How the Pandemic Continues to Shape Medicaid Priorities: Results from an Annual Medicaid Budget Survey for State Fiscal Years 2022 and 2023
For more than two decades, states have increased their reliance on managed care delivery systems to improve access and outcomes, enhance care management and care coordination, and better control costs. State managed care contracts vary widely, for example, in the populations required to enroll, the services covered (or “carved in”), and the quality and performance incentives and penalties employed. Most states contract with risk-based managed care organizations (MCOs) that cover a comprehensive set of benefits (acute care services and sometimes long-term services and supports), but many also contract with limited benefit prepaid health plans (PHPs) that offer a narrow set of services such as dental care, non-emergency medical transportation, or behavioral health services. Managed care plans are at financial risk for the services covered under their contracts and receive a per member per month “capitation” payment for these services. A minority of states operate primary care case management (PCCM) programs which 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.
Enrollment in Medicaid MCOs has grown since the start of the pandemic, tracking with overall growth in Medicaid enrollment. After the PHE ends, state Medicaid agencies will need to complete a large number of eligibility and enrollment tasks and actions, including processing renewals, redeterminations, and post-enrollment verifications. Medicaid MCOs may be well positioned to assist states in conducting outreach and providing support to enrollees who will need to navigate eligibility renewals or redeterminations. CMS guidance for state Medicaid agencies on the resumption of normal operations also includes strategies for working with managed care plans to promote continuity of coverage when the PHE’s continuous coverage requirement ends.
In addition to managed care, state Medicaid programs also use an array of other service delivery and payment system reforms. There is interest among public and private payers alike in restructuring delivery systems to be more integrated and patient-centered and 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. Some models may be implemented in Medicaid fee-for-service delivery systems while other payment and delivery system reform models are implemented through managed care. Although the literature 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 findings.1,2,3,4,5
Uncertainty and disruptions caused by the COVID-19 pandemic, including lack of stability in utilization patterns, labor shortages, provider capacity, and the appropriateness of pre-pandemic performance measures, among other factors, have affected (and may continue to affect) how states can advance delivery system and payment reform initiatives as well as efforts to monitor and incentivize MCO and provider performance. Additionally, when the continuous enrollment requirement ends and states resume renewals and redeterminations, millions of people could lose coverage if they are no longer eligible or are unable to navigate administrative barriers despite remaining eligible. As a result, Medicaid MCOs may see the overall acuity of their membership increase, with implications for per member utilization and costs, and also the return of member churn (i.e., the temporary loss of coverage in which enrollees disenroll and then re-enroll within a short period of time) which can lead to care disruptions.
This section provides information about:
- Managed care models
- Populations covered by risk-based managed care
- Managed care changes
- Other state-contracted delivery systems or initiatives
Managed Care Models
Capitated managed care remains the predominant delivery system for Medicaid in most states. As of July 2022, all states except five – Alaska, Connecticut,6 Maine, Vermont,7 and Wyoming – had some form of managed care (MCOs and/or PCCM) in place. As of July 2022, 41 states8 were contracting with MCOs (unchanged from 2021), and only two of these states (Colorado and Nevada) did not offer MCOs statewide. Twelve states9 reported operating a PCCM program, one fewer than reported in 2021 (as Maine ended its PCCM program in FY 2022).10 Although not counted in this year’s report, following the passage of SB 1337 in May 2022, Oklahoma expects to implement capitated, comprehensive Medicaid managed care in FY 2024 (as of October 1, 2023),11,12 and release an RFP to procure MCO vendors in the fall of 2022.
Of the 46 states that operate some form of comprehensive managed care (MCOs and/or PCCM), 34 states operate MCOs only, five states operate PCCM programs only,13 and seven states operate both MCOs and a PCCM program (Figure 2 and Table 1). In total, 27 states14 were contracting with one or more PHPs to provide Medicaid benefits including behavioral health care, dental care, vision care, non-emergency medical transportation (NEMT), or long-term services and supports (LTSS).
