Elsevier

Journal of Health Economics

Volume 36, July 2014, Pages 47-68
Journal of Health Economics

A tale of two cities? The heterogeneous impact of medicaid managed care

https://doi.org/10.1016/j.jhealeco.2014.03.001Get rights and content
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open access

Abstract

Evaluating Accountable Care Organizations is difficult because there is a great deal of heterogeneity in terms of their reimbursement incentives and other programmatic features. We examine how variation in reimbursement incentives and administration among two Medicaid managed care plans impacts utilization and spending. We use a quasi-experimental approach exploiting the timing and county-specific implementation of Medicaid managed care mandates in two contiguous regions of Kentucky. We find large differences in the relative success of each plan in reducing utilization and spending that are likely driven by important differences in plan design. The plan that capitated primary care physicians and contracted out many administrative responsibilities to an experienced managed care organization achieved significant reductions in outpatient and professional utilization. The plan that opted for a fee-for-service reimbursement scheme with a group withhold and handled administration internally saw a much more modest reduction in outpatient utilization and an increase in professional utilization.

JEL classification

I18
I38
J13

Keywords

Medicaid
Managed care
Child health

Cited by (0)

1

Address: Department of Economics, University of Kentucky, 335 Business and Economics Building, Lexington, KY 40506-0034, United States. Tel.: +1 859 257 7634; fax: +1 859 323 1920.

2

Address: College of Pharmacy, University of Kentucky, 237 BPC, 789 S. Limestone Street, Lexington, KY 40536-0596, United States. Tel.: +1 859 323 7141; fax: +1 859 323 0069.