journalists in New York City on December 18, 1997 in New York City as part of a joint program by The Alan Guttmacher Institute, The Kaiser Family Foundation and the National Press Foundation. This program focused on efforts to break through barriers to emergency contraception, as well as future opportunities for expanding access. New surveys conducted for the Kaiser Family Foundation of American women and men, and obstetrician/gynecologists, family practice physicians, as well as, nurse practitioners and physician assistants on emergency contraception are available separately as package #1352.

Survey of Americans on Emergency Contraception

The 1997 Kaiser Family Foundation Survey of Americans on Emergency Contraception examined public knowledge and attitudes regarding unplanned pregnancy and contraception, with a particular focus on emergency contraceptive pills. The survey, conducted by Princeton Survey Research Associates for Kaiser Family Foundation, consisted of telephone interviews with a nationally representative sample of 1000 women and 300 men aged 18 to 44 years old living in telephone households in the continental United States. The interviews were conducted from May 13, 1997 through June 8, 1997. The margin of error is plus or minus 3 percent for the national sample, plus or minus 3 percent for women, and plus or minus 6 percent for men.

The surveyors called back potential respondents 15 times before removing them from the sample, achieving a response rate of 59 percent. Averaging 15 minutes in length, all interviews were conducted by female interviewers. Respondents were told they would be participating in “a confidential national opinion survey about some important health issues.” Of those who agreed to be interviewed, 6 percent (89 people) terminated the interview before it was completed. The analyses reported here weight the data to be proportional to the actual U.S. population’s demographic characteristics with respect to gender, race, age, income and educational attainment.

The 1995 Kaiser Survey on Public Knowledge and Attitudes on Contraception and Unplanned Pregnancy, conducted by Louis Harris Associates for Kaiser Family Foundation, examined public knowledge and attitudes regarding the magnitude and scope of unplanned pregnancy and various contraceptive options, including emergency contraceptive pills. The national random sample consisted of 2,002 adults, 18 years of age and older, and was conducted between October 12 and November 13, 1994. The margin of error is plus or minus 3 percent for Americans 18-44, plus or minus 4 percent for women 18-44, and plus or minus 4 percent for men 18-44.All interviews were matched for gender of the interviewer and respondent. The surveyors called back potential respondents four times before discarding them from the sample. Among 4,000 women and men contacted by telephone, 1,000 women and 1,002 men completed the survey, for an overall response rate of 50 percent. One hundred and eighty one individuals out of the 4,000 (4%) refused the survey outright, and 1868 (46%) terminated the interview before it was completed. The analyses reported here weight the data to be proportional to the actual U.S. population’s demographic characteristics with respect to gender, race, age, educational attainment, and health insurance status.

Survey of Health Care Providers on Emergency Contraception

The 1997 Kaiser Family Foundation Survey of Health Care Providers on Emergency Contraception was designed by Kaiser Family Foundation and Fact Finders, Inc. and conducted by Fact Finders, Inc. The national telephone survey, which included 754 women’s health care providers, including 305 obstetrician-gynecologists, 236 family practice physicians, and 229 nurse practitioners and physician assistants, examined knowledge, attitudes and practices regarding reproductive health services, with a focus on emergency contraception. Using three separate random probability samples, Fact Finders, Inc. drew nationally representative samples of obstetrician-gynecologists, family practice physicians and nurse practitioners from the American Medical Association Physicians Masterfile. Obstetrician-gynecologists and family practice physicians were drawn directly from the Masterfile, while the sample for nurse practitioners/physician assistants was drawn from a separate sample of obstetrician-gynecologist and family practice offices. The statistical sampling error associated with the overall findings based on a random probability sampling of 300 ranges from plus or minus 3.4 to plus or minus 5.7 percent (+/- 3.4-5.6% for Ob/Gyns, +/- 3.7-6.2% for family practice physicians, and +/- 3.7-6.2% for nurse practitioners and physician assistants). Fact Finders, Inc., contacted providers by phone and facsimile to schedule phone interviews which took place between March 5, and June 12, 1997. Health care providers were contacted up to 15 times before being discarded from the sample, with refusal rates of 18 percent for the obstetrician-gynecologists, 22 percent for the family practice physicians, and 2 percent for the nurse practitioners/physician assistants.