Populations Covered by Risk-Based Managed Care
The vast majority of states that contract with MCOs (35 of 41) reported that 75% or more of their Medicaid beneficiaries were enrolled in MCOs as of July 1, 2022, a decrease of one state15 compared to the 2021 survey and includes the ten states with the largest total Medicaid enrollment (Figure 3 and Table 1). These ten states account for over half of all Medicaid beneficiaries across the country.16
Children and adults, particularly those enrolled through the ACA Medicaid expansion, are much more likely to be enrolled in an MCO than elderly Medicaid beneficiaries or persons with disabilities. Thirty-six of the 41 MCO states reported covering 75% or more of all children through MCOs.17 Of the 39 states that had implemented the ACA Medicaid expansion as of July 1, 2022, 32 were using MCOs to cover newly eligible adults. The large majority of these states (29 states) covered more than 75% of beneficiaries in this group through capitated managed care. Thirty-five of the 41 MCO states reported covering 75% or more of low-income adults in pre-ACA expansion groups (e.g., parents, pregnant women) through MCOs. In contrast, the elderly and people with disabilities were the group least likely to be covered through managed care contracts, with only 16 of the 41 MCO states reporting coverage of 75% or more such enrollees through MCOs (Figure 3).
Managed Care Changes
A number of states reported a variety of managed care changes made in FY 2022 or planned for FY 2023. Notable changes included the following:
- North Carolina implemented its first MCO program. On July 1, 2021, North Carolina launched new MCO “Standard Plans,” offering integrated physical and behavioral health services statewide, with mandatory enrollment for most population groups.18 Over 1.7 million Medicaid beneficiaries were enrolled in Standard Plans as of September 2022.19 North Carolina will launch “Tailored Plans” on December 1, 2022, offering integrated services to enrollees with significant behavioral health needs and intellectual/developmental disabilities (I/DD).20
- Five states (California, Missouri, Nevada, New Jersey, and New York) reported expanding mandatory MCO enrollment for targeted populations. Missouri implemented the ACA Medicaid expansion in October 2021 (with coverage retroactive to July 1, 2021) enrolling all expansion adults in Medicaid MCOs. The California Advancing and Innovating Medi-Cal (CalAIM) initiative includes mandatory enrollment of multiple populations into managed care in both FY 2022 and FY 2023.21 In FY 2023, dual eligible beneficiaries across the state will be required to enroll in managed care. Currently, mandatory enrollment of dual eligibles is limited to certain California counties.22,23 Effective January 1, 2022, Nevada is no longer allowing enrollees with a seriously mentally ill (SMI) determination to disenroll from managed care. New Jersey expanded managed care for acute care and LTSS to nursing home residents, who were previously grandfathered and allowed to remain in FFS after the state first transitioned to managed long-term services and supports (MLTSS). New York began mandatory MCO enrollment of children and youth in direct placement foster care in New York City and children and youth placed in foster care in the care of Voluntary Foster Care Agencies statewide in July 2021.24
- Two states (Missouri and Ohio) reported introducing specialized managed care programs for children with complex needs. Missouri awarded a specialty plan contract to consolidate state care and custody enrollees into one health plan. On July 1, 2022, Missouri launched a new specialty health plan, called Show Me Healthy Kids, to provide coverage to youth in Department of Social Services custody, former foster children, and for individuals receiving adoption assistance payments. The specialized managed care plan was awarded to Home State Health (Centene).25 On July 1, 2022, Ohio introduced a specialized managed care program for youth with complex behavioral health and multisystem needs. OhioRISE (Resilience through Integrated Systems and Excellence), a prepaid inpatient health plan (PIHP), creates access to new in-home and community-based services for children with complex behavioral health challenges.26 OhioRISE also includes a 1915(c) waiver component which aims to prevent institutionalization and keep families supported in the community.
- Three states (California, Nevada, and Tennessee) indicated that they were carving in certain long-term services and supports into their managed care programs. California will be carving in institutional long term care in to MCO contracts in all counties in 2023, making coverage for these services consistent across California.27 Tennessee plans to incorporate Intermediate Care Facility (ICF) Services as well as home and community based LTSS services for people with intellectual and developmental disabilities into its MCO contract in FY 2023. Finally, Nevada extended the number of days its plans must cover nursing facility services from 45 to 180 days in its MCO contracts effective January 2022.
- Three states (California, District of Columbia, and Ohio) reported carving out specific benefits from managed care contracts. California and Ohio – reported carving out pharmacy services in FY 2022 or FY 2023, respectively. The District of Columbia carved out emergency medical transportation from its MCO contracts in FY 2022.
