Kaiser Family Foundation Survey on State Medicaid Managed Care ...

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Figure 4Capitation Rate-Setting Approaches(35 states responding)Administrative rate-setting(using actuaries)NegotiationNumber of states using approach:1127Most states (23) reported using only onemethodology to set capitation rates, butseveral others combined multiplemethods, including two states (Delawareand Nevada) that reported using all fourapproaches over time. Of the 11 statesthat reported negotiating rates, only Utahused this approach alone.Competitive bid within actuariallydetermined rangesCompetitive bidNote: 36 states contract with MCOs.SOURCE: KCMU/HMA <strong>Survey</strong> of Medicaid Managed Care, September 2011.510Most states risk-adjust their capitationrates for age and eligibility category, andabout two-thirds adjust for health status.Capitation rates are intended to reflect theaverage monthly cost associated withproviding a defined set of covered servicesto an enrolled population. Becausemonthly costs are known to vary significantly based on age, gender, and other variables, states generallyadjust capitation rates by a number of factors so that the amount paid to an MCO more closely reflectsthe plan’s actual average monthly cost to serve its actual enrollees. Among the 34 states that providedinformation on their rate-setting factors, the most commonly cited rate cell adjustment factors were age(31 states) and Medicaid eligibility category (28 states), followed by geography (27 states), gender (26states), and health status (22 states) (Table 5).States that risk-adjust MCO capitation rates for healthstatus use various risk-adjustment and/or predictivemodeling software systems. The 22 states that reportedadjusting their MCO capitation rates for health status use anumber of different programs that have been developed forthis purpose. The systems used by more than one state arethe Chronic Illness and Disability Payment System or CDPS(13 states), Medicaid Rx (four states), and Adjusted ClinicalGroups or ACGs (three states).Table 5: Rate-Setting Factors Used by States(34 states responding)FactorNo. of states usingAge 31Eligibility category 28Geography 27Gender 26Health status 22Most states with MCOs reported that they use encounter data in setting capitation rates. Twenty-eightstates (of 34 responding) said that they use encounter data for rate-setting or related purposes,including some that use the data for risk-adjustment or risk-sharing reconciliations.Half the states with MCOs have risk-sharing arrangements with their plans. Separate from the riskadjustmentmethods that most states use in rate-setting, some also have one or more risk-sharingarrangements with health plans, primarily to encourage MCO participation in Medicaid by mitigatingtheir downside financial exposure. Of the 36 states with MCOs, 18 reported that they have sucharrangements; most prevalent are commercial or state-sponsored stop-loss/reinsurance, risk corridors,and condition-specific risk-sharing arrangements. Stop-loss/reinsurance limits an MCO’s losses in22 00
excess of a specified threshold for some or all enrollees. Riskcorridors limit plans’ aggregate profits and losses, with the statebearing a portion of plan losses and retaining a portion of plan profitsthat exceed the limits. Condition-specific risk arrangements apply toplan costs associated with specific health conditions. Table 6 showshow many states reported using each of these risk-sharingmechanisms.Table 6: Risk-Sharing Arrangements between States and MCOs(18 states)Risk-sharing arrangementNo. of states usingRequired commercial stop-loss/reinsurance 7Risk corridors 6Required state-sponsored stop-loss/reinsurance 5Condition-specific risk arrangement 5Optional state-sponsored stop-loss/reinsurance 2Optional commercial stop-loss/reinsurance 2Risk pools 3Experience rebate 1Arizona and Rhode Island bothreported using three risk-sharingarrangements. Arizona requiresstate-sponsored stop-loss/reinsurance, uses risk corridors,and also has condition-specificarrangements. Rhode Islandunderwrites stop-loss/reinsurancefor TANF enrollees, but requiresplans to purchase reinsurance forall products. The state also usesrisk corridors.Massachusetts requires stoploss/reinsurancebut permitsplans to decide whether to buy itfrom the state or commercially.The state also uses risk corridorsfor its Children’s