The 1995 survey was a national telephone survey of 307 obstetrician-gynecologists and 154 family practice physicians, examining knowledge and attitudes toward unplanned pregnancy and contraception, including emergency contraceptive pills. Fact Finders, Inc. drew separate nationally representative samples of obstetrician-gynecologists and family practice physicians from the American Medical Association Physicians’ Masterfile and contacted them by phone and facsimile to schedule phone interviews which took place between February 1 and March 21, 1995. Physicians were contacted up to 15 times before being discarded from the sample, with a refusal rate of 23 percent. The statistical sampling error associated with the overall findings based on a random probability sampling of 307 ranges from plus or minus 3.4 to plus or minus 5.7 percent for obstetrician-gynecologists and plus or minus 4.8 to plus or minus 8.0 percent for family practice physicians. The survey respondents mostly practiced in urban and suburban locations, in solo or single-specialty group practices, were men and were between the ages of 40 and 64. Those refusing to respond to the survey were similar to the respondents with respect to practice characteristics, age and gender patterns, and geographic diversity.

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Survey of Americans on Emergency ContraceptionSurvey Fact Sheet Q&A Resource List

1997 Kaiser Family Foundation Survey of Americans on Emergency Contraception

Conducted for the Henry J. Kaiser Family FoundationBy Princeton Survey Research Associates

• Topline (pdf)

Methodology

Survey of Americans on Emergency Contraception

The 1997 Kaiser Family Foundation Survey of Americans on Emergency Contraception examined public knowledge and attitudes regarding unplanned pregnancy and contraception, with a particular focus on emergency contraceptive pills. The survey, conducted by Princeton Survey Research Associates for Kaiser Family Foundation, consisted of telephone interviews with a nationally representative sample of 1000 women and 300 men aged 18 to 44 years old living in telephone households in the continental United States. The interviews were conducted from May 13, 1997 through June 8, 1997. The margin of error is plus or minus 3 percent for the national sample, plus or minus 3 percent for women, and plus or minus 6 percent for men.

The surveyors called back potential respondents 15 times before removing them from the sample, achieving a response rate of 59 percent. Averaging 15 minutes in length, all interviews were conducted by female interviewers. Respondents were told they would be participating in “a confidential national opinion survey about some important health issues.” Of those who agreed to be interviewed, 6 percent (89 people) terminated the interview before it was completed. The analyses reported here weight the data to be proportional to the actual U.S. population’s demographic characteristics with respect to gender, race, age, income and educational attainment.

The 1995 Kaiser Survey on Public Knowledge and Attitudes on Contraception and Unplanned Pregnancy, conducted by Louis Harris Associates for Kaiser Family Foundation, examined public knowledge and attitudes regarding the magnitude and scope of unplanned pregnancy and various contraceptive options, including emergency contraceptive pills. The national random sample consisted of 2,002 adults, 18 years of age and older, and was conducted between October 12 and November 13, 1994. The margin of error is plus or minus 3 percent for Americans 18-44, plus or minus 4 percent for women 18-44, and plus or minus 4 percent for men 18-44.

All interviews were matched for gender of the interviewer and respondent. The surveyors called back potential respondents four times before discarding them from the sample. Among 4,000 women and men contacted by telephone, 1,000 women and 1,002 men completed the survey, for an overall response rate of 50 percent. One hundred and eighty one individuals out of the 4,000 (4%) refused the survey outright, and 1868 (46%) terminated the interview before it was completed. The analyses reported here weight the data to be proportional to the actual U.S. population’s demographic characteristics with respect to gender, race, age, educational attainment, and health insurance status.

