Summary: With its emphasis on primary care, restricted access to specialists, and control of services, managed care is seen as a way to control spiraling Medicaid costs, which totaled $159 billion in fiscal year 1995. So far, states have extended prepaid care largely to low-income families--about 30 million persons--but to few of the additional six million Medicaid beneficiaries who are mentally or physically disabled. Managed care's emphasis on primary care and control of services is seemingly at odds with the care requirements of disabled beneficiaries, many of whom need extensive services and access to highly specialized providers. However, because more than one-third of all Medicaid payments go for the care of the disabled, policymakers have been exploring the possibility of enrolling disabled persons in managed care plans. These efforts affect three key groups: disabled beneficiaries, who include a small number of very vulnerable persons who may be less able to effectively advocate on their own behalf for access to needed services; prepaid care plans, which are concerned about the degree of financial risk in treating persons with extensive medical needs; and the state and federal governments, which run Medicaid. This report examines the (1) extent to which states are implementing Medicaid prepaid managed care programs for disabled beneficiaries and (2) steps that have been taken to safeguard the interests of all three groups. GAO's review of safeguards focuses on two areas: efforts to ensure quality of care and strategies for setting rates and sharing financial risk.
