Policy Impact

Making Medicaid Managed CareResearch RelevantMarsha Gold

Objective. To help researchers better understand Medicaid managed care and thekinds of research studies that will be both feasible and of value to policymakers andprogram staff. The article builds on our experience researching Medicaid managedcare to provide insight for researchers who want to be policy relevant.Principal Findings. We draw four lessons from our work on Medicaid managedcare in seven states. First, these are complex programs that differ substantially acrossstates. Second, each program faces common challenges and issues. The need to addresscommon design elements involving program eligibility, managed care and providercontracting, beneficiary enrollment, education, marketing, and administration andoversight provides a vehicle that researchers can use to help understand states and toprovide them with relevant insight. Third, well-designed case studies can provideinvaluable descriptive insights. Such case studies suggest that providing effectivedescriptions of state programs and experience, monitoring information on programperformance and tradeoffs, and insight on implementation and design are all valuableproducts of such studies that have considerable potential to be converted into policy-actionable advice. And fourth, some questions demand impact studies but the structureof Medicaid managed care poses major barriers to such studies.Condusions. Many challenges confront researchers seeking to develop policy-rele-vant research on managed care. Researchers need to confront these challenges in turnby developing second-best approaches that will provide timely insight into importantquestions in a relatively defensible and rigorous way in the face of many constraints.If researchers do not, others will, and researchers may find their contributions limitedin important areas for policy debate.

Key Words. Managed care, Medicaid, health policy, states, research methods

OVERVIEW OF OBJECTIVES

Healthcare services for low-income populations are rapidly changing with themovement to managed care, particularly as many states integrate managedcare strategies into their Medicaid programs. By 1997, 15.3 million Medicaidbeneficiaries were enrolled in managed care, representing almost half of

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all beneficiaries (Kaiser Family Foundation 1997). As ofJune 1997, morethan one-quarter of the Medicaid population in 40 states and the Districtof Columbia were enrolled in managed care. Although state objectives inmoving to managed care vary, states generally are seeking structures of carethat can both generate cost savings and potentially address historical problemsof access to and quality of care for Medicaid beneficiaries. In addition, somestates are using savings to fund expanded eligibility.

In this article, we draw on our experience in studying state Medicaidmanaged care initiatives to help researchers identify how these programswork and to assess what this means in terms of the kinds of research that maybe needed.

BACKGROUND AND RATIONALE

Understanding the effects of state managed care programs on low-incomepopulations is an important challenge to the research community. As statesshift to Medicaid managed care, they create the potential to introduce changethat influences how low-income populations receive care and the providersthey see. This change has the potential to improve care for populationshistorically known to be more prone to problems of access (Rowland 1993).But change may also generate problems, particularly if it is associated withpoorly designed and ill-financed systems in which the incentives of capitationcan undermine quality of care (U.S. General Accounting Office [USGAO]1993).

Managed care also tends to have spillover effects. For instance, it tendsto reduce the cross-subsidies on which providers have typically relied tofinance care for the indigent. Within the Medicaid program in particular,the movement to managed care may affect the flow of patients to safety netproviders and limit payments to federally qualified health centers, academicmedical centers, and public hospitals that typically have relied on Medicaid

This article and the research on which it is based were developed with funds from the HenryJ. Kaiser Family Foundation and the Commonwealth Fund. The views are those of the authoronly, not necessarily the associated organizations. An earlier version of this article was presentedat the annual meeting of the Association for Health Services Research in Chicago,June 15-17,1997.Address correspondence and requests for reprints to Marsha Gold, Sc.D., Senior Fellow, Math-ematica Policy Research, 600 Maryland Ave., S.W., Suite 550, Washington, DC 20024. Thisarticle, submitted to Health Services Research on September 3, 1997, was revised and accepted forpublication on May 20, 1998.

Making Medicaid Managed Care Research Relevant

revenue to support care to the uninsured (Fishman and Bentley 1997). Ifthese providers also rely on Medicare or commercial revenues, they may besimilarly stressed by the movement of patients to managed care under theseprograms. Researchers have thus tended to be concerned with efforts to assessboth the effects on safety net providers and the more direct effects on accessfor low-income populations, some ofwhom may lack insurance all or part ofthe time (Baxter and Mechanic 1997; Lipson 1997; Hawkins and Rosenbaum1998; Davis 1997).

