Managing Medicaid Managed Care: New State Strategies to Promote Accountability and Performance

As the scope of State Medicaid agencies becomes wider and more complex, states are increasingly turning to managed care organizations (MCOs) to cover Medicaid enrollees, including those with complex needs. This shift from a fee-for-service, volume-based payment model requires states to effectively manage MCOs and other vendors. With states facing tight budgets, limited staff, and limited resources to manage these changes, many are seeking new information and resources to help them transition to more effective oversight. The steady geographic growth of MCOs and Medicaid expansion under the ACA brings a new urgency to many states as they search for new and better strategies to maximize their MCOs.

Managing Medicaid managed care programs requires continued state agency focus and vendor management.  Even states that have successfully implemented managed care evolve to increase program effectiveness over time and improve the state’s partnership with their plans.  To assure these programs achieve effective and efficient care, states are moving to value-based purchasing (VBP). Under VBP the purchasing agent (i.e., Medicaid agency) seeks to manage vendors (i.e. MCOs) to produce maximum value for Medicaid. A VBP approach holds vendors accountable for outcomes.  It is not a single strategy but rather an approach that requires complex new financial arrangements, different oversight and engagement, and new procurement and contracting strategies.

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