BehavioralHealth Initiative and its SpecialKids/Special Care population.More than half the states with MCOs report having a pay-forperformance(P4P) aspect to their payment methods. “Pay for performance” has been defined as a“quality improvement and reimbursement methodology which is aimed at moving towards paymentsthat create much stronger financial support for patient focused, high value care.” 14 Nineteen states withMCOs indicated that they incorporate at least one P4P component in their method for paying healthplans. P4P can be implemented bywithholding a portion of the capitationpayment, which the MCO can earn backthrough high performance, or by offering aperformance-based bonus in addition to thecapitation amount, or through otherapproaches.Of the 19 states with a P4P component, overhalf (12) reported withholding a portion ofthe capitation payment (Figure 5). Ten statesreported that they make bonus payments toMCOs. In addition to withholds or bonuspayments, other P4P strategies identified byfewer states include: shared savings; autoassignmentpreference; enhanced capitation;Capitation withholdBonus paymentShared savingsFigure 5Pay-for-Performance Strategies inState Payment to MCOs(19 states)incentive for reporting encounter data; extra premium if MCO exceeds savings target for inpatienthospital costs; and one percent of premiums placed at risk in a pool for which plans can compete basedon performance measures.OtherNumber of states using strategy:Note: 36 states contract with MCOs.SOURCE: KCMU/HMA <strong>Survey</strong> of Medicaid Managed Care, September 2011.16101214 https://www.cms.gov/MedicaidCHIPQualPrac/.23
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Page 5 and 6: Table of ContentsExecutive Summary
Page 7 and 8: EXECUTIVE SUMMARYMedicaid, the publ
Page 9 and 10: party enrollment brokers to provide
Page 11 and 12: HEDIS©, CAHPS©, and state-specifi
Page 13: ConclusionFor over 30 years, state
Page 16 and 17: from the recession and the slow rec
Page 18 and 19: A note on Medicaid managed care ter
Page 20 and 21: Managed caremodelTable 1: Medicaid
Page 23 and 24: States are increasingly mandating m
Page 25 and 26: States with Medicaid MCOsKey Sectio
Page 27: States have “auto-assignment” a
Page 31 and 32: Dental care and outpatient and inpa
Page 33 and 34: the second trimester, and within th
Page 35 and 36: eported that they limit PCP panel s
Page 37 and 38: States with non-comprehensive PHPsK
Page 39 and 40: Measuring, monitoring, and improvin
Page 41 and 42: seven states required 10 measures o
Page 43 and 44: CAHPS© surveys. North Carolina is
Page 45 and 46: Special initiatives to improve qual
Page 47 and 48: public health efforts to reduce dis
Page 49 and 50: Medicaid managed long-term care and
Page 51 and 52: (e.g., need to credential Adult <st
Page 53 and 54: In many states, broader efforts foc
Page 55 and 56: Looking ahead: Medicaid managed car
Page 57 and 58: ConclusionFor over 30 years, state
Page 59 and 60: APPENDIX 2: Summary of Medicaid Man
Page 61 and 62: Program Name(e.g., Popular Name, 19
Page 63 and 64: APPENDIX 3: MCO Contracts, Plan Cha
Page 65 and 66: State(No. ofcontracts)NameEnrollmen
Page 67 and 68: State(No. ofcontracts)NameEnrollmen
Page 69 and 70: APPENDIX 5: MCO Capitation Rate-Set
Page 71 and 72: APPENDIX 7: MCO Network Adequacy Re
Page 73 and 74: State Primary Care Obstetric Care S
Page 75 and 76: APPENDIX 9: Providers Recognized as
Page 77 and 78: APPENDIX 11: PCCM Administrative Se
Page 79 and 80:
APPENDIX 13: Initiatives to Improve
Page 81 and 82:
I. MANAGED CARE OVERVIEW1. Total Ma
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4. Enrollment Requirements.a. We ar
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ii. Please indicate whether the fac
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c. Required Providers: We are inter
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IV. NON-COMPREHENSIVE PREPAID HEALT
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. Does your state use CAHPS© surve
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VI. SPECIAL INITIATIVESAll states s
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Appendix I: Managed Care Contracts1
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Appendix II: Clinical Quality Perfo
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1330 G S T R E E T NW, W A S H I N
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