Survey of Health Care Providers on Emergency Contraception

The 1997 Kaiser Family Foundation Survey of Health Care Providers on Emergency Contraception was designed by Kaiser Family Foundation and Fact Finders, Inc. and conducted by Fact Finders, Inc. The national telephone survey, which included 754 women’s health care providers, including 305 obstetrician-gynecologists, 236 family practice physicians, and 229 nurse practitioners and physician assistants, examined knowledge, attitudes and practices regarding reproductive health services, with a focus on emergency contraception. Using three separate random probability samples, Fact Finders, Inc. drew nationally representative samples of obstetrician-gynecologists, family practice physicians and nurse practitioners from the American Medical Association Physicians Masterfile. Obstetrician-gynecologists and family practice physicians were drawn directly from the Masterfile, while the sample for nurse practitioners/physician assistants was drawn from a separate sample of obstetrician-gynecologist and family practice offices. The statistical sampling error associated with the overall findings based on a random probability sampling of 300 ranges from plus or minus 3.4 to plus or minus 5.7 percent (+/- 3.4-5.6% for Ob/Gyns, +/- 3.7-6.2% for family practice physicians, and +/- 3.7-6.2% for nurse practitioners and physician assistants). Fact Finders, Inc., contacted providers by phone and facsimile to schedule phone interviews which took place between March 5, and June 12, 1997. Health care providers were contacted up to 15 times before being discarded from the sample, with refusal rates of 18 percent for the obstetrician-gynecologists, 22 percent for the family practice physicians, and 2 percent for the nurse practitioners/physician assistants.

The 1995 survey was a national telephone survey of 307 obstetrician-gynecologists and 154 family practice physicians, examining knowledge and attitudes toward unplanned pregnancy and contraception, including emergency contraceptive pills. Fact Finders, Inc. drew separate nationally representative samples of obstetrician-gynecologists and family practice physicians from the American Medical Association Physicians’ Masterfile and contacted them by phone and facsimile to schedule phone interviews which took place between February 1 and March 21, 1995. Physicians were contacted up to 15 times before being discarded from the sample, with a refusal rate of 23 percent. The statistical sampling error associated with the overall findings based on a random probability sampling of 307 ranges from plus or minus 3.4 to plus or minus 5.7 percent for obstetrician-gynecologists and plus or minus 4.8 to plus or minus 8.0 percent for family practice physicians. The survey respondents mostly practiced in urban and suburban locations, in solo or single-specialty group practices, were men and were between the ages of 40 and 64. Those refusing to respond to the survey were similar to the respondents with respect to practice characteristics, age and gender patterns, and geographic diversity.

Now I have just a few background questions so we’ll know something about the people taking part in the survey…

51. I’m going to read you a list of things some people do about government or politics. Many people haven’t done any of these things. As I read each one, please tell me if this is something you have done in the past 12 months. (First,) in the past 12 months have you…(read and rotate)

Yes a. Contacted a member of Congress or a U.S. Senator 17 b. Attended a public meeting on town or school affairs 35 c. Worked in the campaign of a political candidate or party 6 d. Wrote a letter to a newspaper that was published 6 e. Been interviewed or quoted by the media about an important issue 7 f. Served as an officer of some club or organization 22 g. Served on a local committee, such as school board or community council 12 h. Made a public speech 12 i. Helped organize a group or event in support of a particular cause 19

D1. What is your religious preference? Are you Protestant, Roman Catholic, Jewish, or some other religion?

D2. Do you consider yourself a Christian?

D3. Would you describe yourself as a born-again or evangelical Christian, or not?

63 Total Protestant/Christian 33 Evangelicals 27 Non-evangelicals 24 Roman Catholic 2 Jewish 5 Other religion 5 No religion/Atheist/Agnostic (vol.) 1 Don’t know/Refused 100

D4. In politics today, do you consider yourself a Republican, Democrat or Independent?

27 Republican 33 Democrat 30 Independent 1 Other Party (vol.) 5 No party (vol.) 2 Don’t know 2 Refused 100

D5. Would you say your views in most political matters are very liberal, somewhat liberal, moderate, somewhat conservative, or very conservative?

6 Very liberal 21 Somewhat liberal 29 Moderate 26 Somewhat conservative 12 Very conservative 4 Don’t know 2 Refused 100

D6. What is the last grade or class that you completed in school? (Do not read)

3 None, or grade 1 to 8 12 High school incomplete (grade 9-11) 34 High school graduate 4 Business, technical or vocational school after high school 24 Some college, but no four-year degree 15 College graduate, four-year degree 8 Post-graduate or professional schooling after college * Don’t know/Refused 100

D7. How old are you?

