Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Evolution of Medicaid Long-Term Care in Managed Care Systems


Prototype Medicaid managed care programs that include long-term care services and supports go back to the 1980s, when the PACE demonstration grew out of San Francisco’s innovative On Lok program, and the Arizona Long-Term Care System (ALTCS) was implemented. Both of these programs were implemented under the Section (§)1115 Research and Demonstration waiver authority (hereafter referred to as a §1115 waiver).

PACE and ALTCS are very different programs, but they have one important feature in common: their contractors receive a monthly capitation fee per member regardless of the amount of services their members use. This contrasts with the usual fee-for-service approach used to pay for home and community-based services (HCBS).

Thirty states now operate PACE sites under a §1934 State Plan amendment, and ALTCS continues to operate as a statewide demonstration program under a §1115 waiver. (More information about these programs and the authorities under which they operate is provided later in this chapter.) Despite the early efforts of these enduring programs, it was several years before a few other states began fashioning managed long-term care (MLTC) models of their own.

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