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Medicaid Managed Care for People with Disabilities

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Medicaid Managed Care for People with Disabilities (PDF, 1412K)


Medicaid Managed Care for People with Disabilities (DOC, 975K)


According to a recent state-by-state survey, more than half the states are planning to increase the number of Medicaid beneficiaries enrolled in managed care plans in an attempt to slow the growth rate of federal-state spending and improve the quality and accessibility of services. [i]

States have steadily increased the number of individuals enrolled in Medicaid managed care plans over the past two decades. Today more than two-thirds of the 70 million Medicaid beneficiaries receive at least a portion of their services through a managed care plan. Until recently, the vast majority of these enrollees have been comparatively healthy children and working-age adults. But now more than half the states are enrolling senior citizens and people with disabilities, as well as children with specialized medical needs, in Medicaid managed care plans. A growing number of states also are offering dental care, behavioral health care, transportation, and pharmacy services through managed care plans.

Three factors are driving states to accelerate managed care enrollments: (1) severe budget constraints resulting from the deep, prolonged economic recession; (2) the impending expansion of Medicaid rolls in 2014 under the Patient Protection and Affordable Care Act, hereinafter referred to as the Affordable Care Act (ACA); and (3) the need to control outlays on behalf of the most expensive segment of the Medicaid population—seniors and people with chronic diseases and disabilities. Experts generally agree that well-designed managed care initiatives can lead to important efficiencies in the delivery and financing of health care services. But studies differ on the extent of cost savings achieved by shifting from a fee-for-service to a managed care format.

Observing these trends in Medicaid policy and recognizing the profound impact they could have on future services to people with disabilities, the National Council on Disability (NCD) commissioned a wide-ranging study of Medicaid managed care. In the fall of 2011, NCD contracted with the National Association of State Directors of Developmental Disabilities Services to conduct the study and prepare a report summarizing its findings, conclusions, and recommendations. Specifically, the purpose of the study was to answer the following questions:

  • What are the implications of managed care for Medicaid beneficiaries with disabilities, both within primary/acute health care settings and within long-term services and support settings?
  • What benefits can states and people with disabilities expect to derive from a Medicaid managed care delivery system? And, conversely, what are the potential pitfalls of organizing and financing the delivery of services along managed care lines—from the perspectives of state policymakers and people with disabilities?
  • What are the essential principles and precepts that state officials should follow in designing and operating a managed care system serving people with disabilities? And what criteria should responsible federal officials use in regulating state managed care plans and reviewing and approving related waiver requests?
  • What are the similarities and differences in designing and operating a system of managed primary/acute care services vs. a system of managed long-term services and supports?
  • How do the operational features of specialty managed care carve-outs for behavioral health and prescription medications differ from managed primary/acute care service systems?
  • How can disability advocates play constructive, influential roles in shaping the contours of state managed care initiatives affecting people with disabilities?

This report is intended to address the implications of managed health care and long-term supports for all subpopulations of Medicaid-eligible people with disabilities, including those with physical, developmental, behavioral, and sensory disabilities. While in many respects managed care has similar ramifications for older Medicaid recipients, the primary focus of the present analysis is on people ages 3 through 64 with chronic disabilities.

The report is divided into four chapters. Chapter 1 summarizes basic concepts underlying a managed care approach to delivering health care services, including the historical roots of those concepts. In addition, it reviews the origins and subsequent growth of managed care within the federal-state Medicaid program. The primary aim of the chapter is to provide readers with a firm grounding in the basic rationale for managed care and the principal techniques used in operating Medicaid managed care programs. Emphasis is on the growth of managed care arrangements within the overall Medicaid program and the reasons this trend is likely to continue and increasingly encompass health care and long-term supports for people with disabilities.

