Medicaid Financing for Services in Supportive Housing for Chronically Homeless People: Current Practices and Opportunities. 7. Managed CARE


States are increasingly relying on managed care approaches to finance and deliver health care and behavioral health services to people enrolled in Medicaid. Under a managed care approach, states provide capitated financing to Managed Care Organizations (MCOs) that then contract with health care providers under arrangements intended to reduce costs and increase the quality of care. The Kaiser Family Foundation reports that the number of Medicaid beneficiaries enrolled in managed care nearly doubled between 1999 and 2008, rising to 71 percent of all Medicaid beneficiaries.39

Medicaid managed care began in many states with a focus on enrolling children and families. However, a growing number of states now allow people with disabilities to enroll in managed care plans, and some states require this enrollment. As discussed earlier in Section 4 (mental health services), in most states managed care arrangements for medical care are separate from arrangements for managed behavioral health care, administered by different MCOs, and delivered by different provider networks with separate payment systems.40

The implementation of Medicaid managed care often is accomplished through a waiver of some Medicaid rules, including a waiver of “freedom of choice” requirements, allowing the MCOs to contract with a limited set of providers. States generally provide some “wraparound” reimbursement for services provided by FQHCs, in addition to the payment provided to the FQHC by the MCO.

All three of the states where site visits were conducted for this study are in some stage of implementing managed care for mental health services. In California and Illinois, mandatory enrollment in Medicaid managed health care for people with disabilities is just beginning, so the implications for financing and delivering care for chronically homeless people and PSH residents are not yet clear.

In Massachusetts, most Medicaid benefits are administered through managed care delivery and financing systems, with a separate managed care arrangement (and separate MCOs) for some behavioral health services.

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