States Respond to COVID-19 Challenges but Also Take Advantage of New Opportunities to Address Long-Standing Issues: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2021 and 2022
For more than two decades, states have increased their reliance on managed care delivery systems often with broad goals to improve access and outcomes, enhance care management and care coordination, and better control costs.1 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 provided. In general, 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, nonemergency medical transportation, or behavioral health 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.
MCOs are at financial risk for the services covered under their contracts and receive a per member per month “capitation” payment for these services.2 (The Provider Rates and Taxes section of this report includes information on state options to address MCO payment issues in response to the COVID-19 pandemic.) Enrollment in Medicaid MCOs has grown since the start of the pandemic, tracking with overall growth in Medicaid enrollment.3
This section provides information about:
- Managed care models;
- Populations covered by risk-based managed care; and
- Managed care changes
Managed Care models
Capitated managed care remains the predominant delivery system for Medicaid in most states. As of July 2021, all states except four – Alaska, Connecticut,4 Vermont,5 and Wyoming – had some form of managed care (MCOs and/or PCCMs) in place. As of July 2021, 41 states6 were contracting with MCOs, up from 40 states in 2019 (with the addition of North Carolina), and only two of these states (Colorado and Nevada) did not offer MCOs statewide. Twelve states reported operating a PCCM program, unchanged from 2019.7
Of the 47 states that operate some form of managed care, 35 states operate MCOs only,8 six states operate PCCM programs only,9 and six states operate both MCOs and a PCCM program (Figure 1 and Table 1). In total, 27 states10 were contracting with one or more PHPs to provide Medicaid benefits including behavioral health care, dental care, vision care, non-emergency medical transportation (NEMT), long-term services and supports (LTSS).
Populations Covered by Risk-Based Managed Care
The vast majority of states that contract with MCOs (36 of 41) reported that 75% or more of their Medicaid beneficiaries were enrolled in MCOs as of July 1, 2021. This is an increase of three states compared to the 2019 survey and includes the ten states with the largest total Medicaid enrollment (Figure 2 and Table 1). These ten states account for over half of all Medicaid beneficiaries across the country.11
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-seven of the 41 MCO states reported covering 75% or more of all children through MCOs. Of the 38 states12 that had implemented the ACA Medicaid expansion as of July 1, 2021, 31 were using MCOs to cover newly eligible adults. The large majority of these states (28 states) covered more than 75% of beneficiaries in this group through capitated managed care. Thirty-four 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 19 of the 41 MCO states reporting coverage of 75% or more such enrollees through MCOs (Figure 2).
Managed Care Changes
A number of states reported a variety of managed care changes made in state fiscal year (FY) 2021 or planned for FY 2022. Notable changes included the following:
- North Carolina reported implementing 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 (nearly 1.6 million enrollees).
- Four states (Arizona, Illinois, Kentucky, and New York) reported managed care changes for children in foster care. Arizona established a fully integrated managed care plan for children in state custody in April 2021; Illinois transitioned youth in care of the Illinois Department of Children and Family Services into the YouthCare Health Plan in September 2020; Kentucky awarded one MCO a contract to manage and oversee Medicaid services for children enrolled in foster care in FY 2021; and 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.
- Two states (District of Columbia and Tennessee) reported expanding mandatory MCO enrollment for other targeted populations. The District of Columbia expanded mandatory managed care enrollment in FY 2021 to include beneficiaries receiving Medicaid Supplemental Security Income (SSI) or SSI-related Medicaid because of a disability, and Tennessee intends to integrate intermediate care facility services for individuals with intellectual disabilities and home and community-based services (HCBS) for persons with intellectual disabilities into its statewide managed care program in FY 2022.
- Three states (Maine, North Carolina, and Oregon) reported changes to their PCCM programs. 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; Oregon reported plans to implement an Indian PCCM program in FY 2022; and Maine reported plans to end its PCCM program in FY 2022 and replace it with a value-based payment model designed to simplify, integrate, and improve the state’s current primary care programs.13,14
- Texas ended its non-emergency medical transportation (NEMT) PHP program and carved NEMT services into its MCO contracts effective June 1, 2021.
- Illinois expanded its Medicare-Medicaid Alignment Initiative statewide on July 1, 2021. This initiative allows eligible beneficiaries to receive their Medicare Parts A and B benefits, Medicare Part D benefits, and Medicaid benefits from a single Medicare-Medicaid MCO.