Largest purchaser of managed care plans

A study, prepared by the Center for Health Policy Research at The George Washington University Medical Center in Washington, DC, presents a description of Medicaid service agreements used by state programs that were in use at the beginning of 1997.

Funded by the Pew Charitable Trusts, the Substance Abuse and Mental Health Services Administration, and the Centers for Disease Control and Prevention, the study provides Medicaid program administrators and policy makers with detailed information on contracts between group negotiators of managed care products. "Negotiating the New Health System" is a nationwide Medicaid managed care contract analysis.

Here are some highlights of the study's findings:

· There are approximately 32 million people enrolled in Medicaid; of these, more than one-third are in Medicaid managed care plans.

· State Medicaid agencies are among the largest purchasers of managed care.

· Contract language among state agencies vary widely. They may be highly specific, leaving little discretion, or broadly worded, delegating contractors substantial discretion in making coverage, operation, and administrative decisions. For example, the study found that a Medicaid managed care plan in Nebraska has more discretion to deny coverage to enrollees than a similar plan in North Carolina.

Managed care quality debate continues

The Balanced Budget Act (BBA) of 1997 has a significant impact on Medicare and Medicaid legislation since many provisions of the BBA are designed to adapt them to a manage care era. The act enables states to convert to managed care - without use of special federal waivers - and to require managed care for most beneficiaries.

Underscoring the key issues in the emerging national managed care quality debate, the study focused on 54 separate contracts, which included 12 contracts exclusively designed for behavioral health. It showed variations in contractual agreements, coverage, and benefits in areas that are heavily influenced by local conditions.

Concluding with the recommendations to expand Medicaid coverage, monitor contracts and practices, and avoid voluntary disenrollment, "Negotiating the Health System" predicts a continued evolution of the Medicaid managed care system.

Some observers believe that Medicaid may develop along the lines of the German compulsory health care system that was originally instituted by Bismarck in 1886 and to this day shows no signs of weakening.