Chapter 2 reviews the Medicaid program’s wide-ranging role in serving people with disabilities, including the number and composition of nonelderly people who qualify for Medicaid benefits on the basis of disability, the types of services they receive, and their recent utilization and expenditure trends in Medicaid-funded services. In addition, this chapter pinpoints the unique challenges associated with enrolling people with disabilities in Medicaid managed care arrangements and outlines the reasons that states, with an increasing sense of urgency, are choosing to confront these challenges.

Chapter 3 contains a set of principles to guide federal and state officials, as well as disability stakeholders, in designing and implementing managed care programs for Medicaid beneficiaries with disabilities. These principles articulate the broad societal outcomes that a managed care program should seek to achieve, and spell out the essential components of a well-designed, effectively administered service system for people with physical, sensory, developmental, and behavioral disabilities. Included with each of the 22 principles is a brief elaboration on the actions necessary to honor the principle, including in several instances state-specific illustrations.

Chapter 4 provides NCD’s recommended action strategies to ensure the successful enrollment of people with disabilities in Medicaid managed health care and long-term support systems. These recommendations, addressed to federal and state officials, are aimed at improving the overall accessibility and quality of Medicaid-funded services and supports furnished to people with disabilities.

To assist readers who are not steeped in the nomenclature of Medicaid managed care policy, appendix A is a glossary of frequently used terms. Appendixes B through G present supplemental information on several topics related to Medicaid and managed care.

Our hope is that the report will help readers gain a better understanding of the intricacies of Medicaid managed care practices and the ways in which these practices can and should affect services for program beneficiaries with disabilities.

 Executive Summary

The federal-state Medicaid program plays an integral role in financing health care services in the United States, accounting for 16 percent of total health spending and providing coverage for one out of every six Americans. Among the more than 60 million citizens who rely on Medicaid are about 9 million nonelderly people with disabilities, including 1.4 million children. The enactment of the 2010 health reform legislation (Affordable Care Act) promises to accentuate the importance of Medicaid financing of disability services, as well as the shift toward using managed care delivery systems.

The Medicaid program serves a diverse array of people with disabilities, ranging widely in age and type and severity of disability. Some enrollees with disabilities are difficult and costly to serve, primarily because of the complexity, intensity, and longevity of their health care and support needs. The service delivery challenges involved in serving low-income people with disabilities are magnified in the case of Medicaid enrollees who require a synchronized array of health care and long-term supports. In the United States, historically health care and long-term supports have been separately organized, financed, and delivered. Bridging the philosophical and practical barriers to integrating such services poses major service delivery and financing challenges.

Faced with growing caseloads, declining federal aid, and escalating health care costs, many states are electing to enroll high-cost people with chronic disabilities in Medicaid managed health care and long-term service plans. They are doing so in an attempt to place program expenditures on a more sustainable course, while simultaneously improving the quality and accessibility of services. The National Council on Disability (NCD) recognizes that managed care techniques can create a pathway toward higher-quality services and more predictable costs, but only if service delivery policies are well designed and effectively implemented. Cost savings should be achieved by eliminating inefficiencies, not by reducing the quality or availability of care available to people with disabilities.

Guiding Principles

Recognizing the many unique challenges involved, NCD recommends that the following guiding principles be rigorously applied in designing and operating Medicaid managed care systems serving children and adults with chronic disabilities:

