Press Release

Policy Brief Highlights the Characteristics and Roles
of Medicaid-Dominated Managed Care Plans
Basic Information Has Been Lacking on This Growing Segment
of Managed Care Market

Princeton, N.J. (March 22, 2000)—A new policy brief provides a national profile of Medicaid-dominated plans, which have played a growing role in the changing Medicaid managed care marketplace. To date, basic information on these plans—full-risk managed care plans in which Medicaid enrollment makes up at least 75 percent of total enrollment—has been lacking, partly because many are not licensed as HMOs by states. But these plans are increasingly important to understand because both policy and market changes are encouraging their growth. As of June 1997, 118 Medicaid-dominated plans served 3.4 million Medicaid enrollees, or 36 percent of all Medicaid enrollees in full-risk plans.

Sue Felt-Lisk, a senior health researcher at Mathematica Policy Research, Inc., and author of the brief, explains that, because Medicaid-dominated plans focus on noncommercial clients, many states certify them under a different set of rules than HMOs. As a result, many are omitted from HMO industry directories that provide data on plan operations and have served as the basis for previous studies.

In "The Characteristics and Roles of Medicaid-Dominated Managed Care Plans," issued by the Kaiser Commission on Medicaid and the Uninsured, Felt-Lisk provides a national profile of Medicaid-dominated plans. She also takes an in-depth look at the role of these plans in 15 high-volume Medicaid managed care states: Arizona, California, Connecticut, Florida, Illinois, Michigan, Missouri, New Jersey, New York, Ohio, Oregon, Pennsylvania, Tennessee, Washington, and Wisconsin. The data in the report combined HCFA and HMO industry data, supplemented by staff research.

The main findings are:

• Medicaid-dominated plans are small plans that vary widely in ownership type and are a mix of for-profit and nonprofit entities.
• In many of the 15 states, Medicaid-dominated plans serve areas with greater concentrations of ethnic minorities, higher levels of poverty, and fewer health care resources.
• Medicaid-dominated plans are not the dominant plan in most Medicaid markets. They also are not serving more of the disabled/elderly Medicaid population than other managed care plans.
• Nearly a third of the Medicaid-dominated plans appear at financial risk. However, their financial status appears no worse than that of other plans in their states, and many are faring better.
  In finding great diversity across the group of plans, Felt-Lisk concluded that few policies or generalizations are appropriate across all plans.

"More research is needed on why these patterns exist, how they affect what providers are used, and whether they influence quality of care," she notes. "Other research has shown a shift toward greater enrollment in Medicaid-dominated plans in several states. If the trend continues, health care decision makers at all levels will need more information to make the best choices for the Medicaid population."

The policy brief can be found on the Kaiser Family Foundation web site at www.kff.org or by calling 800-656-4533 and requesting free copies of publication #2180. For more information, contact Sue Felt-Lisk at (202) 484-4519 or email her at sfeltlisk@mathematica-mpr.com.

The Kaiser Commission on Medicaid and the Uninsured was established by the Henry J. Kaiser Family Foundation to function as a policy institute and forum for analyzing health care coverage, financing, and access for the low-income population and assessing options for reform. The Commission is based in the Foundation’s Washington, D.C., office.

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