Medicaid is a federal/state health insurance program that served more than 86 million lower-income people in fiscal year (FY) 2021. The combined federal and state spending for Medicaid totaled $717 billion that year, $420 billion of which was spent on providing care to Medicaid managed care organization (MCO) members, and $297 billion on services provided to fee-for-service enrollees.
- While the role of managed care in Medicaid has grown tremendously over the past decade, with MCOs covering nearly three-quarters of Medicaid enrollees, detailed cost information has not been estimated for the people with MCO coverage. These data historically have been available only for fee-for-service (FFS) Medicaid because of limitations on federal data sources.
- This lack of data blocks our understanding of the relative magnitude of the cost drivers in the program and contributes to an uninformed debate about policy reforms to control the growth of spending and improve quality of care.
- Obtaining and using cost data by provider type for MCOs can help answer questions such as how much funding do MCO enrollees with diabetes, asthma, and/or hypertension consume? Of these patients, how many also have behavioral health conditions? How many MCO enrollees have six or more emergency department (ED) visits during a year and/or multiple inpatient hospital stays, and what does their resource consumption look like?
Health Management Associates (HMA) has developed a reliable methodology that can be applied to all 50 states, which approximates spending for the major categories of health services that MCOs cover, including: inpatient and outpatient hospital care, physician and other professional services, skilled nursing facilities, clinics, pharmaceuticals, and other services. HMA can determine prices for these services, which, combined with data on the number of encounters, yields reliable cost figures. These cost estimates will be useful in identifying unmet medical needs, gaps in our delivery systems, and areas of high spending where efficiencies and timely care management can be added to slow the growth in total health spending.
