Mapping Medicaid Managed Care Models & Delivery System and Payment Reform

General notes

State Medicaid programs are using managed care and an array of other service delivery and payment system reforms, financial incentives, and managed care contracting requirements to help achieve better outcomes and lower costs. Common delivery and payment reform models used by state Medicaid programs include patient-centered medical homes (PCMHs), ACA Health Homes, accountable care organizations (ACOs), and episodes of care. However, there is variation in which models are most widely used, how states combine and implement these models, and how long states have been engaged in efforts to transform payment and delivery systems. Some models may be implemented in Medicaid fee-for-service (FFS) delivery systems while other payment and delivery system reform models are implemented through managed care.

While the shift to using managed care has increased budget predictability for states, the evidence about the impact of managed care on access to care and costs is both limited and mixed. Additionally, the literature about delivery and payment reform models is not conclusive regarding the impact of these initiatives and more research is needed, states have seen successes and many models have evolved over time in response to state experience and evaluation finding.

Medicaid Managed Care

Medicaid Managed Care Organizations (MCOs) cover a comprehensive set of benefits (acute care services and sometimes long-term services and supports). MCOs are at financial risk for the services covered under their contracts and receive a per member per month “capitation” payment for these services.

Primary Care Case Management (PCCM) programs retain fee-for-service (FFS) reimbursements to providers but enroll beneficiaries with a primary care provider who is paid a small monthly fee to provide case management services in addition to primary care.

Patient-Centered Medical Home (PCMH)

Under a PCMH model, a physician-led, multi-disciplinary care team holistically manages the patient’s ongoing care, including recommended preventive services, care for chronic conditions, and access to social services and supports. Generally, providers or provider organizations that operate as a PCMH seek recognition from organizations like the National Committee for Quality Assurance (NCQA). PCMHs are often paid (by state Medicaid agencies directly or through MCO contracts) a per member per month (PMPM) fee in addition to regular FFS payments for their Medicaid patients.

ACA Health Homes

The ACA Health Homes option, created under Section 2703 of the ACA, builds on the PCMH concept. By design, Health Homes must target beneficiaries who have at least two chronic conditions (or one and risk of a second, or a serious and persistent mental health condition), and provide a person-centered system of care that facilitates access to and coordination of the full array of primary and acute physical health services, behavioral health care, and social and long-term services and supports. This includes services such as comprehensive care management, referrals to community and social support services, and the use of health information technology (HIT) to link services, among others. States receive a 90% federal match rate for qualified Health Home service expenditures for the first eight quarters under each Health Home State Plan Amendment; states can (and have) created more than one Health Home program to target different populations. For substance use disorder (SUD) Health Homes approved on or after October 1, 2018, the SUPPORT Act extends the enhanced federal match rate from eight to ten quarters.

Accountable Care Organization (ACO)

While there is no uniform, commonly accepted federal definition of an ACO, an ACO generally refers to a group of health care providers or, in some cases, a regional entity that contracts with providers and/or health plans, that agrees to share responsibility for the health care delivery and outcomes for a defined population. An ACO that meets quality performance standards that have been set by the payer and achieves savings relative to a benchmark can share in the savings. States use different terminology in referring to their Medicaid ACO initiatives, such as Regional Accountable Entities in Colorado and Accountable Entities in Rhode Island.

Episode of Care

Unlike fee-for-service (FFS) reimbursements, where providers are paid separately for each service, or capitation, where a health plan receives a PMPM payment for each enrollee intended to cover the costs for all covered services, episode of care payments provide a set dollar amount for the care a patient receives in connection with a defined condition or health event (e.g., heart attack or knee replacement). Episode-based payments usually involve payment for multiple services and providers, creating a financial incentive for physicians, hospitals, and other providers to work together to improve patient care and manage costs.

All-Payer Claims Database (APCD)

All-payer claims databases are state databases that include medical claims, pharmacy claims, dental claims (typically, but not always), and eligibility and provider files collected from private and public payers in a state. Through the aggregation of data across all public and private payers, APCDs can provide states with a perspective on cost, service utilization and quality of health care services across the full spectrum of payers in a state, representing a tool that can support state efforts to control health care costs and promote value-based care.


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