Medicaid managed care plans owned by public companies have higher adminstrative costs

June 15, 2011

A new Commonwealth Fund report finds that Medicaid managed care plans that are owned by publicly traded for-profit companies whose primary line of business is managing Medicaid enrollees spent an average of 14 percent of premiums on administrative costs, compared with an average of only 10 percent spent by non-publicly traded plans owned by groups of health care providers, health systems, community health centers, or clinics. Sampling health plans with at least 5,000 enrollees resulted in an initial sample of 225 Medicaid managed care plans representing 23.8 million enrollees. The numbers of plans reporting quality of care measures was limited and varied by measure. Only 27 percent of the publicly traded Medicaid-only plans reported quality measures and scored lower on these measures compared to non-publicly traded plans; they scored 13 percentage points lower when it came to managing chronic illness, and 11 percentage points lower on a composite score measuring preventive care.

"Managed care plans represent a large piece of Medicaid's future, and plans owned by publicly traded companies will likely be a growing share of this market," said lead author Michael McCue, a professor at Virginia Commonwealth University. "In order to assure that Medicaid provides high quality, efficient health care, it will be crucial that state Medicaid directors responsible for managed care contracts take into account publicly traded plans' commitment to Medicaid and whether they are striking the right balance between providing to patients and increasing earnings."

According to the report, Assessing the Financial Health of Medicaid Managed Care Plans and the Quality of Patient Care They Provide, enrollment in Medicaid managed care is on the rise, and the authors anticipate that rise will continue as most people newly eligible for Medicaid under the Act will likely join managed care plans. In 2009, CMS reported 72 percent of Medicaid enrollees were fully or partially covered by a managed care plan, up from only 55 percent in 2000. From this study sample, the number of enrollees in managed care plans owned by publicly traded companies jumped significantly—from 5.6 million to 9.8 million between 2004 and 2009.

"This report shows us that it is possible for health plans to keep administrative costs down and quality high for Medicaid beneficiaries," said President Karen Davis. "Millions of people are already covered by plans and millions more will be added to their ranks when Medicaid is expanded in 2014 under the Affordable Care Act. Now is the time to ensure performance of private contractors to assure that scarce resources are used wisely and patients get the high quality health care they deserve."

Key Report Findings:

  • Quality of care data were reported by only one out of four publicly traded Medicaid-only plans. This limited number of plans performed significantly worse than non-publicly traded plans on clinical quality composite measures of (11 percentage points lower), including childhood immunization status, and adolescent and child well-care visits, and care (13 percentage points lower), including diabetes care and appropriate use of medications for asthma for children and adults.
  • Provider-sponsored health plans had the lowest administrative cost ratio overall, 8%, compared to 12% for non-provider sponsored plans.
  • When looking at measures of patients' experience with their health care plan, non-publicly traded plans scored seven percent higher in overall patient satisfaction than the Medicaid-only publicly traded plans.
  • Health plans sponsored by reported higher quality than non-provider sponsored plans—scoring eight percentage points higher when it comes to managing chronic illness and eight percentage points higher when it come to managing preventive care.
  • More than 50 percent of enrollees in Delaware, Florida, Georgia, Illinois, Indiana, Maryland, Missouri, Nebraska, Nevada, Tennessee, Texas, Washington state, West Virginia, and Wisconsin are enrolled in health care plans managed by publicly traded companies.

More information: The full report will be available at www.commonwealthfund.org/Conte … id-Managed-Care.aspx

Related Stories

Recommended for you

Brain disease seen in most football players in large report

July 25, 2017
Research on 202 former football players found evidence of a brain disease linked to repeated head blows in nearly all of them, from athletes in the National Football League, college and even high school.

Safety of medical devices not often evaluated by sex, age, or race

July 25, 2017
Researchers at Yale and the University of California-San Francisco have found that few medical devices are analyzed to consider the influence of their users' sex, age, or race on safety and effectiveness.

Why you should consider more than looks when choosing a fitness tracker

July 25, 2017
A UNSW study of five popular physical activity monitors, including Fitbit and Jawbone models, has found their accuracy differs with the speed of activity, and where they are worn.

Dog walking could be key to ensuring activity in later life

July 24, 2017
A new study has shown that regularly walking a dog boosts levels of physical activity in older people, especially during the winter.

Study finds 275,000 calls to poison control centers for dietary supplement exposures from 2000 through 2012

July 24, 2017
U.S. Poison Control Centers receive a call every 24 minutes, on average, regarding dietary supplement exposures, according to a new study from the Center for Injury Research and Policy and the Central Ohio Poison Center, ...

Alcohol to claim 63,000 lives over next five years, experts warn

July 24, 2017
Alcohol consumption will cause 63,000 deaths in England over the next five years – the equivalent of 35 deaths a day – according to a new report from the University of Sheffield Alcohol Research Group.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.