GAO-12-872R Medicaid Managed Care

United States Government Accountability Office

Washington, DC 20548

August 17, 2012

The Honorable John D. Rockefeller, IV 

Chairman

Subcommittee on Health Care

Committee on Finance 

United States Senate

The Honorable Henry A. Waxman

Ranking Member

Committee on Energy and Commerce

House of Representatives

Subject: Medicaid: States’ Use of Managed Care

The Medicaid program, a joint federal-state program that finances health insurance 

coverage for certain categories of low-income individuals, is an important source of 

health care coverage for about 67 million beneficiaries. As Medicaid enrollment and 

spending have increased significantly over the past decade, so too has states’ use 

of managed care to provide services to Medicaid beneficiaries, and nearly all states 

enroll some Medicaid beneficiaries in a form of managed care. Within some general 

requirements set out by the Centers for Medicare & Medicaid Services (CMS), the 

federal agency responsible for overseeing the Medicaid program, states have broad 

flexibility to implement Medicaid managed care programs. As a result, states vary 

widely in terms of the scope of services they provide and the populations they enroll 

in managed care. For example, while states commonly contract with managed care 

organizations (MCO) to provide the full range of covered Medicaid services to 

certain enrollees,1 they also frequently rely on other arrangements, such as limited 

benefit plans,2

 

1

States pay MCOs a set, or capitated, per member per month fee to provide enrollees access to 

contracted services and coordination of care. 

which provide a limited set of services, such as dental care or 

behavioral health services, or primary care case management (PCCM) programs, in 

which enrollees are assigned a primary care provider (PCP) who is responsible for 

providing primary care services and for coordinating other needed health care 

2

Some states enroll Medicaid beneficiaries into limited benefit plans, which generally are paid on a 

prepaid basis for providing a limited set of covered services, such as dental care, behavioral health 

care, and transportation, to beneficiaries. 
 2 GAO-12-872R Medicaid Managed Care

services.3 States also vary in their use of managed care for other reasons, such as 

differences in the availability of certain providers or the concentration of program 

beneficiaries that live in urban or rural areas.

The Patient Protection and Affordable Care Act (PPACA) of 2010 requires that all 

states expand eligibility for Medicaid to nonelderly individuals whose income does 

not exceed 133 percent of the federal poverty level (FPL);4 this expansion is 

estimated to result in the enrollment of an additional 7 million individuals in 2014.5 As 

initially set forth in PPACA, states that did not fully implement this Medicaid 

expansion faced the potential loss of all federal Medicaid matching funds, including 

for the population already covered under existing program rules. However, the U.S. 

Supreme Court has ruled that states that choose not to expand Medicaid eligibility to 

these newly eligible individuals will forgo only the federal matching funds associated 

with such expanded coverage.6 States that choose to provide Medicaid services to 

newly eligible individuals may do so through managed care arrangements.7

Because of your interest in the potential increase in Medicaid managed care 

enrollment and related implications, you asked us to describe states’ use of 

Medicaid managed care, including the type of managed care arrangements they 

have in place, and their enrollment of populations with complex health care needs.8

 

3

GAO has historically described PCCM programs as a predominantly fee-for-service arrangement 

because most services provided by participating PCPs are reimbursed on a fee-for-service basis. 

Under a PCCM system, states pay participating PCPs a monthly, per person case management fee 

for coordinating enrollee health care services, and separately reimburse them on a fee-for-service 

basis for specific health care services they provide. For purposes of this report, however, we include 

PCCM programs in the broader discussion of managed care arrangements, which is consistent with 

CMS’s current practice. In addition, CMS officials noted that the agency is thinking more broadly 

about how PCCM authority can be used in the future in a non-managed care delivery system.

Understanding how states use Medicaid managed care—and related similarities and 

differences among them—may be informative as states consider expanding their 

use of managed care to new geographic areas or new populations, such as disabled 

beneficiaries who traditionally have more complex health care needs. This report 

examines variation in states’ use of Medicaid managed care, and identifies groups of 

4

Patient Protection and Affordable Care Act of 2010 (PPACA), Pub. L. No. 111-148, 124 Stat. 119, as 

amended by the Health Care and Education Reconciliation Act of 2010 (HCERA), Pub. L. No. 111-

152, 124 Stat. 1029. For purposes of this report, references to PPACA include the amendments 

made by HCERA.

5

Pub. L. No. 111-148, § 2001, 124 Stat. 271. The 7 million estimate includes new enrollment in both 

Medicaid and the Children’s Health Insurance Program. See Congressional Budget Office, Estimates 

for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme 

Court Decision (Washington, D.C.: July 2012).

6

See National Federation of Independent Business, et al., vs. Sebelius, Sec. of Health and Human 

Services, et al., No. 11-393 (U.S. June 28, 2012).

7

States will receive an increased federal match for newly eligible individuals at 100 percent for 2014 

through 2016, 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020 

and beyond. Pub. L. No. 111-148, §§ 2001(a)(3), 10201(c), 124 Stat. 272, 918, as amended by 

Pub. L. No. 111-152, § 1201, 124 Stat.1051.

8

Our definition of “Medicaid beneficiaries with complex health care needs” includes beneficiaries who 

were aged, blind/disabled, medically needy, or dually eligible for Medicare and Medicaid. We 

excluded from our definition dual eligibles who only received Medicare cost-sharing assistance

through Medicaid.
 3 GAO-12-872R Medicaid Managed Care

states that share similarities, such as program enrollment composition and general 

market characteristics.

To examine variation in states’ use of Medicaid managed care, we reviewed multiple 

data sources, such as CMS’s Medicaid Statistical Information System (MSIS) and 

the Census Bureau’s American Community Survey (ACS), and ultimately identified 

12 indicators that were informative in understanding the context in which states use 

Medicaid managed care.9 The indicators are grouped into two broad categories: 

(1) population-based characteristics, such as state-reported enrollment in MCOs and 

PCCM programs10 and the degree of potential Medicaid expansion that could occur 

in 2014;

11 and (2) state market and other characteristics, such as the health 

maintenance organization (HMO) penetration rate, and the concentration of lowincome individuals who lived in urban areas.12 We excluded other indicators, such as 

states’ regulatory environment and use of limited benefit managed care plans due to 

the lack of available or reliable data. Specifically, we excluded data on oversight 

activities because they were not available in a format that was suitable for our 

analysis, and enrollment in limited benefit plans because of inconsistencies in statereported data.

We then conducted a cluster analysis, a statistical method that assessed these 

indicators simultaneously in an effort to cluster states into groups, which were as 

similar as possible on the indicators within groups and as different as possible 

among the groups. Cluster analysis is a technique that allows us to focus on broad, 

shared patterns among states and can yield insights that are difficult to discern just 

by looking at simple comparisons of data across states. States that are similar with 

respect to multiple indicators may be able to gain insights from each other in terms 

of administering or expanding their Medicaid managed care programs. We also 

interviewed officials from CMS and other national policy experts, including officials 

 

9

The 12 indicators were: (1) the percentage of Medicaid beneficiaries enrolled in MCOs; (2) the 

percentage of Medicaid beneficiaries with complex health care needs enrolled in MCOs; (3) the 

percentage of Medicaid beneficiaries enrolled in PCCM programs; (4) the percentage of Medicaid 

beneficiaries with complex health care needs enrolled in PCCM programs; (5) the Medicaid 

Expansion Index, which is the degree of potential Medicaid expansion; (6) the concentration of lowincome individuals that lived in urban areas; (7) the HMO penetration rate; (8) the commercial HMO 

Market Competition Index; (9) the number of MCOs per 100,000 Medicaid beneficiaries; (10) the 

Primary Care Capacity Index; (11) the allowable PCPs in MCOs; and (12) the allowable PCPs in 

PCCM programs.

10Enrollment data are derived from state-reported data to CMS’s MSIS and provide detailed 

enrollment for the various managed care arrangements states have in place.

11The Medicaid Expansion Index is derived from projections of the number of individuals considered 

potentially eligible for Medicaid in 2014 as a result of PPACA’s expansion of eligibility in relation to the 

number of low-income individuals in the state. For more details, see L. Ku, K. Jones, P. Shin, B. 