24 18-29 43 30-49 18 50-64 15 65 or older 100

D8a. Are you of Hispanic or Latino background, such as Mexican, Puerto Rican, Cuban, or some other Spanish background?

D8b. Is your background mainly Mexican, Puerto Rican, Cuban, or some other Hispanic or Latino nationality?

8 Total Hispanic/Latino background 4 Mexican 1 Puerto Rican * Cuban 3 Other/Mixed (vol.) 91 Not Hispanic/Latino 1 Don’t know/Refused 100

D9. What is your race? Are you white, black, Asian, or some other race?

83 White 11 Black or African-American 1 Asian 3 Other/mixed race (vol.) * Don’t know 2 Refused 100

D10. Last year, that is in 1996, what was your total family income from all sources, before taxes? Just stop me when I get to the right category.

9 Less than $10,000 12 $10,000 to under $20,000 10 $20,000 to under $25,000 10 $25,000 to under $30,000 15 $30,000 to under $40,000 9 $40,000 to under $50,000 14 $50,000 to under $75,000 11 $75,000 or more 4 Don’t know 6 Refused 100

I have just a few more questions. Let me remind you that this a completely confidential interview and that there are no right answers…

D11. In general, how comfortable would you be, personally, working with someone who has HIV — very comfortable, somewhat comfortable, somewhat uncomfortable, or very uncomfortable?

32 Very comfortable 33 Somewhat comfortable 21 Somewhat uncomfortable 12 Very uncomfortable 2 Don’t know/Refused 100

D12. In general, how comfortable are you, personally, being around homosexuals — very comfortable, somewhat comfortable, somewhat uncomfortable, or very uncomfortable?

Current 12/95 31 Very comfortable 32 30 Somewhat comfortable 29 15 Somewhat uncomfortable 15 20 Very uncomfortable 17 2 Never around homosexuals (vol.) 5 2 Don’t know/Refused 2 100 100

D13. Have you, yourself, ever been tested for HIV, that is, the virus that causes AIDS? (If yes, ask: Was that in the last 12 months or not?

Current 12/95 16 Yes, tested within past 12 months 16 22 Yes, tested but prior to this year 21 60 No, never tested 61 2 Don’t know 2 100 100

D14. The last time you were tested, did you discuss your test results with a doctor, other medical professional, or counselor?

Based on those who have been tested for HIV.

50 Yes 50 No * Don’t know/Refused 100 (n=484)

D15. What is the main reason you haven’t been tested for HIV? Is it that… (read in order)

Based on those who have never been tested for HIV.

2 You don’t like needles or giving blood, 21 You’re not sexually active, 61 You’re married or in a monogamous relationship, 1 You’re afraid you’ll test positive for HIV, or 6 Some other reason? 6 No need/No reason to suspect a problem (vol.) 3 Don’t know/Refused 100 (n=701)

D16. As you may know, HIV tests are now being developed that would not require using a needle or taking blood. For example, one new test for HIV would place a sponge inside your mouth for just a few minutes. How likely would you be to use an HIV test that does not require using a needle or taking blood? (read)

35 Very likely 20 Somewhat likely 8 Somewhat unlikely, or 32 Very unlikely? 3 Don’t know 2 Refused 100

D17. Gender

48 Male 52 Female 100

That completes the interview. Thank you very much for your time and cooperation. Have a nice day/evening.

Region

20 Northeast 24 Midwest 35 South 21 West 100

Community Type

28 Urban 49 Suburban 23 Rural 100

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1997 National Survey of Americans on AIDS/HIV:Press Release Survey Part One Part Two Part Three Part Four Part Five Chart Pack

1997 Kaiser Family Foundation Survey of Americans on Emergency Contraception

Conducted for the Henry J. Kaiser Family Foundation By Princeton Survey Research Associates

Topline For Men

May 13-May 26, 1997

Introduction:

Hello, my name is _____, and I’m calling from Princeton Survey Research of Princeton, New Jersey. We are conducting a confidential national opinion survey about some important health issues.

N = 300 men, age 18-44 Margin of error: plus or minus 5 percent * Men were asked a subset of the women’s questions.

1. My first question is, In general, how would you describe your own health? Is it excellent, good, only fair, or poor?

35Excellent55Good7Only fair3Poor*Don’t know0Refused100 2. These next few questions are about your own sexual behavior. Please keep in mind that all of your answers are confidential. First, have you had sexual intercourse within the last six months?

