The Incidental Economist

Because Medicaid programs represent a major source for patients served at FQHC’s it is important to consider the impact on FQHCs of state efforts to move more and more beneficiaries into capitated managed care health plans. The rationale for moving beneficiaries into capitated managed care plans is that the plans will both save the state money and provide more coordinated care. However under the Federal government’s prospective payment system Medicaid programs must pay the FQHCs a fixed rate for each visit, with a portion of this payment meant to subsidize care for other underserved populations treated by the FQHC. When a Medicaid beneficiary enrolled in a health plan is treated at an FQHC the State must pay the FQHC a “wrap-around” payment above and in addition to the capitation amount to bring the payment up to the PPS rate. So it’s hard to save see how the States are actually saving money by enrolling a beneficiary served at an FQHC into a health plan. Since the FQHCs also represent the single source for primary care, it’s also difficult to understand what care the plans are actually “coordinating” that leads to better outcomes. What value are health plans providing in this arrangement that justifies the administrative fees they are paid by the state?