Researchers seeking to develop valuable and timely insight into theseissues can find it difficult to identify the best ways to be useful. State Medicaidmanaged care initiatives are extremely complex, and experience often is notreported in the literature, especially on a timely basis and with sufficientoperational detail to explain how state programs, in fact, work. This makes ithard for researchers to follow state initiatives. It also increases the likelihoodthat researchers either will make assumptions that are not true becausethey lack information or will erroneously extrapolate to the "whole" fromindividual states they know best. Further challenging the researcher seekingto be relevant is the fact that the policy needs for research often are notwell articulated by policymakers, who are trained to raise policy questions,not research questions. In addition, the specificity of the policymaker focuschallenges researchers trained to focus on general and less temporally boundor operationally specific questions.

This article attempts to address limitations that researchers face infocusing their studies to provide timely and policy-relevant information.Identifying timely targets of research opportunity is a complex process. Tomake it easier, we use our experience in studying states active in implementingbroad-based Medicaid managed care initiatives to consider the kinds ofresearch questions that might be addressed by health policy researchers whowant their work to be relevant to policymakers and the real-world issuesthat policymakers face. Findings from our research, based on experience inCalifornia, Florida, Minnesota, New York, Oregon, Tennessee, and Texas,are described in considerable detail in individual case studies (Kaiser FamilyFoundation/Commonwealth Fund 1997) and in comparative studies thatcontrast the Oregon and Tennessee experiences in some detail (Gold 1997)and identify policy lessons based on findings from the first five states involvedin the study (all but Florida and Texas) (Gold, Sparer, and Chu 1996). All sevenstates were active in pursuing risk-based contracting for Medicaid managedcare but their initiatives were at different stages of development, used diversemodels, and had divergent implementation experience. This analysis draws

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lessons based on that research that we hope will encourage researchers toconsider the kinds of studies and analyses that will be useful, with implicationsfor the kind of training researchers need to carry them out effectively.

LESSON 1: MEDICAID MANAGED CAREPROGRAMS ARE COMPLEX AND DIFFERSUBSTANTIALLY ACROSS STATES

Our research shows that the structure of the Medicaid program and diversityacross the states means that a "uniform model" or "standard" program doesnot exist. This complicates the researcher's job, because it means that eachstate program is, to an extent, unique. Diversity may also exist within statesand over time and may be hard to capture in simple models and descriptions.

Table 1: Key Design Elements in Medicaid Managed Care1. Program Eligibility

* Geographic scope of initiative* Eligibility categories included in mandatory programs* Eligibility criteria for new eligibles (if any)

2. Managed Care and Provider Contracting* Managed care models used, including primary care case management networks* Health plans eligible to contract and selection process* Medicaid benefits covered in the capitation rate* Method and level of capitation rate, risk adjustment, and annual update* Contractual requirements (e.g., fiscal solvency, provider networks, access, quality

standards, cultural competency)3. Bengiciary Enrollment and Education

* Entity responsible for and resources for educating and enrollment* Type of information provided on plans and affiliated providers* Availability of toll-free lines, one-on-one counseling* Process for making a choice (e.g., mail, phone, in person)* Allowable health plan marketing (e.g., door-to-door, advertising, mail)* Process used for those who fail to make a choice in the relevant time frame, including

auto-assignment rates and rules* New member education, selection of physician, and initial plan contact

4. Administration and Oversight* Authority under which initiative mounted (federal and state)* Administrative agency and structure of oversight responsibilities across agencies* Division of authority between states and localities* Extent and quality of resources available for administration and oversight* Stability of program leadership and staff

MakingMedicaid Managed Care Research Relevant

For example, California's initiative is county-based; in the more urban coun-ties where managed care is being implemented, each county uses one of threedistinct managed care models that are being implemented at different speedsand with varying features across the counties. In Texas, the state decidesseparately for each county whether only capitated managed care plans willbe offered or whether there will still be a primary care case managementcomponent in which beneficiaries can choose a primary care physician whois paid fee-for-service but is held responsible for authorizing referrals.

Further, standard programs are unlikely to be created because eachstate's experience can be understood only in context, taking into account suchfactors as the state sociopolitical infrastructure, the structure of the Medicaidprogram and safety net, and the process and resources used to implementthe initiative. For example, the consensus style of politics in Minnesota andOregon contrasts markedly with the more contentious style in New York andCalifornia. And the key to understanding the Texas initiative and experienceis the fact that its Medicaid program is one of the most restrictive in the nationand that hospital districts and counties are legally responsible for indigent carein the state.

