More state Medicaid agencies are are shifting to or considering managed care models to provide long-term care services, sparking a growing backlash from disability and elder rights advocates.

Traditionally, state Medicaid agencies paid individual health care providers on a fee-for-service basis. This model has long been criticized as cost-inefficient because it gives providers an incentive to order unnecessary treatments.

The vast majority of states now compensate regular Medicaid providers (that is, not long-term care providers) via a managed care model. Medicaid agencies and managed care organizations pay providers on a per member, per month basis, known as “capitation payments,” which is said to incentivize cost-efficient services. With these managed care plans, patients seek care through a limited network of physicians and health care facilities, which are theoretically organized to reduce overlapping expenses and provide more coordinated care.

Until now, most Medicaid agencies have exempted long-term care services from the managed care model. These vulnerable populations require complex care that was not viewed as a good fit for managed care's cost restrictions. Long-term services include services for people with chronic or other disabilities who require assistance with activities of daily living—services ranging from bathing and dressing to tube feedings and catheter draining. This group includes recipients of the Medicaid Home and Community Based (HCBS) waiver program, the federal government's primary program for providing in-home services to ensure that long-term care beneficiaries are not unnecessarily institutionalized.
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In 2013, Kansas became the first state to fully convert its entire Medicaid program—including all long-term care services—to managed care. Iowa followed suit three years later.

Michigan is among at least 22 other states actively exploring ways to integrate long-term care services into their Medicaid managed care programs, and some states have already adopted a managed care model for specialized services like dental, transportation and pharmacy services for those with disabilities.

After the switchover to managed care in Iowa, there have been complaints of people with home attendants losing half their home care hours and, more recently, Medicaid managers paying little or nothing for medical devises authorized by doctors. In January, Medicaid recipients and their advocates descended on the state capital, demanding reforms. Iowa politicians are now staking out positions on the privatized Medicaid program, according to the Des Moines Register.

In June 2017, Disability Rights Iowa filed a class action lawsuit against the state, alleging a range of violations under the Medicaid Act and the Americans with Disabilities Act, among other federal laws.

“The plans initially maintained services for their Medicaid members with severe disabilities who need extensive home and community-based services to be able to live integrated in their communities, with full access to community life to the same degree as individuals not receiving these services, rather than being forced to live in segregated, institutional settings,” the complaint states. “This year, the plans claimed that they had lost too much money on their Medicaid contracts, and began cutting these members' necessary home and community-based services without any significant changes to their health needs, giving them neither notice nor an opportunity to appeal.”

Similar concerns about transparency and reduced support hours have come from Kansas, where disability rights advocates have voiced concerns since the start of the state's transition to managed care.

In April 2016, the Obama Administration finalized new regulations seeking to increase federal oversight of states' contracting practices with managed care companies. Although the Trump administration allowed these rules to take effect this past July, it has also proposed exempting states that already have a large majority of their Medicaid recipients in managed care plans from rules mandating that they analyze data and monitor access to fee-for-service plans. This change could be significant for Medicaid recipients with disabilities, according to Health Affairs, because it would excuse states from monitoring whether this high-need population has access to Medicaid services.  

The National Council on Disability conducted a series of forums from 2014 to 2016, concerning the experiences of people with disabilities in Medicaid managed care plans. Click here to read the final report and recommendations. “Absent adequate access,” the report states, “enrollees will not receive the health care and support services necessary to achieve positive health outcomes and improved quality of life.”