Medicaid MCO Enrollment Continued Rising Through September 2020

December 03, 2020 - States may need to re-evaluate their Medicaid managed care organization payment rates as trends of increased enrollment and low care utilization continue into fiscal year 2021, according to a Kaiser Family Foundation (KFF) data note.

“Rising unemployment (and loss of employer sponsored insurance) as well as the ‘maintenance of eligibility’ (MOE) requirements tied to a 6.2 percentage point increase in the federal match rate (FMAP) authorized by the Families First Coronavirus Response Act (FFCRA)—which prevents states from disenrolling Medicaid beneficiaries if they accept the additional federal funding—are likely contributing to enrollment increases/growth across states,” the researchers stated.

The researchers looked at data from 30 states to determine enrollment in Medicaid managed care organizations.

Medicaid and Children’s Health Insurance Program (CHIP) enrollment data showed a 6.1 percent increase between February 2020 through July 2020, according to CMS. However, the latest KFF data provides an updated context using enrollment data that 30 states have made public.

Prior to the pandemic, aggregate enrollment was declining. From March 2019 to March 2020, 32 out of the 40 states that contract with managed care organizations saw a 1.3 percent aggregate decline in enrollment. The median change was flat.

Since March, however, the narrative has flipped. The 27 states that reported data for March 2020 and May 2020—when the coronavirus hit the US—saw a leap in enrollment of 4.1 percent. Median growth for these states was 4.6 percent.

The escalation did not stop there. From March 2020 to September 2020, the 30 reporting states saw an aggregate enrollment growth rate of 11.3 percent and the median rose to 10.9 percent.

Enrollment varied across states. In Nevada, enrollment across the seven month time period grew to 25.2 percent. Missouri followed with a 23.9 percent increase and Wisconsin lagged behind these two with 18.9 percent enrollment growth.

At the other end of the spectrum, Tennessee saw barely over five percent increase in enrollment and California saw a 6.7 percent gain.

The Medicaid managed care market continues to be dominated by a select few payers, stoking concerns around payer industry consolidation.

In 2018, nearly half of all Medicaid managed care enrollees received healthcare through one of these organizations (47 percent).

In 2020, five payers that have Medicaid managed care organizations in two or more states saw 60 percent of the Medicaid managed care enrollment increase. Those payers are Centene, Molina, Anthem, UnitedHealth Group, and CVS Health’s Aetna.

Slightly over 23 percent of the enrollment increase went to one multi-state parent firm: Centene.

“Increased enrollment in MCOs is directly tied to spending without immediate regard to utilization of care – which has generally decreased during the pandemic for non-urgent care – since states make upfront capitation payments to MCOs to provide access to a range of services,” the researchers explained.

“Thus, analyzing growth in Medicaid MCO enrollment specifically is valuable beyond signaling broader trends in Medicaid enrollment.”

This fluctuation represents an impact on millions of lives. Managed care organizations provide care for up to two-thirds of Medicaid beneficiaries.

Once coronavirus hit, states expected the upswing in Medicaid managed care enrollment.

Maintenance of eligibility requirements ensures that Medicaid enrollees will not lose their coverage during the public health emergency and will experience stable premiums, among other benefits.

The requirements’ durations often are tied to the public health emergency period but there are exceptions. Uncertainty around when regulations such as maintenance of eligibility requirements would end has been a source of tension for states.

Because of these requirements, beneficiaries who might normally lose Medicaid coverage are retained.

The economic effects of the coronavirus pandemic have also played a role in enrollment increases.

The blow to employer-sponsored health plans will likely be lower than initially expected. Nevertheless, over a quarter of those who lose their employer-sponsored health plans due to the coronavirus pandemic are expected to enroll in Medicaid (28 percent), according to a Robert Wood Johnson Foundation study.

States are expecting the upward trend in Medicaid enrollment to continue into fiscal year 2021, including enrollment in managed care organizations. They also anticipate that trends of low care utilization will continue in the new year.

The KFF researchers recommended that states revisit their payment rates for managed care organizations and evaluate whether states are at risk of overpaying due to low utilization.

This data note comes on the heels of important Medicaid managed care changes.