LESSON 2: COMMON CHALLENGES ANDISSUES PROVIDE A BASIS FOR USEFULCROSS-STATE RESEARCH

Although states differ in ways that affect their decision making, all states facecommon challenges and decisions, and consider similar factors in thinkingabout outcomes even though their initiatives may vary. Researchers whowant to understand the similarities and differences in Medicaid managedcare across states can use these dimensions of program design to interpretstate programs and provide a basis for cross-state studies and analysis.

Table 1, on page 1642, lists the key design elements embedded in eachstate initiative (albeit handled differently in each because federal statute givesstates considerable flexibility, particularly when they are operating underwaiver authority). These key design elements involve program eligibility;managed care and provider contracting; beneficiary enrollment, education,and marketing; and administration and oversight. Four key issues each statemust consider are:

1. Eligibility: Deciding Whom to Include. Should initiatives be restrictedto current Medicaid eligibles only and, if so, to which groups? If

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eligibility is to be expanded, which groups should be included in theexpansion, and how should coverage be structured and financed?Should the state go statewide with the program immediately orphase it in, and, if so, how?

2. Managed Care: Designing Key Features of the Managed Care Strategy.How should managed care initiatives be structured? If programsare mandatory, should there be a primary care case managementoption and under what circumstances? Should entities seeking risk-based contracting be required to have a state HMO license? Howwill the state recruit and contract with health plans, and what ben-efits, rates, and requirements will apply to the contract? Whatprovisions should be built in to protect safety-net providers? Whatbenefits, if any, should be carved out and provided separately?Inherent in these seemingly operational questions are key policydecisions, such as how the state might want to trade off managedcare readiness for broader choice among health plans offered toprotect safety net providers by making it easier for those providersto participate or maintain important services that benefit the com-munity (e.g., preventive care).

3. Enrollment: Actually Enrolling Individuals in a Managed Care Program.How will individuals be informed of the choices available to themand enrolled in health plans, and over what time frame will thisoccur? How should the default be structured for those who do notchoose among the options? The states we studied varied substan-tially in their approach to these issues: in fact, some used differentapproaches over time or in different parts of the state. For exam-ple, Sacramento (California) and Tennessee used mail-in enroll-ment exclusively, while Minnesota required in-person enrollmentin Medicaid managed care but not in the conversion of Minneso-taCare enrollees. Other states used amixed approach to enrollment.California and Oregon used enrollment brokers. Despite differ-ences in their approaches and the resources made available forthe enrollment process, all states had some degree of difficulty andexperienced unanticipated problems with the enrollment process.Thus, the state's approach to these challenges is an important designfeature to consider.

4. Administration: Responding to Transitional Probklms and Setting Up anOversight Structure. The initiatives we studied evolved in response

Making Medicaid Managed Care Research Relevant

to several factors, including problems or new issues that aroseand needed to be addressed. For example, highly publicized re-ports of abuses in marketing and other health plan activities ledFlorida to freeze Medicaid managed care enrollment for sometime and to revamp the oversight structure and resources avail-able to fund that structure. Political leadership in the governor'soffice changed in New York and Texas, bringing with it importantchanges in state Medicaid managed care strategy. Tennessee hadto decide how to respond when the second-largest health planexperienced financial problems, and also when the state's effortsto add a managed care component involving a behavioral healthcarve-out proved problematic. In addition, all states had to identifyways to apportion managed care oversight authority across a vari-ety of state agencies, which involved tradeoffs between the desirefor Medicaid-specific oversight and the ability to leverage generalstate regulatory authority, which typically rests with state insuranceand health departments, not Medicaid agencies. And, to varyingdegrees, states also faced challenges in recruiting and retaining staffwith appropriate skills when state personnel systems often werecumbersome and salaries were not competitive with those in thegrowing private sector seeking managers experienced in Medicaidmanaged care.

LESSON 3: WELL-DESIGNED CASESTUDIES CAN PROVIDE INVALUABLEDESCRIPTIVE INSIGHTSGiven the complexity of Medicaid managed care research, case study infor-mation, including both qualitative information from interviews and availabledocuments and secondary information (like descriptive data), are essentialtools for understanding Medicaid managed care programs. Good researchrequires understanding how each state program works, including both areasof ambiguity or diversity intrastate and the modification of features overtime. Qualitative information and case studies can be invaluable in providingsuch insights. These studies have the potential to provide valuable insight ontheir own; they also are useful in identifying important questions for morequantitatively based research across states.

