Association of Medicaid-Focused or Commercial Medicaid Managed Care Plan Type with Outpatient and Acute Care

Stuart Figueroa, MSW, is a policy analyst at Boston University School of Public Health. He tweets at @RealStuTweets.

Little is actually known about how variations in Medicaid managed care (private plan alternatives to traditional, fee-for-service Medicaid) translate to treatment utilization and health outcomes. The oft-cited advantage of managed care — that it promotes efficiency and cost savings while protecting against unnecessary or redundant treatment — is similarly scant of evidence. This evidence gap exists despite Medicaid’s significant enrollment, about 80 million, 70% of which is enrolled in a comprehensive managed care plans.

Managed care is big business, and is projected to only get bigger. In the Medicaid space, managed care plans claim an increasing market share as traditional fee-for-service enrollment dwindles.

Health insurance carriers point to the increase of state Medicaid dollars being directed to managed care, $281 billion (FY18) vs. $90 billion (FY10), as evidence of the value proposition of managed care: quality care, controlled costs. Plans are paid capitated rates (e.g., a per member per month amount) to provide a defined set of benefits, which provides the potential for cost control.

Managed care plans may be provided by an insurance carrier that primarily serves the Medicaid population (Medicaid-focused plan), or by a carrier that primarily offers commercial health insurance, typically for-profit (commercially-run plan). According to analysis from the Kaiser Family Foundation, six commercial carriers, all of which are publicly traded companies, account for more than 47% of all Medicaid managed care enrollment, nationally. The growing presence of commercially-run plans participating in managed care requires examination to ensure that such investments are both clinically and fiscally sound.

New Study

To date, there has been limited scholarship as to the differences between Medicaid-focused plans and commercially-run plans. Given their for-profit nature, there has been concern that commercially-run plans might implement administrative policies and practices to limit patient access to care in an effort to minimize costs and retain those savings as profit. In a new study published in JAMA Internal Medicine, researchers sought to bridge this gap by looking at how commercially-run Medicaid plans compared to Medicaid-focused plans relative to enrollee utilization of outpatient and acute care services.

(Authors and academic affiliations include Shailender Swaminathan, PhD, Krea University [Scricity, India], Brown University; Chima D. Ndumele, PhD, Yale School of Public Health; Sarah H. Gordon, PhD, Boston University School of Public Health Department of Health Law, Policy and Management; Yoojin Lee, MS, Brown University; and Amal N. Trivedi, MD, MPH, Brown University).

The researchers followed a cohort of Medicaid enrollees (n=8010), living in a state in the northeast, who were randomly assigned to two managed care plans after their previous managed care plan (a nationwide commercial plan) withdrew from the state’s Medicaid market. Affected enrollees were assigned at the family-level to either a Medicaid-focused plan or a commercially-run plan, effective January 1, 2011. The researchers followed the cohort for 30 months post-plan assignment to evaluate any association between health care utilization and managed care plan type. Outcomes of interest included outpatient visits, inclusive of primary care office visits (family practice, pediatrics, internal medicine, and women’s health services) and office visits to any specialty clinician type. Primary outcomes also included emergency department (ED) encounters, inpatient hospitalization, and ambulatory care-sensitive (ACS) admissions.

For its primary analysis, the study employed statistical analyses (chi-square for independence, independent samples t test, and t tests for differences in proportions) to assess baseline differences between the two enrollee groups. Linear regression models were also used as part of the analysis to estimate intent-to-treat association between the Medicaid-focused plan and the commercially-run plan.


The study found that those enrolled in the commercially-run plan received 22% more outpatient services versus those who were randomly assigned to the Medicaid-focused plan. Relative to the other outcomes measured (ED visits, ACS admissions, and hospitalizations), the study found no difference resulting from the random plan assignments. Perhaps most significantly, the increased utilization of outpatient services among commercially-run plan enrollees was associated with a 61% increase in the use of specialty care — an association that held regardless of enrollee demographics, chronic disease status, or Medicaid eligibility type.

Researchers identified two factors that might explain increase outpatient utilization in the commercial plan relative to the Medicaid-focused plan. First, the Medicaid-focused plan had a referral pattern that prioritized referrals to community health services (CHCs), a practice type associated with less intensive care encounters. CHCs are understood to offer robust primary care which may have mitigated the need for additional outpatient visits. The other factor identified was the association of specialty care visits. Researchers theorized that this may be the result of the commercially-run plan having a robust enrollment of specialty care providers, or simply that primary care visits were less intensive compared to those received in the Medicaid-focused plan.


The study acknowledges several limitations that may impact generalizability. Factors related to the state’s Medicaid managed care marketplace (e.g. plan availability, competition, and market share) may limit generalizability to other states. The researchers also had limited access to information as to how the different managed care plans were administered (e.g. provider network, prior authorization requirements, and utilization management procedures). It is possible that administrative differences could influence enrollee utilization. Lastly, the study did not include individuals who were dually enrolled in Medicaid and Medicare or those who made eligible through Medicaid expansion to non-disabled childless adults, limiting generalizability to these populations.

The study’s findings support the need for continued evaluation of managed care plans, both commercial and Medicaid-focused. While these results did not support the concern that access to care suffered within the commercially-run plan, the authors highlight that increased outpatient utilization was not associated with lower utilization of other levels of care such as inpatient admissions and ED visit. Further, the authors contend that enrollment in commercially-run plans may result in higher spending (e.g. future negotiation of capitated payments predicated on increased utilization) with no discernable improvement in health outcomes.

As the health care system continues to embrace managed care for its promise of efficiency, cost savings and containment, and reduction of waste, there is an economic imperative to ensure that managed care as a financing mechanism is truly effective. It is critically important that the managed care paradigm maximizes access to clinically appropriate care and demonstrates improved patient health outcomes.

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