  1. The central organizing goal of system reform must be to help people with disabilities to live full, healthy, participatory lives in the community.
  2. Managed care systems must be designed to support and implement person-centered practices, consumer choice, and self-direction.
  3. Working-age enrollees with disabilities must receive the supports necessary to secure and retain competitive employment.
  4. Families should receive the assistance they need to effectively support and advocate on behalf of people with disabilities.
  5. States must ensure that key disability stakeholders are fully engaged in designing, implementing, and monitoring the outcomes and effectiveness of Medicaid managed care services.
  6. Managed care delivery systems must be capable of addressing the diverse needs of all plan enrollees on an individualized basis.
  7. States should complete a readiness assessment before determining the subgroups of people with disabilities to be enrolled in a managed care plan.
  8. The provider network of each managed care organization should be sufficiently robust and diverse to meet the health care, behavioral health, and where applicable, long-term support needs of all enrollees with disabilities.
  9. States planning to enroll Medicaid recipients in managed long-term services and supports plans should be required by the Centers for Medicare and Medicaid Services (CMS) to cover both institutional and home and community-based services and supports under their respective plans.
  10. The existing reservoir of disability-specific expertise, both within and outside of state government, should be fully engaged in designing service delivery and financing strategies and in performing key roles within the restructured system.
  11. Responsibility for day-to-day oversight of the managed care delivery system should be assigned to highly qualified state and Federal Government personnel, with the authority to proactively administer the plan in the public interest.
  12. States should design, develop, and maintain state-of-the-art management information systems with the capabilities essential to operating an effective managed care delivery system.
  13. States electing to compensate managed care contractors through a capitated payment system should adopt a fair, equitable, and transparent methodology for calculating and adjusting payment rates. Rates should be sufficient to allow a managed care contractor to (a) afford beneficiaries a choice among qualified providers and (b) address all of the service and support needs among plan enrollees with disabilities.
  14. The Federal Government and the states should actively promote innovation in long-term services and supports for people with disabilities.
  15. CMS should rigorously enforce the Affordable Care Act “maintenance of effort” provisions in granting health and long-term service reform waivers and mandate that any savings achieved through reduced reliance on institutional care be reinvested in home and community-based service expansions and improvements.
  16. Primary and specialty health services must be effectively coordinated with any long-term services and supports that an individual might require.
  17. Participants in managed care plans must have access to the durable medical equipment and assistive technology they need to function independently and live in the least restrictive setting.
  18. The state must have in place a comprehensive quality management system that not only ensures the health and safety of vulnerable beneficiaries, but also measures the effectiveness of services in assisting individuals to achieve personal goals.
  19. All health care services and supports must be furnished in Americans with Disability Act (ADA)-compliant physical facilities and programs.
  20. Enrollees should be permitted to retain existing physicians, other health practitioners, personal care workers, and support agencies that are willing to adhere to plan rules and payment schedules.
  21. Enrollees with disabilities should be fully informed of their rights and obligations under the plan, as well as the steps necessary to access needed services in accordance with the requirements of the Social Security Act.
  22. Grievance and appeal procedures should be established that take into account physical, intellectual, behavioral, and sensory barriers to safeguarding individual rights.

Chapter 3 explains the rationale for each of the guiding principles outlined above.


Drawing upon the guiding principles, NCD recommends that federal and state policymakers initiate the following actions to ensure that people with disabilities gain access to the full array of health and long-term services and supports they need while enrolled in Medicaid managed care programs:

Recommendations to Federal Policymakers

Recommendation #1:

CMS should prepare and disseminate a written protocol outlining the criteria to be used in reviewing state demonstration/waiver requests involving Medicaid managed long-term services and supports (LTSS).

Recommendation #2:

In reviewing state waiver/demonstration requests involving the provision of LTSS, CMS should enlist the assistance of disability experts from other units within the U.S. Department of Health and Human Services (HHS).

Recommendation #3:

CMS should require states planning to deliver LTSS through managed care contracts to include in their LTSS coverage of both institutional and home and community-based (HCB) services.

Recommendation #4:

CMS should enforce the “maintenance of effort” requirement in the Affordable Care Act and require states to reinvest savings achieved by lowering institutional admissions and returning residents to the community in expanding access to, and the quality of, HCB supports.

Recommendation #5:

CMS should be allotted the personnel required to review, approve, and oversee implementation of state managed care waiver/demonstration programs and carry out its other related statutory responsibilities.

Recommendation #6:

Congress should restructure Medicaid laws governing LTSS to eliminate the bias toward institutional services and emphasize instead person-centered community supports designed to promote the inclusion of beneficiaries with disabilities in the mainstream of American society.

Recommendation #7:

The Federal Government should direct more time and resources to improving the information management capabilities of state and local LTSS systems for people with disabilities.