Such analysis has the potential to be ofsubstantial utility to policymakersas well. In our work we encountered an immediate need for the following:

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* Effective Description. States want to know in some detail and withsome rigor what other states are doing and what their experiencehas been.

* MonitoringInformation. States recognize that there are tradeoffs, explicitor implicit, in designing any program. While establishing cause-and-effect relationships may be problematic, states still want to know ifthings became better or worse-and for which groups this happened-since their initiative. Thus, performance data that can signal trendsover time are very much needed.

* Impkmentation and Design Insight. States need help identifying whichmodels and practices to consider in structuring the operational designof programs. Providing this kind of information may be a partic-ularly promising, but unacknowledged, way in which research cancontribute to policymaking.

Research that focuses on identifying and describing "best practices" ina number of key implementation areas that state experience shows to beproblematic or challenging can be very valuable. For example, our work hasshown that beneficiary education and enrollment is a key challenge. Whatdo we know about what works better or worse in different circumstances?There is also the challenge of plan/provider recruitment. What should statesbe concerned about if they want to attract and retain quality health plans andproviders over time? How can states assess whether their capitation ratesare fair and equitable, particularly when competing and diverse interestsare invested in debating this issue? What are the tradeoffs when benefitsor populations are carved out or enrolled in specialized systems? What ap-proaches work for states seeking effective oversight without the kind ofmicro-management that will discourage plans with options from participating?

In addition to insight into best practices, studies also can provide usefulinput to decisions about Medicaid and managed care policy. For example,we found that the structure of Medicaid eligibility results in high levelsof eligibility turnover in the program that are inconsistent with the man-aged care model. What can research say about the fiscal, operational, andoutcome-based effects of eligibility turnover or loss of eligibility? Similarly,we found that although adequate administrative resources were importantto the smoothness of program implementation, they were often lacking andhard to obtain. What can research tell us about the "payoffs" from investingin administrative overhead in state policy implementation? These findingsmight help states better make the case for investing in staff and administrativesystems to support program initiatives.

MakingMedicaid Managed Care Research Relevant

Research also can help make the imminent policy tradeoffs more con-crete. For example, we were struck by the considerable diversity in thescope and form of the safety net across different communities. Can researchhelp identify where safety nets are most vulnerable and where it is mostimportant to protect them, or what consequences stem from a weakening ofthe safety net? We also observed considerable state-to-state differences in thepolitical capital brought to bear across the constituencies affiliated with theMedicaid program. Can research identify the presence of change in ways ofdistributing funds and services across beneficiary groups and providers withinthe Medicaid program, or across the low-income population as a whole?That is, can research show whether some are winning or losing more thanothers?

LESSON 4: SOME QUESTIONS DEMANDIMPACT STUDIES, BUT THE STRUCTUREOF MEDICAID MANAGED CARE IMPOSESMAJOR BARRIERS TO SUCH STUDIES

Impact studies are a vehicle for determining the actual changes that occurredas a direct consequence of an initiative (Shortell and Richardson 1978; Veneyand Kaluzny 1984). With respect to Medicaid managed care, for example,impact studies could include evaluations of any changes in access or qualityof care, whether savings occurred and who benefited by them, and the effectsof changes on those outside the initiative, like the uninsured or safety netproviders. These are important questions. Congressional and state legislators,for example, want to know whether Medicaid managed care saves money and,if so, how much, at what cost (if any), and under what circumstances? Suchquestions are critical when budget pressures are intense and cost savings area major impetus for innovation.

Unfortunately, our experience illustrates at least five challenges to de-signing and carrying out such studies on Medicaid managed care in ways thatwill be effective and will have the potential to make a contribution.

First, because state programs vary, the "intervention" is not standard;even if several prototype models and state types can be identified, the limitednumber of state programs constrains analysis.

Second, comparison groups for assessing effects on beneficiaries arenot readily obvious and therefore are hard to define. For example, thosepersons remaining in fee-for-service differ considerably from those included

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in the managed care initiatives, and they probably live in different areas ofthe state.

Third, little baseline data exist on access at the start ofthe initiative. Thisfact is particularly important, because most states acknowledge preexistingaccess problems that provided an impetus for their programs.

Fourth, state programs tend to be modified and refined over time,making it less clear how findings are to be interpreted or generalized fromsingle point-in-time studies.

And fifth, the scope of Medicaid managed care initiatives means thatthey inevitably have transitional effects and long time horizons before perma-nent effects are likely to emerge. Over this period, many other changes haveoccurred and will continue to. For example, welfare reform is now havingmajor effects on state Medicaid programs. Even without major policy shifts,Medicaid enrollment is highly sensitive to the economy. Thus, the pressureson states and their response to those pressures are likely to change over time.