Bruen, and K. Hayes, “The State’s Next Challenge—Securing Primary Care for Expanded Medicaid 

Populations,” New England Journal of Medicine, vol. 364, no. 6 (2011), DOI: 

10.1056/NEJMp1011623. This measure was developed prior to the Supreme Court decision and 

assumes expanded participation by all states; however, the extent to which states will implement 

PPACA’s eligibility expansion is uncertain at this time. Its purpose as a measure is not to assume 

states’ actions with regard to expanding Medicaid, but to provide a relative indicator of the extent of 

potentially eligible individuals within a state. 

12Historically, there have been differences in state implementation of Medicaid managed care in 

urban and rural areas; states have been more likely to contract with MCOs to provide care in urban 

areas. 
 4 GAO-12-872R Medicaid Managed Care

from the Medicaid and CHIP Payment and Access Commission and the National 

Association of Medicaid Directors, and reviewed published reports and surveys 

related to states’ use of Medicaid managed care.13 (See enc. I for more information 

on our scope and methodology, and enc. III for a detailed description of the 

indicators we examined.)

To determine the reliability of data sources we identified, we reviewed related 

documentation and conducted electronic testing for missing data, outliers, and 

apparent errors, and determined that the data were sufficiently reliable for our 

purposes. We conducted this performance audit from March 2011 through 

August 2012 in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our audit objectives. We 

completed our field work prior to the June 28, 2012 decision by the Supreme Court 

on certain aspects of PPACA, including the Medicaid expansion provision.

In summary, we identified four groups of states that differed in their use of Medicaid 

managed care on the basis of the 12 indicators we included in our analysis. A 

handful of these indicators—namely Medicaid enrollment in MCOs and PCCM 

programs, HMO penetration rates, and the concentration of low-income individuals 

that lived in urban areas—had significant influence on how states grouped. In 

contrast, within the four groups, considerable variation existed among the other 

indicators we examined, such as states’ primary care capacity and commercial HMO 

market index. For labeling purposes, we typically describe the four groups on the 

basis of states’ enrollment of Medicaid beneficiaries in MCOs and PCCM 

programs—generally the predominant similarity among the states within each group 

(see fig. 1.):

• Group 1 states were PCCM predominant, enrolling a high percentage of 

beneficiaries in PCCM programs, but typically not in MCOs;

• Group 2 states typically enrolled beneficiaries in both MCOs and PCCM 

programs;

• Group 3 states were MCO predominant, enrolling a high percentage of 

beneficiaries in MCOs, but typically not in PCCM programs; and

• Group 4 states were considered “other” states in that although their enrollment of 

beneficiaries was similar to Group 3, they were outliers on other indicators, which 

differentiated them from states in the other groups we identified.14

Enclosure II provides additional information on these groups of states, and 

enclosure III provides state-specific data related to each of the indicators.

 

13We use “states” to refer to the 50 states and the District of Columbia for the purposes of this report. 

14In addition, the similarity identified among states in Group 4 was weaker than the similarities 

identified among states in Groups 1, 2, and 3. 
 5 GAO-12-872R Medicaid Managed Care

Figure 1: Summary of Selected Indicators by State Groups

Note: GAO analysis of the Center for Medicare & Medicaid Services’ 2008 Medicaid Statistical Information System Annual 

Person Summary file, U.S. Census Bureau 2005-2009 American Community Survey, and Kaiser Family Foundation data. 

Some states in each group were exceptions to the general group descriptions presented in this figure. We use “states” to refer 

to the 50 states and the District of Columbia.

The cluster analysis results provide perspective on how states have implemented 

Medicaid managed care and highlight strong similarities shared among states within 

each of the groups, particularly with regard to MCO and PCCM enrollment. States 

within each of these groups could look to one another as a resource as they 

consider expanding their Medicaid managed care programs.

The results also provide specific information about challenges states may face in 

expanding their use of Medicaid managed care. For example, each of the groups 

emerging from our analysis included states that may face greater than average 

Medicaid program expansions in 2014 if they fully implement PPACA’s eligibility 

expansion, and it is likely that many of these states will look to managed care to 

provide services to their newly eligible population. Specifically, 10 of the 12 states 

with the greatest potential Medicaid expansion are in Groups 1 and 2—states with 
 6 GAO-12-872R Medicaid Managed Care

high enrollment in PCCM programs only or using a mix of MCOs and PCCM 

programs. However, 8 of these 10 states have a below average primary care 

capacity, and 9 of the 10 states had a comparatively small concentration of lowincome individuals that lived in urban areas or a low HMO penetration rate, which 

may affect the states’ capacity to expand their managed care programs to serve 

additional beneficiaries. For example, these states may face challenges attracting 

MCOs that may have concerns about the availability of adequate provider networks 

or the sufficiency of enrollment, and thus may not have a strong business case for 

entering the state’s Medicaid managed care market. Similarly, states with low 

primary care capacity may not have enough providers to expand their PCCM 

programs further, or MCOs that the state contracts with may have challenges 

building an adequate network of PCPs. Therefore, in determining whether to 

implement or expand the use of Medicaid managed care and related challenges, 

these states will need to consider these indicators, as well as other contextual 

factors that may affect their capacity to do so, and may look to similarly situated 

states for guidance.

Despite the robustness of our analysis, it provides an incomplete picture because 

data on additional indicators that affect states’ implementation of Medicaid managed 

care were not available or were unreliable. For example, data on states’ Medicaid 

program oversight capacity and activities could provide a more complete picture of 

states’ Medicaid managed care programs and related challenges, and could provide 

insight on resources and expertise they may need to expand their managed care 

programs. Similarly, reliable enrollment data for limited benefit plans would provide a 

more comprehensive picture of states’ use of Medicaid managed care. A cluster 

analysis that includes these data would offer even more robust groupings of states, 

which could be more useful for states that are considering Medicaid managed care 

expansions. Ensuring the availability of more complete and reliable data and 

conducting research on additional indicators will be important to developing a more 

comprehensive picture of how states use Medicaid managed care.

Agency Comments

We provided a draft of this report to the Department of Health and Human Services 

(HHS) for comment. HHS responded that it did not have any comments on the draft 

report.

– – – – – 

As we agreed with your offices, unless you publicly announce the contents of this 

report earlier, we plan no further distribution of it until 30 days from its date. We are 

sending copies of this report to the Secretary of Health and Human Services and 

other interested parties. In addition, the report is available at no charge on the GAO 

website at http://www.gao.gov. 
 7 GAO-12-872R Medicaid Managed Care

If you or your staff have any questions about this report, please contact me at 

(202) 512-7114 or yocomc@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page of this 

report. GAO staff who made major contributions to this report are listed in 

enclosure IV.

Carolyn L. Yocom

Director, Health Care

Enclosures – 4 
Enclosure I

8 GAO-12-872R Medicaid Managed Care

Scope and Methodology

To examine how states used managed care to provide services to their Medicaid 

beneficiaries, we conducted a cluster analysis, a statistical method that allowed us to 

identify groups of states that were similar across multiple characteristics 

simultaneously. As a first step, we identified the following data sources to collect 

specific information related to states’ use of managed care and other related 

characteristics: 

• The Centers for Medicare & Medicaid Services’ (CMS) Medicaid Statistical 

Information System (MSIS) Annual Person Summary File (APS): The MSIS APS 

file contains individual-level demographic, enrollment, and service utilization data 

summarized for each beneficiary at an annual level from quarterly MSIS files 

submitted by states.1

• CMS’s Medicaid Managed Care Data Collection System (MMCDCS): The 

MMCDCS includes state-reported information on states’ Medicaid managed care 

programs, including enrollment by type of managed care plan; program 

characteristics, such as the types of providers states permit to act as a primary 

care provider (PCP) in their Medicaid managed care programs; and state 

program management activities.2

• Census Bureau’s American Community Survey (ACS): The ACS provides data 

annually on population demographics, income, health insurance, education, 

employment, and other characteristics. We used information from the ACS to 

determine the concentration of low-income individuals that lived in urban areas in 

each state.3

 

1

At the time of our analysis, 2008 was the most recent year for which MSIS APS data were available; 

however, 2009 MSIS APS data are now available. Given the extensive time and effort required to 

identify and correct inconsistencies in the 2008 MSIS APS enrollment data, we opted to rely on the 

2008 data rather than taking additional time to undertake similar data cleaning efforts with the 2009 

data. State Medicaid agencies provide CMS with quarterly electronic files through MSIS that contain 

data on: (1) persons covered by Medicaid, known as “eligible files;” and (2) adjudicated claims, known 

as “paid claims files,” for medical services reimbursed by the Medicaid program. Each state’s eligible 

file contains one record for each person covered by Medicaid for at least 1 day during the reporting 

quarter; eligible records consist of demographic, eligibility, and monthly enrollment data. Paid claims 

files contain information on medical service-related claims and capitation payments, but only include 

expenditures that can be linked to a specific enrollee. The APS, however, summarizes the 

demographic, eligibility, enrollment, utilization, and expenditure data for each person for an entire 

fiscal year.