Recommendation #8:

HHS should designate LTSS as a priority area for comparative effectiveness research.

Recommendation #9:

Congress should eliminate inconsistencies between Medicare and Medicaid statutes governing durable medical equipment and assistive technology, possibly by assigning sole responsibility for purchasing such equipment to one program.

Recommendation #10:

CMS should encourage states that intend to enroll people with disabilities in Medicaid managed care plans to develop explicit strategies for eliminating existing disparities in access to health services between people with and without disabilities and promote wellness initiatives targeted to people with disabilities.

Recommendation #11:

The HHS Administration on Community Living, in collaboration with other departmental units and disability interest groups, should spearhead efforts to develop disability-specific outcomes standards to measure access to, and the quality of, health care and long-term supports for people with disabilities.

Recommendation to State Policymakers

Recommendation #12:

Each state planning to enroll people with disabilities in Medicaid managed care plans should prepare a long-range strategic plan to guide the transformation of Medicaid-funded health care and LTSS for people with disabilities. A state’s strategic plan should be built around a core set of disability values, and those values (see Principles #1–#4 above) should be reflected in the day-to-day service delivery policies and practices adopted by the state and all managed care contractors.

Recommendation #13:

States should actively enlist the assistance of nongovernment stakeholders in designing and operating a managed care system targeted to Medicaid-eligible people with disabilities.

Recommendation #14:

Disability policy experts—both within and outside of state government—should be involved in designing and implementing Medicaid managed care plans involving beneficiaries with disabilities, especially when LTSS are covered under the plan.

Recommendation #15:

State policymakers should grant the state Medicaid agency the authority and resources necessary to hire and retain an adequate number of qualified personnel to effectively administer managed care contracts in collaboration with relevant disability-specific state agencies.

Recommendation #16:

Any state planning to enroll beneficiaries with disabilities in a Medicaid managed care program should complete a readiness assessment to determine the barriers to enrolling various subpopulations of people with disabilities and use the results of this assessment to establish a population-specific phase-in plan.

Recommendation #17:

States intending to enroll people with substantial disabilities in a risk-based Medicaid managed LTSS program should develop capitated payment methodologies that include incentives for providing such services in HCB settings.

Recommendation #18:

States planning to enroll Medicaid beneficiaries in managed long-term services should carefully analyze the diverse support needs among people targeted for enrollment and require managed care organizations (MCOs) to include skilled providers of such services and supports within their respective provider networks.

Recommendation #19:

States should institute a comprehensive management information system (MIS) to support effective, real-time administration of managed health and LTSS at both the state and MCO levels.

Recommendation #20:

States should establish a comprehensive quality management (QM) system to ensure the integrity of services to, and safeguard the health and welfare of, enrollees in managed health and LTSS plans that serve people with disabilities.

Recommendation #21:

Enrollees in Medicaid managed health care and long-term support plans should have access to conflict-free service coordination (case management) to assist them in navigating their way through the intake, assessment, service planning, provider selection, and service-monitoring processes.

Recommendation #22:

States should conduct or commission independent surveys of facility and program sites used by managed care network contractors and subcontractors to ensure that they comply fully with the provisions of the ADA and implementing regulations.

Recommendation #23:

State officials and MCO personnel should allow managed care enrollees with disabilities to maintain their relationships with physicians and other health practitioners, as well as personal support agencies and workers, wherever possible.

Recommendation #24:

States should develop and implement an aggressive education and outreach strategy to ensure that all plan enrollees (and potential enrollees) have accessible information concerning the services and supports available to them under the plan and how such services may be obtained.

Chapter 4 provides additional information and justifications related to these recommendations.


[i]. K. Gifford, V. K. Smith, D. Snipes, and J. Paradise, A Profile of Medicaid Managed Care Programs in 2010: Findings from a 50-State Survey (Kaiser Commission on Medicaid and the Uninsured in collaboration with Health Management Associates, September 2011).