Enrollment in Medicaid managed care is continuing its growth in tandem with eligibility expansion, bringing benefits and challenges to insurers, according to an Avalere Health analysis.
With 26 states plus Washington, D.C., expanding Medicaid, and even other states not expanding eligibility incorporating more managed care policies, Medicaid managed care enrollment could grow by 20 percent this year and by almost 40 percent through 2016, Avalere Health estimates in a new study.
About 75 percent of the nation's Medicaid beneficiaries will be covered in managed care by next year, growing from just above 60 percent in 2012, according to Avalere's analysis of data, projections and trends from the Congressional Budget Office, the Urban Institute and others.
"These changes will expand Medicaid plans' coverage into more rural geographies and will essentially end fee-for-service Medicaid in some states," said Avalere VP Caroline Pearson, one of the study's authors, in a media release.
Indeed, by the end of the decade, capitated reimbursement could account for more than half of all Medicaid spending, CMS deputy administrator Cindy Mann has predicted.
In three of the largest states alone, California, Florida and Texas, managed care is being extended statewide after being used at the regional level, and of the 26 states expanding eligibility, only two aren't using managed care, Arkansas and Connecticut.
For health plans, the extension of managed care into a majority of Medicaid programs brings "a significant growth opportunity for health plans that specialize in managing these low-income populations," said Matt Eyles, Avalere executive vice president, in a media release.
"Plans that currently operate in Medicaid could see significant membership growth, and those outside of the Medicaid market until now could gain market share by moving into this space," he said.
The evolution to Medicaid managed care also brings more challenges, especially in states with more ambitious cost-saving goals, and potentially some financial losses, as Excellus BlueCross BlueShield's recent withdrawal from New York's Medicaid managed care program suggests.
"We have a long history of supporting safety net programs, but we can't do it at the expense of incurring huge financial losses," Jim Redmond, Excellus communications vice president, said last fall.