82Yes17No0Gay (Vol.)*Don’t know1Refused100 3. Have you ever had sexual intercourse?

Based on those who have not had sexual intercourse within the last six months (n=55)

76Yes24No0Gay (Vol.)0Don’t know0Refused100 4. Do you have a partner who is currently pregnant or trying to get pregnant?

Based on those who have had sexual intercourse within the last six months (n=245)

15Yes85No*Gay (Vol.)0Don’t know*Refused100 5. Have you or your partner, if you have one, been sterilized, or have any condition that makes it impossible for your partner to ever get pregnant? (Birth Control Devices Not Included)

Based on those who have had sexual intercourse within the last six months and whose partners are not pregnant or trying to get pregnant (n=210)

25Yes73No0Gay (Vol.)1Don’t know1Refused100 6. When you have sexual intercourse, how often do you and your partner use birth control or do anything else to try to prevent pregnancy? Would you say … (Read)

Based on those who have had sexual intercourse within the last six months, whose partners are not pregnant or trying to get pregnant, and who are able to conceive (n=166)

12Never8Only sometimes,19Most of the time, or59All of the time use birth control?0Don’t know (Do Not Read)2Refused (Do Not Read)100 7. I am going to read a list of birth control methods. We are interested in which of these methods you use most often. Please tell me which of these you or your most recent partner use by saying “yes” when I mention it. You can say “yes” to more than one type of birth control if you currently use more than one method at the same time. Here’s the list. (Read 1 – 10 In Order. Record Up To Three Mentions. If Respondent Has More Than One Current Partner, Ask About His Main Partner.)

Based on those who have had sexual intercourse within the last six months, whose partners are not pregnant or trying to get pregnant, who are able to conceive, and who use birth control at least sometimes (n=143)

71Condoms60Birth control pills4A diaphragm or cervical cap1An IUD, or intrauterine device7Depo-Provera, or contraceptive shots1Norplant, or contraceptive implants9Spermicides, or foams and suppositories with spermicides10The rhythm method, or having sex only during the safe time of the month18Withdrawal or “pulling out”2Refused (Do Not Read)1Some other method? (Specify)20Don’t know0Refused 8. If a woman has just had sex and thinks she might become pregnant, is there anything she can do in the next few days to prevent the pregnancy? (Accept Multiple “Yes” Responses)

21Yes, there is something (Unspecified)*Yes, there is something — RU-486/French abortion pill (Vol.)2Yes, there is something — birth control pills (Vol.)3Yes, there is something — morning-after pills (Vol.)1Yes, there is something — emergency contraceptive pills (Vol.)1Yes, there is something — other (Specify)34No, there is not anything1Too late to prevent pregnancy (Vol.)38Not sure/Don’t know*Refused9. What could she do in the next few days to prevent the pregnancy? (Do Not Read. Record Only One Response.)

Based on respondents who said yes to Q8 but did not specify a method (n=60)

19Take morning-after pills2Take emergency contraceptive pills15Take birth control pills11Take RU-486/French abortion pill0Insert an IUD6Get an abortion15Other32Not sure/Don’t know (Do Not Probe)0Refused100 10. Have you ever heard of emergency contraceptive pills? (Accept Multiple “Yes” Responses)

Based on those who did not mention emergency contraceptive pills for Q8 or Q9 (n=298)

19Yes, have heard of it (Unspecified)2Yes, is RU-486 (Vol.)2Yes, is birth control pills (Vol.)1Yes, it is the same thing as morning-after pills (Vol.)*Yes, is other (Specify)76No, have not heard of it*Not sure/Don’t know0Refused

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1997 Kaiser Family Foundation Survey of Americans on Emergency Contraception Survey Part Four Part One Part Two Part Three Part Five Press Release Report

This Fact Sheet summarizes eligibility, benefits and cost-sharing, and financing rules of the State Children’s Health Insurance Program as well as other child-related Medicaid provisions from the Balanced Budget Act of 1997.