2

At the time of our analysis, 2009 MMCDCS data were the most recent available. CMS indicated that 

overall MMCDCS enrollment data are more reliable than MSIS enrollment data; however, MMCDCS 

data do not provide enrollment on the basis of Medicaid eligibility category, which was integral to our 

analysis. 

3

Low-income individuals are defined as those individuals with incomes below 125 percent of the 

federal poverty level (FPL). Urban areas comprise areas that consist of a central place(s), have a 

minimum population density of 1,000 people per square mile, and have an overall minimum 

population of 50,000 people. It also includes adjacent areas that have lower population density but 

are linked to the more densely settled area and have a population of at least 2,500 people, but fewer 

than 50,000. 
Enclosure I

 9 GAO-12-872R Medicaid Managed Care

• Kaiser Family Foundation data sources on states: The foundation’s website 

included information compiled by another organization on health maintenance 

organization (HMO) penetration rates, and the results of the foundation’s 50-state 

survey on states’ use and future planned uses of Medicaid managed care.4

• American Medical Association (AMA) data: A recent AMA report on competition 

in the health insurance industry included measures of state-level competition 

among commercial HMO plans based on data from another organization.

• Leighton Ku and colleagues’ data published in the New England Journal of 

Medicine: A 2010 journal article on states’ capacity to meet expanded demand 

for health care services if states fully implement the Medicaid eligibility 

expansions under PPACA included measures of state-level primary care capacity 

and potential increases in Medicaid enrollment.5

From these sources, we identified 12 indicators in 2 general categories of states’ use 

of Medicaid managed care: (1) population-based characteristics, such as enrollment 

in managed care organizations (MCO) and primary care case management (PCCM) 

programs; and (2) state market characteristics. (Table 1 and enc. III provide a 

detailed description of the indicators we examined.)

 

4

The Kaiser Family Foundation recently conducted a survey of state Medicaid managed care 

programs to collect information on states’ use of managed care and their future plans to use or 

expand the use of managed care. For more details, see K. Gifford, V. K. Smith, D. Snipes, and 

J. Paradise, A Profile of Medicaid Managed Care Programs in 2010: Findings from a 50-State Survey

(Washington, D.C.: Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured, 

September 2011).

5

The Primary Care Capacity Index is based on measures of states’ primary care workforce in relation 

to the state’s population. For purposes of this index, the primary care workers include internists, 

family or general practitioners, pediatricians, obstetricians/gynecologists, nurse practitioners, and 

physician assistants. It also accounts for the number of patients seen at federally qualified health 

centers. The Medicaid Expansion Index is derived from projections of the number of individuals 

considered potentially eligible for Medicaid in 2014 as a result of the Patient Protection and Affordable 

Care Act’s (PPACA) expansion of eligibility in relation to the number of low-income individuals in the 

state. For more details, see L. Ku, K. Jones, P. Shin, B. Bruen, and K. Hayes, “The State’s Next 

Challenge—Securing Primary Care for Expanded Medicaid Populations,” New England Journal of 

Medicine, vol. 364, no. 6 (2011), DOI: 10.1056/NEJMp1011623. This measure was developed prior to 

the U.S. Supreme Court ruling that states may choose not to expand coverage under PPACA and 

forgo only the federal matching funds associated with such expanded coverage, and assumes 

expanded participation by all states. See National Federation of Independent Business, et al., vs. 

Sebelius, Sec. of Health and Human Services, et al., No. 11-393 (U.S. June 28, 2012). However, the 

extent to which states will fully implement PPACA’s eligibility expansion is uncertain at this time.
Enclosure I

 10 GAO-12-872R Medicaid Managed Care

Table 1: Description of Indicators Included In the Cluster Analysis

Indicator name Description of indicator Year of data Source

Population-based Characteristics

Percent of Medicaid 

beneficiaries 

enrolled in managed 

care organizations 

(MCO)

Percentage of Medicaid beneficiaries 

that were enrolled in an MCO and had 

a capitated payment made on their 

behalf to an MCO.a

Fiscal year 2008 Medicaid Statistical 

Information System (MSIS) 

Annual Person Summary 

(APS) file

Percent of Medicaid 

beneficiaries with 

complex health care 

needs enrolled in 

MCOs

Percentage of Medicaid beneficiaries 

with complex health care needs that 

were enrolled in an MCO and had a 

capitated payment made on their 

behalf to an MCO.a,b

Fiscal year 2008 MSIS APS file

Percent of Medicaid 

beneficiaries 

enrolled in primary 

care case 

management 

(PCCM) programs

Percentage of Medicaid beneficiaries 

that were enrolled in a PCCM program 

and had a per member per month 

case management fee made on their 

behalf to a PCCM provider.c

Fiscal year 2008 MSIS APS file

Percent of Medicaid 

beneficiaries with 

complex health care 

needs enrolled in 

PCCM programs

Percentage of Medicaid beneficiaries 

with complex health care needs who 

were enrolled in a PCCM program and 

had a per member per month case 

management fee made on their behalf 

to a PCCM provider.b,c

Fiscal year 2008 MSIS APS file

Medicaid Expansion 

Index

Index based on the number of 

uninsured, nonelderly adults with 

incomes below 138 percent of the 

federal poverty level (FPL) who are 

either currently eligible for Medicaid, 

but not insured, or who could become 

eligible for Medicaid if states fully 

implement PPACA’s Medicaid 

expansion requirements in 2014.d

Calendar years 

2007-2009d Ku et al., 2010e

State Market and Other Characteristics 

Concentration of 

low-income 

individuals in urban 

areas

Percentage of the population earning 

less than 125 percent of the FPL that 

lived in urban areas.

Calendar years

2005-2009

American Community 

Survey 

Health maintenance 

organization (HMO) 

penetration rate

Percentage of the total population 

enrolled in an HMO plan, such as a 

commercial HMO plan, or a Medicaid 

or Medicare managed care plan.

July 2010 Kaiser Family Foundation

Commercial HMO 

market competition 

index

A Herfindahl-Hirschman Index (HHI) of 

the competitiveness of the statewide 

commercial HMO market. The index is 

the sum of the squared market share 

of all HMO plans in a state.f

January 2009 American Medical 

Association (AMA)

Number of MCOs 

per 100,000 

Medicaid 

beneficiaries

Number of MCOs that each state 

contracts with per 100,000 Medicaid 

beneficiaries.

October 2010 Kaiser Family Foundation

Primary Care 

Capacity Index

Index based on the number of primary 

care providers (PCP) and the number 

of unduplicated patients seen at 

federally qualified health centers in the 

state.g

Calendar years 

2008-2009g Ku et al., 2010e
Enclosure I

 11 GAO-12-872R Medicaid Managed Care

Indicator name Description of indicator Year of data Source

Allowable PCPs: 

MCO

Average number of different types of 

providers that a state allows MCOs to 

consider as PCPs.

June 2009 Medicaid Managed Care 

Data Collection System 

(MMCDCS)h

Allowable PCPs: 

PCCM

Average number of different types of 

providers that a state allows to 

participate as PCPs in its PCCM 

program.

