Medicaid: State Flexibility in Implementing Managed Care Programs Requires Appropriate Oversight

GAO discussed the flexibility that state's have in restructuring their Medicaid programs, focusing on the: (1) existing authority to waive Medicaid managed care restrictions; (2) purpose behind the restrictions and the need for oversight in their absence; and (3) impact of recently approved waivers on federal Medicaid expenditures. GAO found that: (1) over 33 million low-income individuals depend upon health care made possible by the Medicare program; (2) requiring states to obtain waivers in order to broaden their use of managed health care could hamper their efforts to pursue cost-containment strategies; (3) to receive a waiver, a state must show that managed care will cost no more than the fee-for-service program, will not diminish access to quality care, and will not adversely affect access to emergency care or family planning services; (4) the absence of current program restrictions requires the substitution of approaches and adequate mechanisms to protect both Medicaid beneficiaries and federal dollars; and (5) the potential for increased federal spending under future statewide demonstrations suggests the need for greater oversight by Congress.