Medicaid Managed Care: Efficiency, Medical Loss Ratio, and Quality of Care

North American Actuarial Journal (2019 Forthcoming)

38 Pages Posted: 31 Oct 2019

See all articles by Patrick L. Brockett

Patrick L. Brockett

University of Texas at Austin - Department of Information, Risk and Operations Management

Linda L. Golden

University of Texas at Austin - Red McCombs School of Business

Charles C. Yang

Florida Atlantic University

David H. Young

Brown University

Date Written: September 28, 2019

Abstract

The recent final rule on Medicaid managed care establishes the minimum medical loss ratio (MLR) requirement for Medicaid managed care and contains several provisions to strengthen delivery and payment reforms and improve efficiency and quality of care. Accordingly, this research examines the quality of Medicaid managed care and the effect of MLR and efficiency. The results show that, medical services efficiency has an insignificant (but negative) effect on the quality of care, which indicates that there may be room to improve medical services efficiency without significantly reducing the quality of care. The MLR does have a significantly positive effect on the aggregate quality ratings, however the magnitude of this effect is very small. This indicates that a minimum MLR requirement of 80% or 85% does not make a large difference on quality ratings.

Keywords: Medicaid managed care, quality of care, medical loss ratio, medical services efficiency

JEL Classification: I13, I11, H51

Suggested Citation

Brockett, Patrick L. and Golden, Linda L. and Yang, Charles C. and Young, David H., Medicaid Managed Care: Efficiency, Medical Loss Ratio, and Quality of Care (September 28, 2019). North American Actuarial Journal (2019 Forthcoming) , Available at SSRN: https://ssrn.com/abstract=3473964

Patrick L. Brockett

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States

Linda L. Golden

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX 78712
United States

Charles C. Yang (Contact Author)

Florida Atlantic University ( email )

777 Glades Road
Boca Raton, FL 33431
United States

David H. Young

Brown University ( email )

Box 1860
Providence, RI 02912
United States

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