June 2009 MMCDCSh

Source: GAO.

a

In general, we considered individuals as enrolled in an MCO if they were reported as being enrolled in an MCO and had a 

capitated payment made to an MCO on their behalf. For three states—Alabama, Idaho, and Utah—we assumed there was no 

MCO enrollment in 2008 to address data reporting issues. Specifically, Alabama did not enroll Medicaid beneficiaries into 

MCOs, but reported dually eligible enrollees for whom Medicaid pays for Medicare cost sharing as an MCO enrollee. Idaho and 

Utah erroneously reported enrollment in MCOs; neither state enrolled Medicaid beneficiaries into MCOs in 2008.

b

Our definition of “Medicaid beneficiaries with complex health care needs” includes beneficiaries who were aged, 

blind/disabled, medically needy, or dually eligible for Medicare and Medicaid. We excluded dual eligibles who only received 

Medicare cost-sharing assistance through Medicaid from our definition.

c

In general, we considered individuals as enrolled in a PCCM program if they were reported as being enrolled in a PCCM 

program and had a monthly case management fee paid on their behalf. Because of the way Colorado, Delaware, Maine, 

Massachusetts, New York, South Dakota, and Utah reported PCCM case management payments, we relied only on the PCCM 

enrollment data to determine the number of enrollees. To determine PCCM enrollment in Oklahoma, we relied on the limited 

benefit plan enrollment data because Oklahoma typically reports those enrolled in its comprehensive PCCM program as 

enrolled in a limited benefit plan instead.

d

The Medicaid Expansion Index is based on two measures: (1) adults aged 19 to 64 who could become eligible, or who are 

already eligible for Medicaid but not enrolled; and (2) an Urban Institute estimate of individuals who may become newly eligible 

for Medicaid and may enroll. The number of individuals who would potentially become eligible for Medicaid under PPACA’s 

eligibility expansion is standardized by the number of the individuals with incomes below 200 percent of FPL. This index was 

calculated using data from calendar years 2007 to 2009 and assumes that all states will expand Medicaid eligibility.

e

L. Ku, K. Jones, P. Shin, B. Bruen, and K. Hayes, “The State’s Next Challenge—Securing Primary Care for Expanded 

Medicaid Populations,” New England Journal of Medicine, vol. 364, no. 6 (2011), DOI: 10.1056/NEJMp1011623.

f

The market share is calculated on the basis of the number of insured individuals enrolled in a single, commercial HMO plan 

divided by the sum of all commercial HMO enrollment in a state, which is then multiplied by 100.

g

The number of “primary care providers” included the number of internists, family/general practitioners, pediatricians, 

obstetricians/gynecologists, 50 percent of the number of nurse practitioners and physician assistants, and the unduplicated 

number of patients seen at federally qualified health centers (FQHC). To create this index, the number of primary care 

providers was standardized by the state population, and the number of patients served by FQHCs was standardized by 

number of people with incomes below 200 percent of the FPL. This index was based on the following data sources: estimates 

of nonfederal physicians from the AMA; nurse practitioners in 2009 based on the Pearson Report; projected number of 

physician assistants in December 2008 from the American Academy of Physician Assistants; number of patients served in 

FQHCs in 2009 from the Health Resources and Services Administration, Bureau of Primary Health Care’s Uniform Data 

System.

h

Because of reporting issues in the 2009 MMCDCS for Wisconsin and Vermont, for our cluster analysis, we substituted data on 

the number of allowable primary care types in the state’s MCO program(s) for Minnesota and the number of allowable types in 

Vermont’s PCCM program with data collected by the Kaiser Family Foundation in a 50-state survey on Medicaid managed 

care. See K. Gifford, V. K. Smith, D. Snipes, and J. Paradise, A Profile of Medicaid Managed Care Programs in 2010: Findings 

from a 50-State Survey (Washington, D.C.: Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured, 

September 2011).

Limitations of Our Analysis

Our analysis captures state information with respect to the selected indicators 

described above; however, several other factors that reflect or affect states’ use of 

Medicaid managed care were not included in our analysis. For example, states vary 

in their use of limited benefit plans, which provide a limited set of Medicaid benefits, 

such as behavioral health and dental services, and are a key component of the 

overall Medicaid managed care delivery system in some states.6

 

6

Previous research has shown that Medicaid beneficiaries sometimes experience challenges in 

accessing behavioral health and dental care. For some populations, such as individuals with complex 

health care needs, these access challenges can be especially problematic. 

Although the MSIS 
Enclosure I

 12 GAO-12-872R Medicaid Managed Care

data included information on states’ enrollment in limited benefit plans, we identified 

cases where state-reported data were incomplete or inconsistent, and thus 

determined that the data were not reliable for our purposes.7 Another factor we 

considered, but ultimately excluded from our analysis, was the extent of states’ 

Medicaid managed care program management and oversight activities. According to 

CMS officials, the agency’s most readily available data source on state Medicaid 

managed care programs—the MMCDCS—contains descriptive and qualitative data 

on state program management and oversight activities, which were not suitable for a 

cluster analysis, which requires continuous, quantitative data.8 We considered other 

factors that could affect states’ use of Medicaid managed care, such as states’ 

regulatory environment and staff capacity to oversee Medicaid managed care 

programs, but found these to be either difficult to quantify or not readily available, 

and we ultimately excluded these factors from our analysis.

Data Reliability

To determine the reliability of the data sources we used, we reviewed related 

documentation and, when necessary, interviewed experts most knowledgeable in 

the collection and validation of the data. For large electronic data sets that we used, 

such as the MSIS APS, we conducted electronic testing for missing data, outliers, 

and other apparent errors. For example, we tested whether states known to not use 

a certain type of Medicaid managed care, such as MCOs, erroneously reported 

enrollment in or capitated payments to such plans. We also compared our results, 

when possible, to similar estimates of managed care enrollment available in other 

data sources, such as the 2008 Medicaid Managed Care Enrollment Report, which 

is derived from the MMCDCS. We also compared our estimates to other publicly 

available estimates, such as those compiled by the Kaiser Commission on Medicaid 

and the Uninsured and the Medicaid and CHIP Payment and Access Commission. 

We determined that the data sources we used were sufficiently reliable for the 

purposes of our engagement.

Methodology

After compiling data on the indicators we identified, we used cluster analysis to 

identify states that were similar across multiple indicators simultaneously. Cluster 

analysis is a method of measuring the degree to which groups of objects—in our 

case, states—resemble each other on many different characteristics. One can 

measure group similarity on a single characteristic simply by using graphs, 

descriptive statistics, or manually inspecting the data. However, these methods are 

less useful in describing similarities on multiple characteristics at once. The form of 

 

7

States were inconsistent in how they defined limited benefit plans or how they reported enrollment 

and capitated payments. Cluster analysis requires that all observations in the sample data have 

complete information, as missing or incorrect values could skew results.

8

CMS officials advised us that these are data are the only available program management data 

collected from states systematically and stored centrally, and that the data are an important source of 

high-level information on states’ activities. However, the officials acknowledged that the data are 

limited in their robustness and level of detail.
Enclosure I

 13 GAO-12-872R Medicaid Managed Care

cluster analysis we used creates an index from multiple indicators of interest, and 

then uses the index to form a sequence of clusters that range from most similar, with 

each state as its own cluster, to least similar, with all states in a single cluster. We 

did not have strong prior hypotheses about the multivariate distribution of the data, 

or where potential clusters may be located. As a result, the nonparametric and 

exploratory nature of our clustering method was appropriate to identify many clusters 

at varying degrees of similarity.

Because this method uses mathematical clustering rules and measures of similarity, 

it identifies potential clusters in a more objective, systematic, and replicable way 

than methods that require more human judgment. Cluster analysis requires us to 

decide (1) how to measure similarity across multiple variables, and (2) how to 

identify clusters of states that are similar to each other. The diversity of our indicator 

scales makes the measurement of similarity somewhat difficult. As table 2 shows, 

several of our indicators are scaled as proportions, but others are small counts or 

broader concepts measured on arbitrary scales. The maximum values across all 

indicators range from 2.79 to 10,000.
Enclosure I

 14 GAO-12-872R Medicaid Managed Care

Table 2: Descriptive Statistics for Indicators Used in Cluster Analysis

Indicator Mean Minimum 25th Percentile Median 75th Percentile Maximum

Population-based Characteristics

Percent of Medicaid 

beneficiaries enrolled 

in managed care 

organizations (MCO) 36.2 0 0 46.2 65.1 92.9

Percent of Medicaid 

beneficiaries with 

complex health care 

needs enrolled in 

MCOs 16.9 0 0 7.1 31.2 98.0

Percent of Medicaid 

beneficiaries enrolled 

in primary care case 

management (PCCM) 

programs 20.3 0 0 6.9 40.8 86.1

Percent of Medicaid 

beneficiaries with 

complex health care

needs enrolled in 

PCCM programs 15.0 0 0 5.0 22.1 93.9

Medicaid Expansion 

Index 100 25 90.2 101 117.1 153.9

State Market and Other Characteristics

Concentration of lowincome individuals in 

urban areas 74.5 45.2 62.8 75.9 86.4 100

Health maintenance 

organization (HMO) 

penetration rate 17.2 0.1 7.7 16.6 24.2 54.1

Commercial HMO 

market competition 

index 3,889 1,293 2,426 3,414 4,758 10,000

Number of MCOs per 

100,000 Medicaid 

beneficiaries 0.53 0 0 0.46 0.76 2.79

Primary Care Capacity 

Index 100 55.5 75.7 85.2 115.7 244.4

Allowable primary care 

providers (PCP): MCO 6.0 0 0 7.5 9.2 13

Allowable PCPs: 

PCCM 5.2 0 0 6 9 14

Source: GAO.

