States Turn to Managed Care to Improve Access and Control Costs

HRD-93-46: Published: Mar 17, 1993. Publicly Released: Mar 17, 1993.

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Pursuant to a congressional request, GAO reviewed state implementation of managed care programs, focusing on: (1) difficulties states face in implementation of certain program components; (2) the effect of the managed care approach on health care access, quality, and cost; and (3) the features that ensure the quality of health services and providers' financial stability.

GAO found that: (1) from 1987 to 1992, states' enrollment of Medicaid beneficiaries into managed care programs doubled; (2) two-thirds of all states have managed care programs and nearly all states are expected to have at least one managed care program by 1994; (3) states are choosing primary care case management programs because providers are more willing to participate in these fee-for-service programs; (4) states have struggled to attract providers to capitated-based reimbursement models of managed care because of low-reimbursement rates and assumption of financial risk and administrative burdens; (5) states have reported difficulties in implementation of managed care that involved planning, mandatory enrollment, setting capitation rates, and education of beneficiaries about the program, regardless of the managed care model used; (6) managed care has improved access to care and beneficiary satisfaction, but quality of care has stayed about the same as traditional Medicaid fee-for-service programs; (7) state cost savings have been inconclusive; and (8) the Health Care Financing Administration has established a quality assurance initiative that would subject Medicaid managed care plans to current Medicare and private-sector quality assurance standards.

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