Can Medicaid Managed Care Programs Deliver on the Promise to Improve Outcomes?

Heather O’Donnell
Vice President of Advocacy and Public Policy, Thresholds

Autumn ushers in a time to evaluate your current health insurance plans. Over the next few weeks, CFYM will provide information on Medicaid, employee-sponsored plans, and ACA marketplace plans. In today’s post, Heather O’Donnell provides guidance about moving to a Medicaid managed care plan.

As the Affordable Care Act is implemented across the country, Illinois, like most states, is making changes to its Medicaid program. As the largest insurer of Illini living with a mental health condition, this program has a responsibility to

  • improve health outcomes
  • reduce preventable hospitalizations
  • reduce costs.

In order to meet these challenges, Medicaid in Illinois is moving away from traditional fee-for service—a reimbursement model that pays health care providers separately for each service, regardless of whether the service leads to improved health—to a system of “coordinated care” for most of the Medicaid population. Also known as managed care, the coordinated care model is intended to incentivize the delivery of timely care, resulting in good health outcomes. Based on a new state law, Illinois must move at least 50% of the 2.8 million individuals enrolled in Medicaid into Medicaid health plans by January 2015.

The Medicaid reforms underway today are different from the state’s efforts at managed care in the 1980s. That program produced many health maintenance organizations (HMOs) that restricted access to care to hold down costs and were not accountable for improved health outcomes. The current effort instead is focusing a tremendous effort on ensuring network adequacy (i.e., physician and provider participation in the managed care networks) to better

  • meet patient needs
  • improve access to care
  • achieve quality metrics and good patient health outcomes.

Fulfilling the promise

Most state Medicaid programs nationwide have moved to systems of coordinated or managed care models because fee-for-service systems do not incentivize good care and improved health outcomes. In fact, the fee-for-service model can be so restrictive in the types of services it reimburses that some providers, particularly mental health providers, are prohibited from delivering the comprehensive care a person may need to help them get well and move into recovery.

In addition, fee-for-service Medicaid systems are highly fragmented. It is often difficult for a patient who needs mental health, primary, and other specialty care at the same time to receive effective, coordinated care. The multiple specialists rarely communicate, and even the most adept of individuals is not able to effectively navigate these systemic challenges on their own.

The goal of coordinated care is a more integrated and coordinated healthcare system with better patient experiences and health outcomes.

Individuals with mental health conditions are twice as likely to be hospitalized or use the emergency room as the rest of the population. This population also often has additional medical conditions like heart disease or diabetes. The Medicaid health plans cover both physical and mental health services like fee-for-service plans, but with increased coordination among providers and increased flexibility in the types of care offered by these providers.

What does coordinated care mean for me and my family?

So what does this mean if you or a family member has coverage through Medicaid? While Illinois is just one example, it does follow some already established protocols. The following describes how Illinois is making the transition.

If you live in certain areas of the state where coordinated care is being rolled out you will receive a notice in the mail from the Illinois Department of Healthcare and Family Services, the state’s Medicaid agency. You will need to choose a Medicaid health plan. The health plans include traditional Medicaid managed care organizations and social service- or hospital-led plans.

When selecting a new Medicaid health plan, you should consider a few things:

  • Are your current physicians and social service providers participating providers in the plan?
  • What are the plan’s prior authorization policies for prescription drugs?
  • What other additional benefits does the plan offer?

During the Illinois transition anyone who does not select a plan will be auto-enrolled, so it is important that they select a plan that best meets their health care needs.

Illinois is in the early stages of rolling out Medicaid coordinated care. Plan networks are still being put together, meaning the plans are still expanding the number of participating health and social service providers. There is a steep learning curve. As advocates, we must ensure that this transition is done well and also work to change things that are not. As we evaluate the success of Medicaid coordinated care over the coming years, we have the opportunity to shape the Medicaid program into one that works best for those living with a mental illness and other complex medical conditions.


  • What has been your experience with Medicaid Managed Care Plans? Are you able to access the quality mental health care you need?
  • Has your state transitioned to a Medicaid Managed Care Plan? What was your experience of the transition? (Please specify your state.)

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