Managed care is an approach to delivering and financing health care that is aimed at both improving the quality of care and saving costs. The fundamental idea is to improve access to care and coordination of care by assuring that enrollees have a “medical home” with a primary care provider, and to rely more heavily on preventive and primary care. As distinct from the fee-for-service system, in which individual providers are paid for each service they furnish, traditional risk-based managed care systems put networks of providers at financial risk, paying them a fixed monthly “capitation” rate for each enrollee to provide all or a defined set of Medicaid-covered services. This payment arrangement provides different financial incentives to providers, and ideally, supports an approach to practice that emphasizes early identification and treatment of health problems and coordinated management of patients’ conditions. Capitation also gives states more cost predictability and control, and contracts with managed care plans offer states a mechanism, through quality measurement and improvement requirements, for holding plans accountable for the quality of care they provide to Medicaid enrollees.

Full report:  Medicaid and Managed Care: Key Data, Trends and Issues (PDF | 231.53 KB)