Medicaid managed care provides for the delivery of Medicaid health benefits and additional services in the United States through an arrangement between a state Medicaid agency and managed care organizations (MCOs) that accept a set payment – “capitation” – for these services. There are two main forms of Medicaid managed care, “risk-based MCOs” and “primary care case management (PCCM).”
Managed care delivery systems grew rapidly in the Medicaid program during the 1990s. In 1991, 2.7 million beneficiaries were enrolled in some form of managed care. Currently, managed care is the most common health care delivery system in Medicaid. In 2009, over two-thirds of all Medicaid beneficiaries are enrolled in some form of managed care – mostly, traditional health maintenance organizations (HMO) and primary care case management (PCCM) arrangements. This amounted to 36 million beneficiaries, of which 24 million individuals were covered by fully-capitated arrangements and 7.3 million were enrolled in Primary Care Case Management.
During this time, states increasingly turned to health plans already serving the public coverage programs such as Medicaid and SCHIP to operationalize expansions of coverage to uninsured populations. States used health plans as a platform for expansions and reforms because of their track record of controlling costs in public coverage programs while improving the quality of and access to care.
A variety of different types of health plans serve Medicaid managed care programs, including for-profit and not-for-profit, Medicaid-focused and commercial, independent and owned by health care providers such as community health centers. In 2009, 318 health plans offered Medicaid coverage. Of those, 159 were Medicaid-focused health plans that specialize in serving the unique needs of Medicaid and other public program beneficiaries. Over 13 million are enrolled in Medicaid focused health plans.