Medi-Cal and Managed Care: Risk, Costs, and Regional Variationby E. Kathleen Adams, Edmund R. Becker, Janet M. Bronstein
California has launched a new effort to expand the use of managed care within Medi-Cal, its Medicaid program. Under the "two-plan" model, Medi-Cal enrollees in 11 counties choose either a private commercial plan or one organized and operated by the county. The implementation of this model has raised several questions about the fit between Medi-Cal and private managed care. For example, how do the health risks and resource use patterns of Medi-Cal enrollees differ from those of the privately insured? Should the state consider these differences when setting its capitated ratesflat rates paid to both public and private plans for each enrolled member? Should these rates reflect regional differences in health risks as well?
Using data on Medi-Cal enrollees in seven counties along with a sample of privately insured California employees, this study analyzes and compares the resources used by Medi-Cal enrollees and a sample of privately insured employees. It also investigates Medi-Cal resource use by county, thereby allowing for regional comparisons. Although Medi-Cal clients as a whole have lower-than-expected costs, these costs vary significantly across counties. Also, low Medi-Cal payment rates to providers are likely to discourage some commercial plans and their physicians from participating more extensively in the Medi-Cal market. These and other factors suggest the need for risk-adjusted rates for short-term and high-risk Medi-Cal clients. Without such adjustments, commercial plans are likely to avoid areas with high concentrations of such clients, thereby hampering the continued success of the two-plan model.
This project was supported by PPIC through an Extramural Research Program contract.
- Public Policy Institute of California
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