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Strengthening the Rural Health Infrastructure

Medicaid Managed Care

In Rural Areas


Pam Silberman, Dr. P.H., J.D., Cecil G. Sheps Center for Health Services Research, University of North Carolina, Chapel Hill, NC.

Ilalynn Irwin, Regional Administrator, Division of Medical Services, Missouri Department of Social Services, Jefferson City, MI.

This session explored the development of Medicaid managed care programs in rural areas.

Dr. Silberman began by reviewing recent research findings on the extent and types of such programs in all 50 States, which showed that as of May 1997:

  • Only 2 States had no Medicaid managed care program.
  • Forty-five States had at least one operational Medicaid managed care program that required a waiver.
  • Primary care case management programs (PCCMs) were more common in rural areas; capitated plans in urban areas.

In looking at current program designs, Dr. Silberman noted that some States have capitated or PCCM programs statewide and other States allow different programs in rural and urban areas (i.e., PCCM in most of the State with some capitation limited to urban areas; capitation programs operating in most of the State and certain rural areas operating PCCM or partial capitated programs; capitation programs available in both urban and rural areas but mandatory capitation limited to urban areas).

The results seem related to barriers to statewide capitation such as the lack of commercial health maintenance organizations (HMOs) in rural areas and lack of providers or provider resistance to managed care arrangements.

Dr. Silberman reviewed various State strategies for overcoming these barriers such as changing their goals and using phased-in approaches, expanding the definition of primary care providers, and engaging in extensive community education efforts to reduce provider resistance.

Also discussed was how States vary in their protections for so-called safety-net providers, (e.g., community health centers) from no or minimal protections to giving managed care organizations (MCOs) extra points for contracting with safety-net providers or actually mandating contracts with certain safety-net providers.

Missouri is an example of a full-risk State. Ms. Irwin discussed various functional aspects of that program such as rural access standards. For example, the PCP (primary care provider) 20-mile standard cannot apply in rural areas where the usual and customary is a greater distance. Usual and customary is based on a commercial market standard for the area.

Ms. Irwin shared the following lessons Missouri learned about Medicaid managed:

  • The managed care contract is very important.
  • Traditional providers must continue to be part of provider networks.
  • Need to be flexible and have realistic expectations.
  • Need to use a phased-in approach.
  • Emphasize primary and preventive care and be willing to pay higher reimbursement rates.


Silberman P, et al. The Experience and Consequences of Medicaid Managed Care for Rural Populations. Literature Synthesis, North Carolina Rural Health Research Program, Cecil G. Sheps Center for Health Services Research—The University of North Carolina at Chapel Hill. Working paper, No. 51, July 20, 1997.

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