Particularly because impact studies take a long time to conduct, re-searchers conducting them need to be careful to ask the right questions sothat the studies will provide the kinds of information that policymakers need,especially on a timely basis. At the current pace of change, for example, thekey question for policymakers is not whether to adopt managed care, buthow. Thus, impact studies need to identify not just whether managed care"works" or saves money, but under what circumstances and in what contexts.Further, the kinds of models that may prove more or less effective undercertain circumstances need to be identified. Unfortunately, these are not easyquestions to answer, especially when there are only 50 states and limiteddegrees of freedom.

THE CHALLENGE FOR RELEVANTRESEARCH

Our experience suggests that researchers interested in policy-relevant re-search on Medicaid managed care face serious challenges in achieving thisgoal. Not only are data limited, but the complexity of state programs, theirvariability, and their fluidity over time all complicate design. Researchers whowant to study these programs in a relevant way not only need to address thesechallenges from a research perspective but they also need to become suffi-ciently expert in the way programs work and the context in which they operateto be able to define the research question and suitable methods to approach

Making Medicaid Managed Care Research Relevant

it. Unfortunately, few researchers combine the kind of solid knowledge ofresearch design and methods with analogous training in program operations.In addition, most research training tends to favor one set of methods overanother, limiting the ability of researchers to effectively consider which formof study and method may work better in diverse situations. The complexity ofprograms also demands that researchers have considerable ability to toleratethe high levels of ambiguity and complexity that may frustrate some.

Researchers seeking to conduct policy-relevant research on Medicaidmanaged care need not be discouraged, but they may need to be willing totake more risks and to employ a mix ofresearch methods. Policymakers havea host of researchable questions that can be studied usefully. Some of thesequestions demand methods that may be less familiar or less elegant. Yet suchstudies arguably can be more robust and potentially less misleadingwhen a sit-uation is complex. A key challenge is to design "second-best" studies that willprovide timely insight into important questions in a defensible and rigorousway in the face of constraints. If researchers do not address these questions,others will, but with less vigor and objectivity. Ultimately, researchers mustfind a way to balance rigor and the creation ofnew knowledge with timelinessand operational feasibility. Thus, while it may be appealing to design studiesthat assume no constraints, researchers may find that their work is morerelevant to policymaking when they acknowledge constraints and find waysto work and contribute within-or even despite-the limitations.

REFERENCES

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Fishman, L., and J. D. Bentley. 1997. "The Evolution of Support for Safety NetHospitals." Health Affairs 16 (4): 30-47.

Gold, M. R. 1997. "Markets and Public Programs: Insights from Oregon and Ten-nessee." Journal ofHealth Politics, Policy andLaw 22 (2): 633-66.

Gold, M., M. Sparer, and K Chu. 1996. "Medicaid Managed Care for Low IncomePopulations." Health Affairs 15 (3): 153-66.

Hawkins, D., and S. Rosenbaum. 1998. "The Challenges Facing Health Centers in aChanging Healthcare System." In The Future U.S. Healthcare System: Who WillPayfor the Poor and Uninsured? Chicago: Health Administration Press.

Kaiser Family Foundation. 1998. Medicaid and Managed Care. Washington, DC: TheKaiser Commission for Medicaid and The Uninsured.

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Kaiser Family Foundation/Commonwealth Fund. 1997. Kaiser/Commonwealth Low-Income Coverage and Access Project: Surveys, Case Studies, and Focus Groups. Wash-ington, DC,June.

Lipson, D.J. 1997. "Medicaid Managed Care and Community Providers: New Part-nerships." Health Affairs 16 (4): 91-107.

Rowland, D. 1993. "Health Care for the Poor: The Contribution of Social Insurance."In Medical Care and Health for the Poor, edited by D. Rogers and E. Ginzberg.New York: Westview Press.

Shortell, S. M., andW C. Richardson. 1978. Health Program Evaluation. St. Louis, MO:C. V. Mosby Company.

U.S. General Accounting Office. 1993. Medicaid States Turn to Managed Care to ImproveAccess and Control Cost. Pub. No. GAO/HRD 93-86. Washington, DC: USGAO.

Veney,J. E., and A. D. Kaluzny. 1984. Evaluation and Decision Makingfor Health ServicesPrograms. Englewood Cliffs, NJ: Prentice-Hall, Inc.