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1994.12.09 :  Increase in Medicaid Beneficiaries in Managed Care

Contact:  Anne Verano         (202) 690-6145
December 9, 1994

    HHS FINDS INCREASE IN MEDICAID BENEFICIARIES IN MANAGED CARE


     The number of Medicaid beneficiaries enrolled in managed-care
plans increased sharply during the past year from 4.8 million to 7.8
million enrollees, HHS Secretary Donna E. Shalala announced today. 
That growth represents a one-year increase of 3 million, or 63
percent.

     "The strong response to the managed-care option for the
Medicaid population is a good indication of the growing importance
of managed care in the U.S. health care delivery system," Secretary
Shalala said. 

     Managed-care plans, which include health maintenance
organizations, are now used by 44 states to serve Medicaid
recipients.

     The growth in Medicaid managed care reflects increased
enrollment in HMOs and primary care case management programs.

     "We believe that managed-care programs can meet the needs of
Medicaid recipients especially well, particularly because they
emphasize preventive and primary care," said Bruce C. Vladeck,
administrator of the Health Care Financing Administration, which
oversees the Medicaid and Medicare programs. "At the same time, we
continue to focus our efforts on ensuring that the promise of
managed care results in quality health care for beneficiaries."

     "We want to avoid using the hospital emergency room as a major
source of care for Medicaid recipients who are primarily poor women
and their children.  Managed care can help to eliminate that
problem," Vladeck said.

     About 23 percent of the nearly 34 million people enrolled in
the Medicaid program now receive their medical care through some
form of managed-care delivery system, up from 14 percent in 1993.
Included in this year's figures are more than 1.6 million
individuals who have joined managed-care programs through
participation in state health care reform demonstration programs.
Such programs typically expand eligibility beyond traditional
Medicaid eligibility standards.

     "An increasing number of states are offering their Medicaid
populations the option of enrolling in managed-care programs,"
Vladeck said.  "States also are increasing their use of federal
waiver authority to enroll Medicaid populations in mandatory
managed-care programs.  As a result, these programs are expected to
continue growing."

     Under the Medicaid program, the federal government provides
matching funds to the states to help finance health care services
for the poor and the uninsured.

     HCFA requires that Medicaid managed-care plans meet federal
standards and cost no more than the amount that would be spent on
comparable fee-for-service care.


     Under primary care case management, physicians contract with a
state to provide primary care services to specific Medicaid 
recipients and to coordinate referrals for any needed specialist
or hospital care.  HMOs and other prepaid health plans contract
with a state to provide all or part of the Medicaid benefit package
on a prepaid risk basis.

     In 1993, HCFA issued voluntary quality guidelines for states to
use in examining the care provided in Medicaid managed care
programs.  States may use these guidelines fully or in part, but
Vladeck has urged states to adopt them, as much as their resources
will allow. 

     "We are pleased with the response by the states to these
guidelines," Vladeck said.  "They are a step forward in  fulfilling
our commitment to quality of care in the Medicaid managed-care
program."
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