Michigan Association of Health Plans

Why Michigan should expand the managed care model in Medicaid

This editorial was written by MAHP Executive Director Dominick Pallone and was published in Crain’s Detroit Business. Read more here

High quality is the gold standard of health care. A new study looking at measurable outcomes finds that managed care – where an insurer is required to work with all of an individual’s health care providers to ensure the best care is delivered at the right time by the right provider – is outperforming the old fee-for-service system.

Health Management Associates (HMA), a 
top national healthcare research firm used by government and private sector entities 
to identify trends, statistical data, and measurable outcomes of healthcare policies across the world, conducted the study.

For many years, the fee-for-service model, where physicians and providers are reimbursed a uniform set fee for each service rendered, was typical around the nation. However, the last 40 years has seen the growth of a more innovative health care delivery model, known as managed care, where health plans create a network of providers and physicians to manage patient quality outcomes and competitively set provider reimbursement rates.

Managed care became more common in the early ‘80s to better monitor spiraling costs and measure patient experiences, outcomes and preferences. Today, most of the commercial employer sponsored healthcare market operates under a managed care model. Traditionally, government run programs like Medicare and Medicaid use a fee-for-service model to deliver healthcare services, although Michigan has been a leader in using private managed care organizations to achieve improved outcomes for quality, access, and cost.

In the Medicare space, Medicare Advantage, a managed care alternative to fee-for-service Medicare, has been growing in popularity. Nearly half of Medicare customers now select a Medicare Advantage plan to coordinate and administer their Medicare-covered benefits through a managed care network.

With that history, HMA compared the fee-for-service Medicaid programs to managed care programs to determine which provided the highest quality. The study found that managed care provides higher quality outcomes and has more positive impact overall on the quality of care for the Medicaid population across the county than fee-for-service.

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