• Fact Sheet
• Fact Sheet

Overview of Medicaid Managed Care Provisions in the Balanced Budget Act of 1997

Prepared by Andy SchneiderThe Center on Budget and Policy Priorities

for The Kaiser Commission on the Future of Medicaid

December 1997

This paper was prepared for The Kaiser Commission on the Future of Medicaid with support from The Henry J. Kaiser Family Foundation. The views represented in this report are those of the author and do not necessarily represent the views of The Kaiser Commission on the Future of Medicaid.

Contents

Overview

1. Summary
2. Medicaid Managed Care: An Overview
3. Statutory Pathways to Mandatory Medicaid Managed Care
4. Standards for State Contracting with Medicaid MCOs
5. Payment Rates for Medicaid MCOs
6. Organizational Qualifications for Medicaid MCOs
7. Access and Quality Standards for Medicaid MCOs
8. Beneficiary Protections
9. Accountability of Medicaid MCOs for Compliance with State and Federal Standards
10. Primary Care Case Management Option and Rural Beneficiaries
11. Implications for Safety Net Providers

Conclusion

Appendices:

A. Standards for State Contracts with Medicaid MCOs

B. Index to Statutory Provisions Relating to Medicaid Managed Care

Overview of Medicaid Managed Care Provisions in the Balanced Budget Act of 1997

The Balanced Budget Act of 1997 (P.L. 105-33) dramatically expands the authority of state Medicaid agencies to provide covered health care services through managed care organizations (MCOs). The Act enables states, without obtaining waivers from the Secretary of Health and Human Services, to require most Medicaid beneficiaries to enroll in MCOs that do business only with the Medicaid program. It also allows states, again without obtaining waivers, to limit the number of participating Medicaid MCOs. These provisions are likely to have a major effect on access to covered hospital and physician services by low-income women and children and other Medicaid beneficiary populations.¹ The implications of these provisions for beneficiaries, for states, for “safety net” hospitals and clinics, and for MCOs are the focus of this analysis. The budgetary and policy context in which these changes were enacted is discussed elsewhere.²

1. Summary

The Balanced Budget Act did not launch the shift of Medicaid from fee-for-service to managed care. That transition has been under way for several years, prompted largely by state efforts to restrain Medicaid expenditure growth and nurtured by federal waivers.³ A recent Urban Institute analysis finds that between 1991 and 1996, enrollment of Medicaid beneficiaries in managed care nationally grew from 9.5 percent to 40.1 percent of total Medicaid enrollment.⁴ Even before passage of the Balanced Budget Act, CBO projected that, between fiscal years 1996 and 2002, federal matching payments to Medicaid MCOs would increase, on average, more than 15 percent annually, from $7 billion, or 11 percent of federal spending on Medicaid benefits, to $17 billion, or 14 percent.⁵

What the Balanced Budget Act has done is to alter fundamentally the managed care policy options available to states under the federal Medicaid statute. In the past, states that wanted to require Medicaid beneficiaries to enroll in MCOs that do business mainly or exclusively with Medicaid had to obtain a waiver from the Secretary of Health and Human Services (HHS). Under the Balanced Budget Act, they will now be able to do so without seeking a waiver. State managed care initiatives currently rely heavily on the use of mostly Medicaid MCOs. In 1996, for instance, 7.7 million Medicaid beneficiaries were enrolled in 355 fully capitated managed care plans in 35 states, according to a recent analysis by Mathematica Policy Research. Of these, 3.6 million, or 48 percent, were in 156 managed care plans in which Medicaid beneficiaries accounted for more than 75 percent of total enrollment.⁶ The Balanced Budget Act gives states the flexibility to rely more heavily on MCOs that primarily or exclusively enroll Medicaid beneficiaries. These could include MCOs that are for-profit, MCOs that are owned by non-profit or public “safety net” providers, as well as MCOs specializing in particular services like mental health.

Under the Act, states that want to limit Medicaid beneficiaries living in urban areas to a choice between two MCOs can do so without seeking a waiver from the Secretary of HHS. States can also restrict beneficiaries living in rural areas to a single MCO. In either case, all the MCOs that a state allows to participate may do business primarily or exclusively with Medicaid. For this purpose, the managed care plans with which the state contracts can be fully capitated – that is, at financial risk for providing hospital, physician, and other covered services to Medicaid beneficiaries – or a primary care case manager (PCCM), which does not assume financial risk for the provision of covered hospital services.

