States Are Turning to Managed Care for Medicaid LTC

More and more states are switching to a managed care model when dealing with Medicaid long-term care patients, a change that has resulted in a loss of services in some cases.

Many states use managed care to deliver care to their regular Medicaid populations, but until recently, the care needs of the elderly and disabled have been viewed as too complex for the managed care model.  But states are increasingly turning their state-run home health programs over to private insurance firms to provide managed long-term services and supports (MLTSS). The number of states with MLTSS programs increased from eight in 2004 to 20 in 2016.

The benefit to states is cost savings. The basic idea of managed care is that a health plan is paid a flat monthly fee for each patient under its care. If the plan's costs in caring for that patient are less than the fixed fee, the plan makes money. But if the patient is quite sick and requires many costly medical services, then the plan may lose money on that particular patient. In this way, the insurance company rather than the state is at risk of incurring extra costs, and insurers have an investment in keeping costs down.

On the plus side, MLTSS programs can help people who might otherwise be institutionalized stay in their homes because home health care is generally cheaper than nursing home care. According to an article in Modern Healthcare, New Jersey reports that the number of Medicaid beneficiaries staying in the community is up 12 percent since that state’s MLTSS program launched. 

On the other hand, some beneficiaries are complaining that the switch to managed care has resulted in a loss of services. Modern Healthcare reports that managed care providers denied long-term care services and supports that were previously provided, sometimes without notice or explanation. Beneficiaries complained about reduced care hours or changes in the type of care provider. A study of MLTSS programs in three states could not determine whether or not the programs resulted in higher quality care and lower costs.