Managed Care in Medicaid Touted as Money Saver

Virginia officials said managed care has reduced the state's Medicaid bill by about 5 percent. The savings, they said, are applied to other programs.

"When we started managed care [in Virginia] in 1996, our big focus was saving taxpayer money," said Cheryl Roberts, deputy director of programs and operations for the state's Department of Medical Assistance Services. "The best part of the exercise is what the health outcomes look like. . . . We save money, but mostly we improve health."

Medicaid was established in 1965 as a federal- and state-financed program to pay for health care for those with low incomes.

The number of Medicaid enrollees has increased dramatically in recent years, from 28 million in 1991 to 44 million in 2004. The growth has fueled spending. Last year, the amount spent on Medicaid topped $311 billion, more than four times the amount spent in 1990.

Although states began exploring Medicaid managed care two decades ago, only recently has the practice been widely embraced.

In 1991, about 9.5 percent of all Medicaid enrollees were covered by managed care. By 2003, 59 percent of enrollees had managed care.

Virginia is aggressively pursuing managed-care programs to contain growth in Medicaid spending while trying to maintain access to care for low-income residents.

According to data compiled by the state, last year, 606,115 Virginians were enrolled in Medicaid, with 65 percent of those participating in a managed-care program.

Roberts said a major goal of the program is to provide recipients with "all the bells and whistles that we take for granted in commercial care."

The state plans to extend managed care to Medicaid recipients in Winchester in December. Lynchburg is to be added in May.