Approximately one-third of Medicaid spending, $136 billion, is on long-term services and supports (LTSS).  While the majority of Medicaid LTSS takes place in institutional settings, such as nursing facilities and mental health facilities, there is an ongoing emphasis on the role of non-institutional facilities. A growing number of states, from 8 in 2004 to 16 in 2012 and an expected 26 through 2014, are adopting a managed care approach to expanding home-and community-based services. This transition is commonly referred to as a “rebalancing” of LTSS systems.

Managed LTSS arrangements are diverse. Program design varies on a number of aspects, including enrollment thresholds, whether enrollment is voluntary or mandatory, and the scope of benefits covered. Programs also vary in terms of the types of contractors used—private for-profit, private non-profit, publicly traded, or other corporate types—and the extent of risk assumed by the contractors.

An article appearing in the New York Times on March 6th, 2014 highlights issues facing governments, managed care plans, and beneficiaries in states implementing privately run long-term care programs.^[1] The primary focus of the article is how efforts to expand the number of people benefiting from the program in Tennessee have resulted in the establishment of higher eligibility thresholds with potentially adverse resulting consequences for beneficiaries and caregivers. The article also reviews incidents such as the suspension of new enrollment in New York’s largest managed long-term care plan after fraud investigations last year, and Federal congressional criticism of Minnesota for potentially overpaying plans in 2011. Given the interplay between maintaining and improving quality of care, on the one hand, and the imperative inherent in managed care programs to control costs, on the other hand, the implementation of cost control mechanisms often can trigger complaints and enhanced regulatory scrutiny.

Such anecdotes are simultaneously a symptom of, and impetus for, increased oversight of managed LTSS programs. A number of states with established programs have chosen to undertake oversight activities beyond federally required processes. Tennessee, for example, requires additional consumer rights protections and problem resolution mechanisms. In recent years, audits were commissioned in Wisconsin and Minnesota to determine the adequacy and appropriateness of capitation rates.

While best practices are still emerging, the establishment of monitoring and oversight responsibilities was a focus of the Centers for Medicaid and Medicare Services guidance on managed LTSS published in 2013.²As a result, managed care organizations contracting with Medicaid may experience particularly rigorous oversight activity both in states newly transitioning to managed LTSS and in states that are expanding or modifying existing programs.

_{1The article, “Pitfalls Seen in a Turn to Privately Run Long-Term Care.”} 

_{2 The “Guidance to States using 1115 Demonstrations or 1915(b) Waivers for Managed Long Term Services and Supports Programs” is available here.}