- Four states (Maine, North Carolina, Oregon, and Washington) reported changes to their PCCM programs. Maine ended its PCCM program, moving to a new value-based approach to support primary care. On July 1, 2022, Maine launched a single, integrated initiative called Primary Care Plus (aligned with the Center for Medicare and Medicaid Innovation’s (CMMI’s) Primary Care First multi-payer initiative). Primary Care Plus aims to move away from a fee-for-service payment system toward population-based payments tied to cost- and quality-related outcomes.28 North Carolina launched a new PCCM option in July 2021 available only to Indian Health Service (IHS) eligible beneficiaries associated with the Eastern Band of Cherokee Indians in select counties in the western part of the state.29 Oregon reported plans to implement an Indian PCCM program in FY 2023. Washington is planning to implement a tribal PCCM entity program in FY 2023 and released a draft SPA for comment in May 2022.30 This program will expand options for Indian health care providers (IHCPs) interested in providing primary case management services. It is like the current PCCM program available to IHCPs but with a larger, more defined list of provider responsibilities.
- Several states also reported efforts to streamline managed care programs. In FY 2023, Virginia plans to implement Cardinal Care, merging the state’s two existing managed care programs: Medallion 4.0 (serving children, pregnant individuals, and adults) and Commonwealth Coordinated Care Plus (CCC Plus) (serving seniors, children and adults with disabilities, and individuals who require LTSS).31,32 The six MCOs currently serving members statewide in Medallion 4.0 and CCC Plus will continue to do so under Cardinal Care. Mississippi and Ohio report that in FY 2023 they are centralizing credentialing processes for providers in MCO networks at the state level to reduce the administrative burden on Medicaid providers. In addition, Ohio plans to implement a fiscal intermediary in FY 2023 requiring all provider claims and prior authorization requests to go through the fiscal intermediary rather than through individual MCOs.33
Other State-Contracted Delivery Systems or Initiatives
In addition to expanding the use of risk-based, comprehensive managed care, state Medicaid programs have expanded their use of other service delivery and payment system reforms in recent years. State Medicaid programs utilize a range of delivery and payment reform; however, there is wide state variation in Medicaid health care delivery and payment systems, as states design and combine service delivery models and payment approaches in different ways.
The vast majority of states (41 of 51) had at least one specified delivery system and payment reform initiative34 designed to address Medicaid cost and quality in place as of July 2022 and nearly half (24 of 51) had multiple initiatives in place (Figure 4).35 These initiatives are defined in Exhibit 1. Three states (New York, Rhode Island, and Vermont) had implemented initiatives in all five specified areas. For example, Vermont is participating in an All-Payer ACO Model with CMS; has in place a multi-payer advanced primary care initiative, including PCMH and community health teams through the state’s Blueprint for Health; has a “Hub and Spoke” Health Home model for people experiencing opioid dependence; has episodic payments for its residential substance use disorder (SUD) program; and has a mature all-payer claims data base (APCD). Total states with each initiative include:
- Patient-Centered Medical Home – 26 states36
- ACA Health Homes – 20 states
- All-Payer Claims Database (APCD) – 18 states
- Accountable Care Organization – 11 states
- Episode of Care – 9 states
Many of these delivery system and payment reform initiatives are longstanding and have been in place for many years. Although the survey did not ask for details regarding each initiative, several states identified changes to initiatives as well as plans to implement in the near future. For example, in FY 2022 California transitioned from its former ACA Health Home program to an “Enhanced Care Management” managed care benefit available statewide. This initiative is part of a framework for broad-based delivery system, program, and payment reform across the Medi-Cal program, called California Advancing and Innovating Medi-Cal (CalAIM).37 Also in FY 2022, Maine replaced its PCMH and PCCM programs with the new “Primary Care Plus” program, an integrated care model that provides monthly payments to eligible primary care providers that vary by practice characteristics and are risk adjusted and performance-based. Although Nevada does not currently have an APCD in place, one was approved for implementation in the 2021 legislative session with an anticipated go-live date of January 2023. Several other states including California, Indiana, Oklahoma, and West Virginia indicated an APCD is planned or currently under development.