MCOs proliferate due to Medicaid expansion

More than half of all Medicaid beneficiaries nationwide were enrolled in a managed care organization (MCO) as of September 2014, according to a new analysis by the Kaiser Family Fund (KFF).

Thirty-nine states had contracts with 265 MCOs. Driving the growth, according to KFF, are states’ expansion of geographic areas, beneficiaries with more complex needs, and a shift from long-term services to capitated arrangements.

MCOs are also playing a big role in states where Medicaid has been expanded, with many states relying on MCOs to handle the influx.

KFF profiles the data on MCOs and Medicaid through its interactive Medicaid Managed Care Market Tracker. The tool includes data from those states that pub

licly report MCO enrollment data. Out of 39 states where MCOs are in operation, 19 states report enrollment data. Almost 50% of the beneficiaries in those 19 states are in MCOs, according to KFF.

Other findings:

• Premium payments to comprehensive MCOs account for more than one-quarter of total national Medicaid spending;

• State payment levels vary widely, from a low of close to zero in Connecticut to nearly 80% in Hawaii;

• In 2013, the average medical loss ratio for Medicaid MCOs was 85% or higher in 28 of 38 total states.

Five Fortune 500 health insurance companies - UnitedHealth Group, Wellpoint, Centene, Aetna, and Molina - have a large footprint in 10 or more states that have MCO contracts with Medicaid. The five, along with HealthNet, account for over one-third of all Medicaid MCO contracts in the 18 states reporting data, according to KFF.

Medicaid expansion continues to add to MCO numbers, and more states are now moving forward or considering Medicaid expansion including Alabama, Alaska, Florida, Tennessee and Wyoming.

READ: More states move forward with Medicaid expansion