Managed care has replaced fee-for-service as the dominant delivery system that states use to deliver Medicaid services to beneficiaries. Under this system, states contract with managed care plans, which are paid predetermined rates to cover and coordinate Medicaid services. CMS and states share responsibility to ensure that managed care plans spend public funds wisely, provide high quality care, and deliver adequate access to services. To help meet these responsibilities, states use payment tools and financial mechanisms such as minimum medical loss ratio standards, state directed payments, and risk mitigation mechanisms, including risk corridors, risk pools, reinsurance, and gainsharing arrangements.

The Medicaid Payment Strategies (MPS) project provides advisory services to help CMS and states use, oversee, and improve these payment tools and financial mechanisms. Mathematica evaluates state compliance with medical loss ratio requirements, provides data-driven insights on state directed payments, and provides technical assistance to states.

For additional insight into this work, read Mathematica’s Health Affairs Forefront article, “Together, Medicaid Capitation Withholds and Value-Based Payments Can Improve Care for Dually Eligible Managed Care Enrollees,” which explores how states can align payment strategies to improve outcomes for dually eligible individuals.