Medicaid Managed Care Models May Improve Outcomes for Elderly, Disabled

November 30, 2021 - Transitioning elderly and disabled Medicaid beneficiaries from fee-for-service Medicaid to a managed care model may lead to improved health outcomes and more than $100 billion of savings for states and the federal government, according to a report from UnitedHealth Group.

Most Medicaid programs offer a managed care model, using these contracts to cover 80 million low-income individuals instead of a fee-for-service model. However, there is still a share of Medicaid beneficiaries who are still covered under a fee-for-service health plan. These beneficiaries tend to be 65 years old and older or they have a disability.

Comprehensive managed care plans work with providers to help coordinate services for beneficiaries, whereas fee-for-service models have little care management and lack coordination between Medicare and Medicaid services, the report stated.

These are just a couple of factors that could make all the difference for elderly and disabled Medicaid beneficiaries who usually have complex health needs and require adequate care coordination to address their health concerns.

In addition to physical disabilities or limitations, many of these beneficiaries have chronic and behavioral health conditions and cognitive limitations.

A handful of beneficiaries also require assistance from Medicaid-covered long-term services and supports (LTSS). This service helps beneficiaries with everyday activities including eating, dressing, housekeeping, bathing, and grocery shopping, making it more feasible for them to remain in their own homes.

Dual-eligible beneficiaries who are enrolled in both Medicaid and Medicare comprise a portion of the elderly and disabled beneficiaries still on fee-for-service plans as well.

Without proper care coordination and management, these beneficiaries could fall into care gaps that may lead to poor health outcomes and potential hospital admissions, the report noted.

Transitioning elderly and disabled beneficiaries to managed care plans may ensure that they get the care they need. Under a fee-for-service model, there is no organization in charge of a beneficiary’s care, while a comprehensive managed care plan designates the health plan as being responsible for the care.

Additionally, fee-for-service plans offer limited incentives that may improve health outcomes for beneficiaries. There are no financial incentives for Medicaid programs to prevent hospitalizations and few incentives or programs that promote keeping beneficiaries in their homes rather than nursing facilities.

In contrast, managed care models offer financial incentives and programs that aim to reduce avoidable hospitalizations and readmissions and assist beneficiaries with tasks so that they can remain living at home.

The transition from fee-for-service reimbursement to managed care may not only improve health outcomes but could also lead to billions of dollars of savings over the next 10 years, UnitedHealth Group stated in the report.

Between 2022 and 2031, Medicaid is projected to spend $2.9 trillion for fee-for-service health plans. The projected fee-for-service spending for Medicare over this period is $1.5 trillion. If Medicaid transitioned its 10 million elderly and disabled beneficiaries from fee-for-service to managed care, it could produce 2.6 percent in potential savings for Medicaid and 5 percent in potential savings for Medicare, according to the report.

These projected calculations would equal $75 billion in savings for each program, amounting to $150 billion in overall savings for states and the federal government.

Separate data from AHIP also indicated that Medicaid managed care organizations can lead to lower prescription drug costs.

Managed care organizations may help reduce care disparities and promote health equity as well by leveraging telehealth, social determinants of health screenings, and data analytics, according to AHIP.