Menges Group 5 Slides Series for October and November 2017

The Menges Group puts out these great analyses and insights each month. And is kind enough to let us repost them for the MM audience. Check out to learn more about the work they do. 

Attached are our two most recent 5 Slide Series reports, both of which are focused on the Medicaid managed care industry.

The October 2017 edition summarizes an analysis of Medicaid MCO financial performance of Medicaid MCOs in each state, showing the degree to which the health plans are collectively experiencing gains or losses.  During 2015 and 2016, about two-thirds of states with MCO capitation programs landed in what we would consider an optimal place – with the health plans collectively earning a positive margin on their Medicaid business but with that margin not exceeding 5%.

The November 2017 edition looks state-by-state at the degree to which its 2016 Medicaid expenditures were capitated.  Nationally, capitation payments represented 48.9% of FFY2016 Medicaid expenditures.  This figure was 27% as of 2010.  It is highly likely that we have now crossed a threshold where the majority of Medicaid expenditures occur via capitation payments.  This is an encouraging trend given all that the Medicaid MCOs do to systematically facilitate access to care, measure and improve quality, and steer care towards cost-effective settings and treatments.  Our one caution is that for the Medicaid MCO model to achieve taxpayer savings, unit prices need to be held closely in line with Medicaid fee-for-service prices.  When providers with strong negotiating leverage secure payments from MCOs well above Medicaid fee-for-service rates, the Medicaid managed care program in that state is probably adding to taxpayer costs rather than yielding savings.


November 2017 Use of Capitation in Medicaid by State 2016


October 2017 Distribution of States by Medicaid MCO Operating Margin