ACAP: Capitation merits 'careful consideration'

A new report from ACAP details savings afforded Medicaid programs through managed care

Estimated overall savings to Medicaid programs owing to capitation reached $2.1 billion in 2011, and could reach $6.4 billion in calendar year 2016-presuming no material changes in the Medicaid landscape, such as a state taking up or moving away from capitation in the near future, according to a new report.

The report, Projected Savings of Medicaid Capitated Care, which The Menges Group authored at the request of The Association for Community Affiliated Plans (ACAP), looked at the extent to which Medicaid programs around the country realized savings through contracting with Medicaid managed care organizations and paying those firms a capitated rate.


“The interest in the report is largely fueled in the move to managed care by state Medicaid programs in recent years,” says Managed Healthcare Executive Editorial Advisor and ACAP CEO Margaret A. Murray. “There has also been a sharp increase in Medicaid enrollment overall in recent years; clearly, the Medicaid expansions under the Affordable Care Act figure heavily into this, as does the ‘welcome mat’ effect-people signing up for the program, even in states that don’t expand.”  

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The estimates included in the report are based on data from the Centers for Medicare & Medicaid Services Medicaid Statistical Information System; the methodology is detailed in the report itself. Based on those numbers, The Menges Group then estimated potential savings if all Medicaid enrollees remaining in fee-for-service systems were moved to a capitation model. The report postulates that significant savings are still out there: about $50 billion for the 10-year timeframe between 2016 and 2025, were capitation to be universally taken up starting in 2016.

“While not every market is conducive to capitation, there are certainly areas of the country where it merits careful consideration, and the report brings this fact into sharp relief,” Murray says.

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Because the report deals with Medicaid MCOs, “we’re dealing in taxpayer dollars-and it’s incumbent on all of us to be wise stewards of public funds,” she says. “This report shows that states contracting with Medicaid MCOs are generating significant savings. In the larger states, it’s hundreds of millions of dollars a year that can be used to shore up other areas of a state budget. That’s a real benefit that managed care brings to states around the country.”

But at the same time, Murray says to keep in mind that savings themselves aren’t enough. “It’s also incumbent on managed care executives to demonstrate that managed care plans are delivering value; that the quality of care is every bit as good as that delivered through fee-for-service and that access to quality care is undiminished,” she says.