Managed care is increasingly being seen as a way to contain costs and simultaneously maintain the quality of care. According to the latest data from the Group Health Association of America (1995), enrollment in health maintenance organizations (HMOs) has grown more than fourfold since 1983, with a dramatic 13-percent jump between 1993 and 1994 alone. One in five Americans is now enrolled in an HMO.
Like employers and other third-party payers, States are turning to HMOs and other managed care arrangements to control costs in Medicaid programs. The managed care portion of the Medicaid revenue stream is still low, but it is likely to increase in the future, mainly as a result of Medicaid statewide section 1115 research and demonstration and 1915(b) waiver programs, and/or Medicaid block grants. The waiver programs, which authorize States to enroll Medicaid recipients in managed care, represent the most recent strategy adopted by States to shift the emphasis from a fee-for-service to a managed care system. From 1990 to 1994, the number of Medicaid managed care enrollees jumped from 2.3 million to 7.8 million, with enrollment more than doubling between 1992 and 1994. Approximately one-quarter of all Medicaid beneficiaries were enrolled in managed care in 1994 (Hegner, 1995). Some of this increase has been attributed to the implementation of section 1115 waiver programs.
In this article, we describe the approaches adopted by federally funded Community and Migrant Health Centers (C/MHCs) to participate in Medicaid managed care. These providers, who have traditionally played an important role in serving the Medicaid population, have been able to maintain their financial stability as managed care continues to change the environment in which they operate. Retaining their basic mission of serving the underserved and the uninsured, however, may be at risk because of cuts in funding and the growing number of uninsured persons. This number was estimated to range from 40.1 to 41.7 million people in 1993, up from 39.8 million in 1992 (Employee Benefits Research Institute, 1995). Increasing health care costs and declining employment-based coverage are often seen as factors behind the steady increase in the number of uninsured persons (Employee Benefits Research Institute, 1995). Information on C/MHCs was obtained from interviews conducted by the staff of the Intergovernmental Health Policy Project with State officials, health center administrators, and the Bureau of Primary Health Care of the U.S. Public Health Service.
Mission Versus Margin
Health centers are required to serve Medicaid patients as well as anyone else, regardless of ability to pay. Since their inception about 30 years ago, health centers have played an important role in providing community-based primary care to medically underserved populations, including the uninsured. These populations have tended to use C/MHCs as a final, guaranteed source of continuous care. A major portion of the funding for C/MHC operations comes from two Federal grant programs and the Medicaid and Medicare programs. The remaining portion derives from State and local governments, patient fees that are set on a sliding-scale basis according to income and family size, private insurance, and other contributions (National Rural Health Association, 1995). Overall, grants tend to offset the difference between the actual costs of providing care and the amount collected from third-party payments and fees. These grants usually pay for the care of the uninsured, as well as essential support services (e.g., transportation, translation, outreach, case management), not covered by traditional insurers, that improve the health outcomes of underserved populations. In the current environment of decreasing Federal grant support, health centers have become more dependent on Medicaid and commercial insurers to provide the necessary revenue to …