Summary: As states move to prepaid managed care to control costs and improve access for their Medicaid clients, the number of participating community health centers continues to grow. Medicaid prepaid managed care is not incompatible with health centers' mission of delivering health care to medically underserved populations. However, health centers face substantial risks and challenges as they move into these arrangements. Such challenges require new knowledge, skills, and information systems. Centers lacking expertise and systems face an uncertain future, and those in a vulnerable financial position are at even greater risk. Today's debate over possible changes in federal and state health programs heightens the concern over the financial vulnerability of centers participating in prepaid managed care. If this funding source continues to grow as a percentage of total health center revenues, centers must face building larger cash reserves while not compromising services to vulnerable populations. GAO summarized this report in testimony before Congress; see: Community Health Centers: Challenges in Transitioning to Prepaid Managed Care, by Mark V. Nadel, Associate Director for Health Financing and Policy Issues, before the Senate Committee on Labor and Human Resources. GAO/T-HEHS-95-143, May 4, 1995 (8 pages).
