Western Journal of Emergency Medicine: Integrating Emergency Care with Population Health

Some researchers and consulting groups have promoted managed care as a way to provide cost-effective quality care to Medicaid patients, based on assertions that are often poorly substantiated. Unfortunately, politicians and policy makers in California and other states have adopted the presumption of the cost-effectiveness of Medicaid Managed Care as a rationale for expanding the use of managed care programs to include a larger share of more Medicaid eligible enrollees, and expand coverage and services to the currently uninsured. This paper challenges the assertion that Medi-Cal Managed Care is cost effective, by demonstrating that the unique and idiosyncratic manner in which Medi-Cal managed care has been implemented in California (and other states) creates perverse incentives leading to cost-shifting and selective enrollment and dis-enrollment of costly beneficiaries. This places an unfair burden on fee-for-service Medi-Cal providers, who are expected to provide more services for less reimbursement. Administrators of Medicaid Managed Care programs need to consider risk adjusted rates for beneficiaries enrolled in plans in order to align incentives with program objectives. [WestJEM. 2009;10:124-129.]