To make the indicators comparable, we standardized their scales in two different 

ways. First, we normalized each indicator so that its mean and standard deviation 

equaled 0 and 1, respectively. Second, we rescaled the indicators so that they 

ranged on the unit interval. Because both transformations are affine (or orderpreserving), they eliminated scale differences, while preserving the relative position 

of the states in each univariate distribution. This, in turn, allowed us to compare the 

relative location of each state in multiple dimensions. After rescaling the data, we 

calculated the Euclidean distance between each of the (N*(N-1))/2 = 1,275 possible 
Enclosure I

 15 GAO-12-872R Medicaid Managed Care

pairs of states and arranged the results in a symmetric matrix. This served as our 

final measure of multivariate distance. Using Euclidean distance, the normal 

standardization assumes that each variable has equal weight on the overall 

distance, but the unit interval standardization relaxes this assumption.

We used a hierarchical, agglomerative algorithm to identify clusters from the 

distance matrix. We first assumed that each state was its own cluster, and then 

combined states into larger clusters using the “complete linkage” method. This 

clustering rule avoided giving too much weight to the moderate number of outliers in 

the data, particularly states that enrolled zero participants in Medicaid managed 

care, unlike single or, to a lesser extent, average or median linkage methods. Our 

method produced a sequence of cluster options that varied from most to least 

homogenous within clusters. Working from these many clustering options, we used 

our knowledge of Medicaid managed care, and PPACA to create a final set of 

clusters that meaningfully described variation across states.

Specifically, our clustering algorithm had the following form. For any multivariate 

distance h ≥ 0, let i = 1, 2, ... , N index states and j = 1, 2, ... , Nh index clusters 

(subsets of states). Let Xij denote the vector of observations for state i in cluster j. 

The complete linkage algorithm initializes with h0 = 0 and i = j. For each j and h > h0, 

complete linkage adds state i to cluster j if max(d(Xi, Xj)) ≤ h for all i in j, where d(∙) is 

the Euclidean distance function and the maximum is taken over i. This step of the 

algorithm repeats until Nh = 1. We then chose from the sequence of clusters formed 

along values of h. 

Results

Figure 2 presents the results of our cluster analysis. This version of the analysis 

used the normalized standardization and all variables in table 2. The figure plots the 

distance between each pair of states as a matrix of colors, or a “heat map,” in which 

states that are more similar are shaded in darker red and those that are dissimilar 

are shaded in yellow. A “dendrogram” above the heat map represents the clustering 

process. Each line at the bottom of the dendrogram denotes a single state. The 

convergence of lines represents the combination of states into larger clusters at 

decreasing levels of similarity, which is measured on the vertical axis. Because 

distance matrices are symmetric, the plot is reflected above and below the diagonal. 

The results show four broad clusters, or groups, of states, based predominantly on 

the proportions of Medicaid beneficiaries enrolled in MCOs or PCCM programs, 

relative to other states. Within these large clusters, subclusters form around the 

degree of potential Medicaid expansion, the structure of the health care market, and 

the concentration of low-income individuals that lived in urban areas.
Enclosure I

 16 GAO-12-872R Medicaid Managed Care

Figure 2: Distance Matrix and Results of Cluster Analysis

Because rescaling on the unit interval did not meaningfully change the four broad 

clusters we identified, we concluded that our choice of scale was not critical, given 

the moderate stability of the results and our focus on the four broad clusters. Our 

four broad clusters persisted when removing various indicators from the multivariate 

measure of distance. As with rescaling the data, some subclusters included different 

states, and some states might have been reclassified as outliers. Ultimately, we 

decided to include all of the variables in table 2 in order to allow each variable to 

contribute to the final results.
Enclosure II

 17 GAO-12-872R Medicaid Managed Care

Summary of States’ Use of Medicaid Managed 

Care by Groups of Similar States

This enclosure highlights the indicators of states’ use of Medicaid managed care that 

were generally shared among states in each of the four distinct clusters, or groups, 

of states we identified. The descriptions provided in this enclosure generally focus 

on the indicators that appeared to have had significant influence on how states 

grouped. For labeling purposes, we typically describe the four groups on the basis of 

states’ enrollment of Medicaid beneficiaries in managed care organizations (MCO) 

and primary care case management (PCCM) programs, which was generally the 

predominant similarity among states within each group.

Summary of Group 1: PCCM Predominant States

Group 1 was the largest group of states we identified and included 18 states: 

Alabama, Alaska, Arkansas, Idaho, Illinois, Iowa, Louisiana, Maine, Mississippi, 

Montana, New Hampshire, North Carolina, North Dakota, Oklahoma, South Dakota, 

Utah, Vermont, and Wyoming. These states enrolled, on average, the highest 

percentage of beneficiaries in PCCM programs, and typically did not enroll any 

Medicaid beneficiaries in MCOs. In addition, these states generally had a low 

concentration of low-income individuals that lived in urban areas, and lower 

managed care penetration in their overall health insurance markets compared to 

states in the other groups we identified. States in Group 1 generally shared the 

following characteristics:

High PCCM and No or Low MCO Enrollment

• PCCM Enrollment: Fourteen of 18 states enrolled Medicaid beneficiaries, 

including those with complex health care needs, in PCCM programs. On 

average, states in Group 1 enrolled 45 percent of all Medicaid beneficiaries in 

PCCM programs, which was higher than the national average of 20 percent, and 

highest among the four groups we identified. (See fig. 3.) In addition, these states 

typically extended enrollment to Medicaid beneficiaries with complex health care 

needs, though to a lesser degree than their general Medicaid population. In 

2008, most of these states enrolled between 20 to 50 percent of Medicaid 

beneficiaries with complex health care needs in PCCM programs.1

 

1

Our definition of “Medicaid beneficiaries with complex health care needs” includes beneficiaries who 

were aged, blind/disabled, medically needy, or dually eligible for Medicare and Medicaid. We 

excluded from our definition dual eligibles who only received Medicare cost-sharing assistance 

through Medicaid.
Enclosure II

 18 GAO-12-872R Medicaid Managed Care

Figure 3: Percentage of Medicaid Beneficiaries Enrolled in Primary Care Case Management (PCCM) 

Programs among Group 1 States, Fiscal Year 2008

Note: GAO analysis of the Center for Medicare & Medicaid Services’ 2008 Medicaid Statistical Information System Annual 

Person Summary file. Oklahoma operates an enhanced PCCM program, but the state’s enrollment data are excluded from this 

figure because we determined that they were unreliable for our purposes. Specifically, the state reports enrollment in its 

enhanced PCCM program as enrollment in a limited benefit plan rather than in the PCCM program category in the MSIS. 

Therefore, we could not accurately estimate enrollment numbers in the state’s PCCM program. The following states did not 

enroll any Medicaid beneficiaries in PCCM programs and were excluded from this figure: Alaska, Mississippi, New Hampshire, 

and Wyoming. However, Alaska, Mississippi, New Hampshire, Oklahoma, and Wyoming were included in our calculation of the 

Group 1 average percentage of Medicaid beneficiaries enrolled in PCCM programs.

• MCO Enrollment: Sixteen of the 18 states did not enroll any Medicaid 

beneficiaries in MCOs in 2008. In the 2 states that did enroll Medicaid 

beneficiaries in MCOs—Illinois and Iowa—less than 10 percent of all 

beneficiaries were enrolled in MCOs, and an even lower percentage of 

beneficiaries with complex health care needs were enrolled.

