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Medicaid Managed Care Lagging in Rural Counties

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Press Release Date: November 10, 1998

Medicaid managed care enrollment is growing at an explosive rate, but not in rural America where, according to a new nationwide study sponsored by the U.S. Agency for Health Care Policy and Research (AHCPR), it is progressing more slowly.

Findings show that Medicaid enrollees in only slightly over half of all rural counties in the United States were covered by some type of Medicaid managed care in early 1997, compared with nearly three-fourths of urban counties, and there are important differences in the types of managed care programs.

"This comprehensive, nationwide picture of Medicaid managed care implementation in rural areas provides an important evidence base for state policymakers and health care planners to use in making decisions aimed at improving their rural citizens' access to health care," said AHCPR Administrator, John M. Eisenberg, M.D.

According to the study, mandatory fully capitated programs are less common in rural counties than in urban ones (10 percent versus 23 percent), although seven states do have statewide mandatory fully capitated Medicaid programs. Rural counties are also less commonly covered by programs that combine types of managed care. The study also found that Primary Care Case Management (PCCM), a form of managed care involving no financial risk to the provider, is more common in rural counties than in urban ones.

"These findings can serve as benchmarks for research on the impact of the Balanced Budget Act of 1997," said lead author Rebecca T. Slifkin, Ph.D. of the University of North Carolina at Chapel Hill. " However, it remains to be seen if the legislation will spur states to expand fully capitated programs in rural areas."

The most common reasons given by state Medicaid officials for including their rural enrollees in managed care programs is to save money and/or improve access to health care and establish a medical home. Yet over half the states who said their main motivation was to reduce costs operated PCCM or mixed type plans rather than full-risk programs.

The study further found that:

  • Many states do not plan to implement capitated programs statewide.
  • Aside from the statewide capitated programs, most other states have not yet attempted nor been successful at generating significant rural enrollment in capitated programs.
  • Provider resistance and inadequate provider supply are major obstacles to implementing Medicaid managed care in rural areas.
  • Other obstacles include lack of health plan interest in rural markets, consumer resistance, and lack of education and communication in rural areas about managed care.

However, many states are determined to at least partially overcome these obstacles and have taken diverse approaches to implementing capitated Medicaid managed care in rural areas.

The findings are based on telephone interviews conducted in 1997 with Medicaid officials in all 50 states—the first stage of a larger collaborative effort between staff at the Cecil G. Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill and staff at Mathematica Policy Research, Inc.

Details are in "Medicaid Managed Care Programs in Rural Areas: A Fifty State Overview," by Dr. Slifkin; Sheila D. Hoag, M.A.; Pam Silberman, Dr. P.H., J.D.; Suzanne Felt-Lisk, M.P.A.; and Benjamin Popkin, J.D. It appears in the November-December 1998 issue of Health Affairs.

For additional information, contact AHCPR Press Office: Karen Migdail, (301) 427-1855 (

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