Summary: "Managed care," widely used in private-sector health care, refers to a health care delivery system with a single point of entry: A primary physician typically provides basic care and decides when a referral to a specialist or admission to a hospital is necessary. GAO testified that managed care in state Medicaid programs could improve access to quality health care. Because of the financial incentives of such programs and the vulnerability of Medicaid recipients, however, GAO cautions that safeguards must be instituted to adequately protect patients. These safeguards include a quality assurance system that requires client satisfaction and disenrollment surveys; a grievance procedure; and an outside, independent review of medical records. Further, states need to monitor (1) the financial arrangements between the contracting plan and its providers to spot excessive incentives to deny necessary services, (2) utilization data to determine if appropriate levels of service are being delivered, and (3) subcontractors in the same manner as contractors because the same problems can arise. Finally, effective state and federal oversight is needed along with prompt corrective actions when problems are discovered.