• No PCCM or MCO Enrollment: Four states—Alaska, Mississippi, New 

Hampshire, and Wyoming—did not enroll any Medicaid beneficiaries in PCCM 

programs or MCOs in 2008.

Low Concentration of Low-Income Individuals in Urban Areas

Sixteen of the 18 states had a lower percentage of low-income individuals that lived 

in urban areas than the national average (75 percent). Most commonly, the overall 

percentages of low-income individuals that lived in urban areas was between 45 and 

75 percent, which was generally a lower percentage than in states in other groups.
Enclosure II

 19 GAO-12-872R Medicaid Managed Care

Low HMO Penetration

The health maintenance organization (HMO) penetration rate, which measured the 

percentage of the total population enrolled in an HMO, such as commercial HMOs, 

Medicaid MCOs, and Medicare managed care plans, was lower than the national 

average (17.2 percent) in 17 of the 18 states, and was typically less than 10 percent.

Variation in Potential Expansion of Medicaid and Managed Care

These states varied with regard to the degree of potential Medicaid expansion, in 

that 8 states were above the national average and 10 states were below. (See 

fig. 4.) However, 4 of these states—Alaska, Louisiana, Mississippi, and Oklahoma—

had the highest potential expansion index of all states. Ten states reported plans to 

expand the use of Medicaid managed care, 6 of which had a potential Medicaid 

expansion that was above the national average.2

 

2

In a 50-state survey, the Kaiser Commission on Medicaid and the Uninsured asked states to 

describe the future direction of Medicaid managed care in their states, including any plans to expand 

its use. For more information, see K. Gifford, V. K. Smith, D. Snipes, and J. Paradise, A Profile of 

Medicaid Managed Care Programs in 2010: Findings from a 50-State Survey (Washington, D.C.: 

Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured, September 2011).
Enclosure II

 20 GAO-12-872R Medicaid Managed Care

Figure 4: Group 1 States by Potential Medicaid Expansion Index and Medicaid Managed Care Expansion 

Plans 

Note: The potential Medicaid Expansion Index values are presented on this map for each state in Group 1. GAO analysis of 

data from L. Ku, K. Jones, P. Shin, B. Bruen, and K. Hayes, “The State’s Next Challenge—Securing Primary Care for 

Expanded Medicaid Populations,” New England Journal of Medicine, vol. 364, no. 6 (2011), DOI: 10.1056/NEJMp1011623; 

and K. Gifford, V. K. Smith, D. Snipes, and J. Paradise, A Profile of Medicaid Managed Care Programs in 2010: Findings from 

a 50-State Survey (Washington, D.C.: Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured, 

September 2011).

Summary of Group 2: States That Use Both MCOs and PCCM Programs

Group 2 was the second largest group of states we identified, and included 

16 states: Colorado, Connecticut, Florida, Georgia, Indiana, Kansas, Kentucky, 

Missouri, Nebraska, Nevada, Pennsylvania, South Carolina, Texas, Virginia, 

Washington, and West Virginia. Most notably, these states were generally 

characterized by their enrollment of Medicaid beneficiaries, including those with 

complex health care needs, in MCOs and PCCM programs. However, these states 

enrolled beneficiaries in MCOs or PCCM programs to a lesser extent than the other 

groups of states that used such arrangements. (See fig. 5.) Additionally, when 

compared to the other groups of states, Group 2 states generally had an average 

concentration of low-income individuals that lived in urban areas and average 

managed care penetration.
Enclosure II

 21 GAO-12-872R Medicaid Managed Care

MCO and PCCM Enrollment

• Above Average MCO Enrollment: All 16 states enrolled Medicaid beneficiaries, 

including those with complex health care needs, into MCOs in 2008. On average, 

these states enrolled 46 percent of all Medicaid beneficiaries in such plans, 

which was 10 percentage points higher than the national average (36 percent), 

but notably lower than the average percentage of beneficiaries enrolled in MCOs 

in Group 3 (64 percent) and Group 4 (67 percent). Over half of these states 

enrolled between 40 and 60 percent of all Medicaid beneficiaries in MCOs, but 

notable variation in enrollment existed among the states. Four states—Colorado, 

Kentucky, Nebraska, and South Carolina—enrolled less than a third of all

beneficiaries; and two states—Georgia and Indiana—enrolled two-thirds or more 

of all beneficiaries. While all these states extended MCO enrollment to Medicaid 

beneficiaries with complex health care needs, they most commonly enrolled less 

than 20 percent of such beneficiaries in MCOs.

• Moderate PCCM Enrollment: Thirteen states enrolled Medicaid beneficiaries, 

including those with complex health care needs, in PCCM programs in 2008. 

Enrollment in these states varied widely, ranging from less than 10 percent of all 

Medicaid beneficiaries in about half of the states, to 45 percent of beneficiaries in 

Kentucky. While 8 of the 13 states enrolled beneficiaries with complex health 

care needs to a lesser extent than their total population, 5 states—Colorado, 

Georgia, Indiana, Kansas, and Washington—enrolled a considerably higher 

percentage of beneficiaries with complex health care needs than the percentage 

of overall beneficiaries.
Enclosure II

 22 GAO-12-872R Medicaid Managed Care

Figure 5: Percentage of Medicaid Beneficiaries Enrolled in Managed Care Organizations (MCO) and 

Primary Care Case Management (PCCM) Programs among Group 2 States, Fiscal Year 2008

Note: GAO analysis of the Center for Medicare & Medicaid Services’ 2008 Medicaid Statistical Information System Annual 

Person Summary file. 

Average Concentration of Low-Income Individuals in Urban Areas

On average, the percentage of low-income individuals that lived in urban areas in 

this group of states (76 percent) was roughly equal to the national average of 

75 percent, and was over 10 percentage points higher than the average of states in 

Group 1 (63 percent). It was also about 10 percentage points lower than the average 

of states in Group 3 (85 percent) and Group 4 (87 percent).
Enclosure II

 23 GAO-12-872R Medicaid Managed Care

Average HMO Penetration

This group of states had an average HMO penetration rate (16 percent) that was 

roughly equal to the national average of 17 percent. When compared to the other 

groups, the average HMO penetration rate in these states was higher than those in 

Group 1 (7 percent), but lower than those in Group 3 (26 percent) and Group 4 

(36 percent).

Variation in Potential Expansion of Medicaid and Managed Care

These states varied with regard to the degree of potential Medicaid expansion, in 

that 10 states were higher than the national average and 6 states were lower. (See 

fig. 6.) However, three of these states—Georgia, Kentucky and South Carolina—

were among the 10 states with the largest potential Medicaid expansions. Ten states 

reported plans to expand the use of Medicaid managed care in the future, seven of 

which had a potential Medicaid expansion that was above the national average.3

 

3

See K. Gifford et al., A Profile of Medicaid Managed Care Programs in 2010. 
Enclosure II

 24 GAO-12-872R Medicaid Managed Care

Figure 6: Group 2 States by Potential Medicaid Expansion Index and Medicaid Managed Care Expansion 

Plans 

Note: The potential Medicaid Expansion Index values are presented on this map for each state in Group 2. GAO analysis of 

data from L. Ku, K. Jones, P. Shin, B. Bruen, and K. Hayes, “The State’s Next Challenge—Securing Primary Care for 

Expanded Medicaid Populations,” New England Journal of Medicine, vol. 364, no. 6 (2011), DOI: 10.1056/NEJMp1011623; 

and K. Gifford, V. K. Smith, D. Snipes, and J. Paradise, A Profile of Medicaid Managed Care Programs in 2010: Findings from 

a 50-State Survey (Washington, D.C.: Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured, 

September 2011).

Summary of Group 3: MCO Predominant States

The 12 states in Group 3—Arizona, California, Delaware, Maryland, Michigan, 

Minnesota, New Jersey, New Mexico, New York, Ohio, Rhode Island, and 

Wisconsin—were among those that generally enrolled the highest percentage of 

Medicaid beneficiaries in MCOs, and typically did not enroll any Medicaid 

beneficiaries in PCCM programs. In addition, these states generally had a high 

concentration of low-income individuals that lived in urban areas, and high managed 

care penetration within the states’ overall health insurance markets when compared 

to the other groups of states we identified.
Enclosure II

 25 GAO-12-872R Medicaid Managed Care

High MCO and No or Low PCCM Enrollment

• MCO Enrollment: All 12 states enrolled Medicaid beneficiaries, including those 

with complex health care needs, in MCOs in 2008. On average, these states 

enrolled 64 percent of all Medicaid beneficiaries in MCOs, which was 

substantially higher than the national average of 36 percent and the enrollment 

averages in Groups 1 and 2. (See fig. 7.) All 12 states also extended MCO 

enrollment to Medicaid beneficiaries with complex health care needs, though to a 

lesser degree than their general Medicaid population. These states typically 

enrolled between one-third and two-thirds of Medicaid beneficiaries with complex 

health care needs in MCOs.

