A Tale of Two Cities? The Heterogeneous Impact of Medicaid Managed Care

68 Pages Posted: 21 Jun 2011 Last revised: 5 Mar 2014

See all articles by James Marton

James Marton

Georgia State University - Andrew Young School - Department of Economics

Aaron Yelowitz

University of Kentucky - Department of Economics

Jeffery C. Talbert

University of Kentucky

Date Written: February 25, 2014

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.

Keywords: Medicaid, Managed Care, Child Health

JEL Classification: I18, I38, J13

Suggested Citation

Marton, James and Yelowitz, Aaron and Talbert, Jeffery C., A Tale of Two Cities? The Heterogeneous Impact of Medicaid Managed Care (February 25, 2014). Journal of Health Economics, Forthcoming; Andrew Young School of Policy Studies Research Paper Series No. 11-28. Available at SSRN: https://ssrn.com/abstract=1866389 or http://dx.doi.org/10.2139/ssrn.1866389

James Marton (Contact Author)

Georgia State University - Andrew Young School - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

Aaron Yelowitz

University of Kentucky - Department of Economics ( email )

Lexington, KY 40506
United States

Jeffery C. Talbert

University of Kentucky ( email )

Lexington, KY 40506
United States

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