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What is a Medicaid Managed Care Plan?

Most states now use a managed care delivery system where Medicaid enrollees receive their services from an outside company under contract with the state. The use of managed care plans has increased greatly in the past 10 years. In 2002, 57% of all Medicaid enrollees received some or all of their benefits from managed care. As of 2011, this percentage has jumped to 74% of all Medicaid beneficiaries. This means that up to 50 million people currently receive some form of Medicaid health services through a managed care program.

States have the authority to make enrollment in managed care voluntary or mandatory. As the savings of managed care becomes more necessary within state budgets, states are more likely to mandate enrollment in managed care although enrollees are allowed to select their preferred providers.

There are three types of managed care systems that states may use either separately or in combination. These systems can provide some of the Medicaid program’s healthcare benefits or all of them.

Managed Care Organizations (MCOs)

Similar to HMOs, Managed Care Organizations provide most Medicaid services directly to their enrollees. MCOs can be made up solely of physicians or can be a combination of physicians and member hospitals. Currently, MCOs serve over 42 million enrollees in 47 states, the District of Columbia, and Puerto Rico.

In areas where MCOs are used, beneficiaries can select from a given network of providers allowing more flexibility and customization to address their healthcare needs. Typically users will pick a primary care physician who will supervise all referrals to more specialized care. Insurance plans such as these decrease state spending and provide a better per-patient outcome as opposed to plans where states use a fee-for-service program.

The drawbacks of MCOs may include restriction of patient care in areas where states focus less on preventative care and more on reducing their Medicaid budgets. In addition, the pool of in-network physicians and facilities may be limited. Consumers can expect a higher out-of-pocket cost when they receive non-emergency care from a physician or hospital that is not in their network of approved providers.

Primary Care Case Management (PCCM)

Some states offer a system that uses Primary Care Case Management (PCCM) that provides enrollees with one primary care provider that oversees and coordinates all healthcare needs for the beneficiary. These needs may include referrals and specialized services. About 7 million people nationwide are enrolled in a PCCM.

PCCM serves to streamline the Medicaid system by increasing preventative care and reducing unneeded visits to emergency healthcare providers. However, a PCCM can also limit referrals to specialized treatment because there are extra steps to take before approving a referral.

Limited Benefit Plans

Limited Benefit Plans may seem similar to HMOs or MCOs but these plans only offer specialized Medicaid services. They are intended to supplement full-coverage programs and typically offer one service. About 14.7 million Medicaid recipients are enrolled in a Limited Benefit Plan. This number includes 6 million participants in plans that provide transportation to and from doctor’s offices. Other Limited Benefit Plans cover mental health, substance addiction treatment, and dental care.

Limited Benefit Plans are not a substitute for comprehensive health coverage but are used in instances where a MCO or the Medicaid program does not provide a specific service.


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