Figure 7: Percentage of Medicaid Beneficiaries Enrolled in Managed Care Organizations among Group 3 

States, Fiscal Year 2008

Note: GAO analysis of the Center for Medicare & Medicaid Services’ 2008 Medicaid Statistical Information System Annual 

Person Summary file.

• PCCM Enrollment: Ten of the 12 states did not enroll any Medicaid beneficiaries 

in PCCM programs in 2008. The 2 states that did enroll Medicaid beneficiaries in 

PCCM programs at this time—Delaware and New York—enrolled less than 

10 percent of enrollees in PCCM programs, and enrolled an even lower 

percentage of beneficiaries with complex health care needs in such programs.

High Concentration of Low-Income Individuals in Urban Areas

The average percentage of low-income individuals that lived in urban areas in these 

states was 85 percent, which was notably higher than the national average 

(75 percent) and the averages in both Group 1 (63 percent) and Group 2 

(76 percent).
Enclosure II

 26 GAO-12-872R Medicaid Managed Care

High HMO Penetration

The HMO penetration rate was higher than the national average (17 percent) in all 

12 states, and these states, on average, had a higher HMO penetration rate 

(27 percent) than that of both Group 1 (7 percent) and Group 2 (16 percent).

Variation in Potential Expansion of Medicaid and Managed Care

These states varied with regard to the degree of potential Medicaid expansion, in 

that 7 states were above the national average for potential Medicaid expansion and 

5 states were below the national average. (See fig. 8.) New Mexico was among the 

10 states with the largest potential degree of Medicaid expansion in the United 

States. Five states reported plans to expand the use of Medicaid managed care, one 

of which, Michigan, had a potential Medicaid expansion that was above the national 

average.4

 

4

See K. Gifford et al., A Profile of Medicaid Managed Care Programs in 2010. 
Enclosure II

 27 GAO-12-872R Medicaid Managed Care

Figure 8: Group 3 States by Potential Medicaid Expansion Index and Medicaid Managed Care Expansion 

Plans 

Note: The potential Medicaid Expansion Index values are presented on this map for each state in Group 3. GAO analysis of 

data from L. Ku, K. Jones, P. Shin, B. Bruen, and K. Hayes, “The State’s Next Challenge—Securing Primary Care for 

Expanded Medicaid Populations,” New England Journal of Medicine, vol. 364, no. 6 (2011), DOI: 10.1056/NEJMp1011623; 

and K. Gifford, V. K. Smith, D. Snipes, and J. Paradise, A Profile of Medicaid Managed Care Programs in 2010: Findings from 

a 50-State Survey (Washington, D.C.: Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured, 

September 2011).

Summary of Group 4: Other States

Group 4 consisted of five states—the District of Columbia, Hawaii, Massachusetts, 

Oregon, and Tennessee.5

 

5

We use “states” to refer to the 50 states and the District of Columbia. 

When compared to the other three groups we identified, 

the degree of similarity across these five states was the weakest, which may be due 

to the fact that one of these states was typically an “outlier” on one or more of the 

indicators we examined. That is, at least one state had a value on an indicator that 

was either markedly higher or lower than the values for the other four states, thus 

diminishing the degree of overall similarity across states in this group. Although 

these states exhibited similarities on certain key indicators—such as MCO 

enrollment or concentration of low-income individuals that lived in urban areas—to 
Enclosure II

 28 GAO-12-872R Medicaid Managed Care

states in the other groups, they did not cluster with those states, possibly as result of 

the states’ “outlier” values on indicators.

High MCO Enrollment and No or Low PCCM Enrollment

All five states enrolled Medicaid beneficiaries, including those with complex health 

care needs, into MCOs, and with the exception of Massachusetts, did not typically 

enroll beneficiaries in PCCM programs.6 Specifically, these states enrolled an 

average of 67 percent of all Medicaid beneficiaries in MCOs, which was the highest 

average among all groups. (See fig. 9.) At 93 percent, Tennessee had the highest 

MCO enrollment of all states, which was 15 percentage points higher than the next 

highest state. All five states also enrolled Medicaid beneficiaries with complex health 

care needs in MCOs, but generally to a lesser degree than their overall Medicaid 

population.7 Massachusetts differed from the other 4 states in that it enrolled a 

smaller percentage of Medicaid beneficiaries in MCOs, and did enroll a sizeable 

percentage of beneficiaries in PCCM programs. Specifically, Massachusetts enrolled 

30 percent of all Medicaid beneficiaries in MCOs, and 24 percent of beneficiaries in 

PCCM programs, which was similar to MCO and PCCM enrollment of states in 

Group 2. In contrast, the other four states in this group—the District of Columbia, 

Hawaii, Oregon, and Tennessee—were most similar to Group 3 states in terms of 

MCO and PCCM enrollment.

 

6

Although Oregon did use a PCCM program in 2008, it enrolled 1 percent of its Medicaid beneficiaries 

in this program, which was the second smallest percentage of Medicaid beneficiaries enrolled among 

states that used PCCM programs.

7

Although Hawaii enrolled a high percentage of Medicaid beneficiaries in MCOs, which was similar to 

some other states in this group, it enrolled a distinctly smaller percentage of beneficiaries with 

complex health care needs (8 percent) than those other states enrolled.
Enclosure II

 29 GAO-12-872R Medicaid Managed Care

Figure 9: Percentage of Medicaid Beneficiaries Enrolled in Managed Care Organizations (MCO) among 

Group 4 States, Fiscal Year 2008

Note: GAO analysis of the Center for Medicare & Medicaid Services’ 2008 Medicaid Statistical Information System Annual 

Person Summary file. We use “states” to refer to the 50 states and the District of Columbia.

High Concentration of Low-Income Individuals in Urban Areas

On average, 86 percent of low-income individuals in these states lived in urban 

areas, which was the highest concentration of all groups we identified. The District of 

Columbia had the highest concentration of low-income individuals that lived in urban 

areas (100 percent) of all states. With respect to this indicator, states in this group 

generally were similar to states in Group 3; however, Tennessee, where the 

concentration of low-income individuals that lived in urban areas was 65 percent, 

was most similar to states in Group 1.

High HMO Penetration

All 5 states had HMO penetration rates that were higher than the national average 

(17 percent), and three of the states—the District of Columbia, Hawaii, and 

Massachusetts—had HMO penetration rates that were among the top 5 states 

nationally. At 54 percent, Hawaii had the highest HMO penetration of any other 

state, which was 12 percentage points higher than the second highest state. 

Generally, states in this group exhibited similar HMO penetration rates as states in 

Group 3.
Enclosure II

 30 GAO-12-872R Medicaid Managed Care

Variation in Potential Expansion of Medicaid and Managed Care

Like the other three groups we identified, states in Group 4 varied with regard to the 

degree of potential Medicaid expansion in that two states were above the national 

average for potential Medicaid expansion and three states were below. 

Massachusetts, which implemented a statewide health care reform in 2006 that 

included an expansion of Medicaid, was expected to have the smallest potential 

Medicaid expansion of any state as a result of Medicaid eligibility expansion 

requirements under the Patient Protection and Affordable Care Act.8 Oregon, 

however, was among the 10 states with the largest potential degree of Medicaid 

expansion, and reported plans to expand the use of Medicaid managed care.9

 

8

Patient Protection and Affordable Care Act of 2010 (PPACA), Pub. L. No. 111-148, 124 Stat. 119 , 

as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA), Pub. L. No. 111-

152, 124 Stat. 1029. For purposes of this report, references to PPACA include the amendments 

made by HCERA.

9

See K. Gifford et al., A Profile of Medicaid Managed Care Programs in 2010. 
Enclosure III

 31 GAO-12-872R Medicaid Managed Care

Summary of Indicators for States

This enclosure provides state-specific data on each of the indicators that we 

included in our analysis. We describe each indicator and its relevant data source, 

and provide general observations of differences among groups of states with respect 

to each indicator.