This new authority translates into additional bargaining power for state Medicaid programs vis-a-vis managed care plans. States can use this leverage to obtain more favorable rates from participating plans and to limit participants to those that demonstrate the highest levels of quality in services provided. However, this bargaining power can also raise the financial rewards to winning MCOs substantially, by limiting competition, thus giving each MCO a far larger market share and a heftier revenue stream. The Medicaid managed care business can be extremely lucrative.⁷ The potential for favorable results in the Medicaid market has attracted venture capital firms, where, as a rule of thumb, the expected rate of return is roughly one and one-half to three times the normal market rate of return.⁸ This venture capital will help finance new entrants into the Medicaid managed care market as well as the expansion of firms already participating.

One attraction of Medicaid managed care as an investment opportunity is that the conversion of Medicaid beneficiaries into mandatory MCO enrollees creates large monthly flows of capitation payments. An MCO with a mandatory enrollment of, say, 30,000 Medicaid-eligible women and children at an average capitation rate of $90 per month will realize a monthly cash flow of $2.7 million and annual revenues of $32.4 million without accounting for interest. The prospect of such large revenue streams — and the potential returns to be realized in the Medicaid managed care business — are likely to prove highly attractive in many states. As new entrants seek to acquire market share and incumbent plans attempt to protect or expand their existing positions by bringing financial and other resources to bear, the state Medicaid contracting process requires careful monitoring to assure its integrity.

The Medicaid managed care business is not always financially rewarding. There is considerable variation from state to state in the Medicaid payment and regulatory policies toward MCOs. This in turn produces variations in the attraction of Medicaid as a business proposition for managed care plans. A recent review of Medicaid managed care in the trade press indicates that some investor-owned MCOs have either halted new Medicaid enrollment or withdrawn from the Medicaid market altogether in a number of states, including Arizona, Illinois, New York, Ohio, Oregon, and Tennessee. The article attributes this trend primarily to low Medicaid payment rates.⁹

The Balanced Budget Act alters the statutory options available to states with respect to Medicaid managed care, but it does not change the sometimes conflicting interests of states in pursuing this policy path. On the one hand, states have an interest in ensuring that their low-income families have access to basic health care services. Medicaid managed care, when properly implemented, can improve both the accessibility and quality of basic health care services for Medicaid beneficiaries, particularly in those communities in which the quality and continuity of fee-for-service care are substandard.

On the other hand, states want to limit their Medicaid expenditures. The shift from fee-for-service to managed care enables them to curb Medicaid spending on a per beneficiary basis without formally and publicly narrowing the benefits package that they offer under their Medicaid programs. States also have an interest in limiting per beneficiary payments to MCOs and allowing the MCOs to narrow the covered services enrollees actually get. How these sometimes conflicting interests are resolved will vary from state to state.

This analysis describes the new legal and policy framework within which the shift of state Medicaid programs from fee-for-service to managed care will take place over the next few years. The analysis does not duplicate section-by-section summaries of the Balanced Budget Act’s Medicaid managed care provisions.¹⁰ Instead, it focuses on those provisions that are likely to have the most influence in shaping the transition to managed care and its impact on Medicaid beneficiaries:

• standards relating to state procedures for contracting with MCOs,
• standards for MCO organizational qualifications,
• standards relating to Medicaid payment rates for MCOs,
• standards relating to accessibility and quality of care in MCOs,
• beneficiary protections,
• accountability of MCOs for compliance with these standards, and
• provisions affecting safety net providers.

