A PRACTICING PHYSICIAN ’ S WHITE PAPER THE MEDICAID MCO
Kenneth C . Henderson , MD , FAAP , FACPE , DABMM , ABQAURP , CPQA
This brief white paper is written for physicians actively involved in the practice of medicine concerning the delivery of Medicaid health care benefits between a state ’ s Medicaid Department and multiple Managed Care Organizations ( MCO ).
This contractual relationship between Medicaid and the MCO is financially risk based to the Medicaid MCO . This is a capitation arrangement that is paid out on a monthly basis to the Medicaid MCO by the state Medicaid client ( PMPM ). If this arrangement is to be successful , it is essential that the Medicaid client , as well as all members of the Medicaid MCO health care delivery team including the physician reviewers and business managers , understand the business in which they are mutually contracted . Currently almost all state Medicaid health care , except for fee-for-service / long term care , has been contracted to multiple Medicaid MCOs . The total number of Medicaid MCO enrollees in the country is currently estimated to be nearly 100 million . This total number of state Medicaid recipients is predicted to increase by 46 million based upon the additional new expansion members that will be added to the Medicaid role by the Affordable Care Act ( ACA ). The medical management of each state ’ s children ’ s health insurance program , ( SCHIP ), will generally follow the Medicaid model .
At the present time , about 70 percent of state Medicaid health care money is paid out to multiple Medicaid MCOs . The remaining 30 percent of Medicaid health care money covers the disabled and elderly on a fee-for-service basis ( FFS ). An MCO can also contract with state Medicaid to medically manage long term health care for the elderly and disabled . This modified primary care case management model should be designed to coordinate health care for the Medicaid beneficiary . To date , large commercial insurers and small not-for-profit providers have not been able or willing to take on a capitated risk arrangement for this medically fragile highrisk population . Even in a small state , this 30 percent segment of Medicaid health care money may be more than one billion dollars annually and could represent a business opportunity for the progressive Medicaid MCO . However , some state Medicaid health care programs are unable for various reasons to provide the annual cost of this health care , in order for company actuaries to predict the actual financial risk involved and determine an acceptable PMPM payment . It should also be pointed out that currently , most state Medicaid health care departments demand medical management fees as low as 2-4 percent for this high risk segment of the Medicaid population .
The MCO delivery of Medicaid benefits is concerned with cost control , quality improvement and access to care . However , delivering specific metrics to the Medicaid client that address these three issues is an ongoing challenge for the MCO . Pay for performance , ( P4P ),
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