Medicaid and CHIP Risk-Based Managed Care in 20 States. Experiences Over the Past Decade and Lessons for the Future.. Changes in Number and Type of Plans over the Decade


Most state officials indicate that they have had substantial stability over the decade in the number and mix of MCOs with which they contract, which in turn has brought stability to their programs and beneficiaries. This stability is in sharp contrast to the 1990s, when several of the states experienced more turmoil in their risk-based managed care programs, with plans exiting and entering the programs more frequently.

Connecticut, Delaware, and Tennessee represent exceptions to this pattern of plan stability during the first decade of the 21st century. All experienced difficulties with plan participation during the study period, resulting in Tennessee suspending risk-based managed care for five years, Delaware reverting to a state-administered plan that was essentially a fee-for-service arrangement, and Connecticut transitioning to a non–risk-based arrangement. Both Tennessee and Delaware have recently returned to statewide risk-based managed care. Though Connecticut also returned to a risk-based model in 2009, this arrangement did not last long, as the state decided to replace risk-based managed care with an ASO model (described above) beginning in January 2012.

In spite of this general stability, the Medicaid and CHIP risk-based managed care market in the study states slowly continues to consolidate. Most states report that, while they have retained their largest plans, there has been some decline in the number of smaller plans and some shift toward national plans. Much of this shift is due to the acquisition of smaller, local plans by larger national plans. The trend was more pronounced in the first half of the decade, with more stability in the latter half of the 2000s.

States continue to work toward achieving full geographic coverage, especially in rural areas. Several states report that throughout the past decade there have been shifts in where plans operate. The mobility is affected by where the plans feel capitation rates are sufficient, where there are enough enrollees, and where they can obtain a reasonable provider network. Over time the states may be able to persuade plans to reenter the counties they left.

It was a business decision to choose the [counties we are in] for Medicaid. We are making an investment in infrastructure. We look at where membership is, and where take-up is by other plans. A county with many plans already would mean slow enrollment. (Plan Representative)

We are reentering the counties that we left now. The state did make some rate increases—they wised up…They understood it was not a joke. We also got better at our work—more creative, more collaborative, and more partnership-oriented. That produced some results. (Plan Representative)

We got out because we had serious problems with one of the major providers there. We were losing too much money, so we pulled out. (Plan Representative)

In addition, in some states the requirements to maintain more substantial financial reserves, and/or to obtain licensure as an HMO, have tightened over time and hospital or provider-based plans have left the Medicaid market because they were unable to maintain these reserves.

States may perceive plan decisions to leave the market as a lack of willingness to undertake the effort needed to survive in the Medicaid managed care market.

Some plans have left because they have not been able to get efficient enough to make a decent return on their investment based on the rates we’re providing. (State Official)

There are some [health plans] that have had difficulties maintaining the networks, the right number of Primary Care Providers. I mean, when this happens it's because they're either not paying claims, or they're doing other things….internally to not run a sound plan. (State Official)

View full report


"rpt.pdf" (pdf, 1.42Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®