The interpretation of many of these provisions here is necessarily preliminary, since as of December 19, 1997, the Health Care Financing Administration (HCFA) has issued administrative guidance to the states or to MCOs with respect to only some of these amendments.¹¹

Endnotes

1. CBO, Budgetary Implications of the Balanced Budget Act of 1997, August 12, 1997. CBO does not attribute any federal savings to these provisions. In CBO’s view, the only budget effect of the legislation’s Medicaid managed care provisions is to increase federal spending somewhat ($0.1 billion over five years and $0.3 billion over ten) due to the requirement that Medicaid MCOs pay for hospital emergency visits whenever a “prudent layperson” would seek emergency care. 2. Andy Schneider, Overview of Medicaid Provisions in the Balanced Budget Act of 1997, P.L. 105-33, Center on Budget and Policy Priorities, Revised, September 8, 1997. www.cbpp.org/908mcaid.cfm. 3. For a detailed state-by-state survey of the scope of Medicaid managed care, see Jane Horvath et al., Medicaid Managed Care: A Guide for States, 3rd Edition, National Academy for State Health Policy, January 1997 4. Stephen Zuckerman, Alison Evans, and John Holahan, Questions for States as They Turn to Medicaid Managed Care, Urban Institute, August, 1997. 5. CBO Memorandum, Behind the Numbers: An Explanation of CBO’s January 1997 Medicaid Baseline, April 1997, p. 9. 6. Suzanne Felt-Lisk and Sara Yang, “Changes in Health Plans Serving Medicaid, 1993-1996,” Health Affairs, September/October 1997, at 127. 7. A recent report on a Medicaid-only MCO operating in Philadelphia found that between 1989 and 1996, the organization had generated pretax profits of $119 million (a return of 7,600 percent on a $200,000 investment, according to a 1994 audit), and had paid its four founders a total of $26.8 million in bonuses. Craig McCoy and Karl Stark, “An HMO Finds Lots of Money in Poverty,” Philadelphia Inquirer, August 3, 1997. A recent review of a Medicaid MCO contract by the HHS Inspector General found that one contractor realized a profit of $22.9 million over a three-year period, exceeding the IG’s “benchmark for reasonableness” by $4 million. Office of Inspector General, Department of Health and Human Services, State of Wisconsin’s Medicaid Managed Care Program Financial Safeguards, February 1997, p. 3. 8. For example, venture capital firms have invested $38 million in Americaid Community Care, which targets the Medicaid market in large urban areas like Houston and Chicago. A managing partner of Acacia Venture Partners of San Francisco, which has invested $5.5 million in Americaid, believes that Medicaid is “an exciting market, one largely ignored by the large, commercial HMOs.” Debra Gordon, “Virginia Beach-based HMO Takes the Medicaid Gamble,” The Virginian-Pilot, July 26, 1997. 9. The article quotes a health stock analyst as follows: “States have gotten reckless in cutting rates because they couldn’t care less about the Medicaid population. Only the worst HMOs, those that desperately need Medicaid will stay in.” Harris Meyer, “Medicaid: States Serve Up a Real Turkey,” Hospitals and Health Networks, November 20, 1997, p. 22. 10. For a summary section-by-section overview, see Sara Rosenbaum and Julie Darnell, A Comparison of the Medicaid Provisions in the Balanced Budget Act of 1996 (P.L. 105-33) With Prior Law, Kaiser Commission on the Future of Medicaid, September 1997. For a detailed section-by-section analysis, see National Health Law Program, National Center for Youth Law, National Senior Citizens Law Center, and Center for Medicare Advocacy, The Balanced Budget Act of 1997 – Reshaping the Health Safety Net for America’s Poor, October 1997 at www.healthlaw.org. 11. This guidance currently takes the form of letters to state Medicaid Directors. Copies are available on the HCFA Website, www.hcfa.gov/medicaid/bbahmpg.cfm.

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Overview of Medicaid Managed Care Provisions in the Balanced Budget Act of 1997

Report Part One Part Two Part Three Part Four Part Five Part Six Part Seven Part Eight

The availability of employer-sponsored retiree health benefits from large companies has declined since 1991, according to a new study conducted for the Kaiser Family Foundation by Hewitt Associates LLC. The study also shows that the number of big businesses charging premiums, tightening eligibility requirements, encouraging use of managed care, and placing dollar caps on coverage increased. In addition, the report concluded that potential changes in the Medicare program, such as a higher eligibility age, could accelerate the decline in retiree benefits by shifting additional health care coststo employers and retirees and thus encouraging companies to scale back or eliminate retiree plans.

• News Release: HTML format
• News Release: New Study Shows Decline in Retiree Health Benefits
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National Perspectives on Medicaid Managed Care

• Report: National Perspectives on Medicaid Managed Care