Percentage of Medicaid Beneficiaries Enrolled in Managed Care Organizations 

and Primary Care Case Management Programs

The Medicaid managed care enrollment indicators we identified provide information 

on the

• percentage of Medicaid beneficiaries who were enrolled in a managed care 

organization (MCO);1

• percentage of Medicaid beneficiaries with complex health care needs enrolled in 

an MCO;2

• percentage of Medicaid beneficiaries enrolled in a primary care case 

management (PCCM) program;3 and

• percentage of Medicaid beneficiaries with complex health care needs enrolled in 

a PCCM program.

We obtained data from the Centers for Medicare & Medicaid Services’ (CMS) 

Medicaid Statistical Information System, which states report to CMS quarterly, and 

which are summarized at an individual level annually in CMS’s Annual Person 

Summary (APS) file. Using the APS, we identified the beneficiaries who were 

enrolled in MCOs or PCCM programs, including beneficiaries that we considered to 

have complex health care needs.

 

1

We considered someone as enrolled in an MCO if they were both reported as enrolled and had a 

capitated payment made on their behalf to an MCO.

2

For the purposes of this analysis, “Medicaid beneficiaries with complex health care needs” includes 

beneficiaries who were aged, blind/disabled, medically needy, or dually eligible for Medicare and 

Medicaid. We excluded dual eligibles who only received Medicare cost-sharing assistance through 

Medicaid from our definition.

3

We considered individuals as enrolled in a PCCM program if they were both reported as enrolled 

and had a monthly case management fee paid on their behalf to a PCCM provider. 
Enclosure III

 32 GAO-12-872R Medicaid Managed Care

Percentage of Medicaid Beneficiaries Enrolled in MCOs

In 2008, 35 states enrolled Medicaid beneficiaries into MCOs, but enrollment varied 

widely, ranging from about 1 percent in Iowa to 93 percent in Tennessee. Twentyeight states, including all states in Group 3, and 4 of 5 states in Group 4, enrolled 

more than one-third of beneficiaries in MCOs, of which 16 states enrolled more than 

60 percent. (See fig. 10.) The 35 states that used MCOs in 2008 also enrolled 

Medicaid beneficiaries with complex health care needs into MCOs, although to a 

lesser extent than the overall Medicaid population in all states except Colorado and 

Tennessee.

Figure 10: Percentage of Medicaid Beneficiaries Enrolled in Managed Care Organizations (MCO) in 35 

States with MCOs, Fiscal Year 2008

Note: GAO analysis of the Center for Medicare & Medicaid Services’ 2008 Medicaid Statistical Information System Annual 

Person Summary file. We use “states” to refer to the 50 states and the District of Columbia.
Enclosure III

 33 GAO-12-872R Medicaid Managed Care

Percentage of Medicaid Beneficiaries Enrolled in PCCM Programs

Thirty-one states enrolled Medicaid beneficiaries into PCCM programs, although 

enrollment was relatively low except in the Group 1 states, which typically enrolled 

more than 50 percent of Medicaid beneficiaries in such programs.4 (See fig. 11.) All 

31 states also enrolled beneficiaries with complex health care needs in PCCM 

programs, although generally to a lesser extent than the overall Medicaid population.

Figure 11: Percentage of Medicaid Beneficiaries in Primary Care Case Management (PCCM) Programs in 

30 States with PCCM Programs, Fiscal Year 2008

Note: GAO analysis of the Center for Medicare & Medicaid Services’ 2008 Medicaid Statistical Information System Annual 

Person Summary file.

 

4

Oklahoma operates an enhanced PCCM program, but the state’s enrollment data are excluded from 

the data presented here because we determined that they were unreliable for our purposes. 

Specifically, the state reports enrollment in its enhanced PCCM program as enrollment in a limited 

benefit plan rather than in the PCCM program category in the MSIS. Therefore, we could not 

accurately estimate enrollment in the state’s PCCM program. 
Enclosure III

 34 GAO-12-872R Medicaid Managed Care

Concentration of Low-Income Individuals in Urban Areas

This indicator measures the percentage of individuals with incomes below 

125 percent of the federal poverty level (FPL) that lived in urban areas from calendar 

year 2005 to 2009. In general, states with higher MCO enrollment, such as those in 

Groups 3 and 4, had a higher concentration of low-income individuals that lived in 

urban areas, while states with greater PCCM enrollment and no MCO enrollment, 

particularly those in Group 1, generally had a lower concentration of low-income 

individuals that lived in urban areas. States with a comparatively small concentration 

of low-income individuals in urban areas may face challenges attracting MCOs that 

may have concerns about the availability of adequate provider networks or the 

sufficiency of enrollment.

Figure 12: Concentration of Low-Income Individuals in Urban Areas by State, Calendar Years 2005-2009

Note: GAO analysis of the U.S. Census Bureau 2005-2009 American Community Survey. We use “states” to refer to the 

50 states and the District of Columbia.
Enclosure III

 35 GAO-12-872R Medicaid Managed Care

Health Maintenance Organization Penetration Rate

A state’s health maintenance organization (HMO) penetration rate is the percentage 

of the total population in the state that is enrolled in HMOs, such as commercial 

HMOs, Medicaid MCOs, and Medicare managed care plans. The state HMO 

penetration rates we used were based on population data from the U.S. Census 

Bureau as of July 2010.5

 

5

The Kaiser Family Foundation reports on HMO penetration rate. See Kaiser Family Foundation, 

State HMO Penetration Rate, July 2010 (Washington, D.C.: July 2010), accessed September 30, 

2011, http://statehealthfacts.org/comparemaptable.jsp?ind=349&cat=7.

Typically, less than one-third of a state’s population was 

enrolled in such plans; however, a larger percentage of Medicaid beneficiaries were 

enrolled in MCOs, on average, than the percentage of the total U.S. population 

enrolled in any HMOs. In 2008, an average of 36 percent of Medicaid beneficiaries 

nationwide was enrolled in an MCO, whereas about 17 percent of the general 

population, on average, was enrolled in an HMO in 2010. States with MCOs that had 

the highest MCO enrollment, states in Groups 3 and 4, also typically had high HMO 

penetration rates. As expected, HMO penetration rates were lowest among states in 

Group 1, which generally did not enroll beneficiaries into MCOs.
Enclosure III

 36 GAO-12-872R Medicaid Managed Care

Figure 13: Health Maintenance Organization (HMO) Penetration Rate by State, July 2010

Note: GAO analysis of Kaiser Family Foundation’s state HMO penetration rate data. We use “states” to refer to the 50 states 

and the District of Columbia.

Commercial HMO Market Competition Index

This indicator describes the competitiveness of the commercial HMO market as 

measured by the Herfindahl-Hisrchman Index (HHI), which was calculated on the 

basis of the market shares of commercial HMOs in each state as of January 2009.6

 

6

We obtained data on state HHI values from the American Medical Association’s (AMA) “Competition 

in Health Insurance: A Comprehensive Study of U.S. Markets” 2011 Update, which reported on 

market data as of January 1, 2009. The HHI is the sum of the squared market shares of each firm in 

the market. See AMA, Competition in health insurance: A comprehensive study of U.S. Markets—

2011 Update (Chicago, Ill.: AMA, Division of Economic and Health Policy Research, 2011).

In general, states with low HHI values—defined as less than 1,500—are considered 

to have the most competitive HMO markets, while states with higher HHI values are 
Enclosure III

 37 GAO-12-872R Medicaid Managed Care

considered to be less competitive. States with HHI values between 1,500 and 2,500 

are considered slightly uncompetitive, and those with HHI values greater than 2,500 

are considered to be the least competitive.7

In general, there was variation among states in all four groups with respect to their 

HHI values, but overall, most states were not considered to have competitive 

commercial HMO markets, according to this measure. Only two states, New York 

and Ohio, which are in Group 3, would be considered to have competitive 

commercial HMO markets. However, because states in Groups 3 and 4 have been 

able to establish and maintain high enrollment in MCOs, the relationship between 

the competiveness of a state’s commercial HMO market and its Medicaid MCO 

market is unclear.

 

7

The HHI, which can reach a maximum value of 10,000, is a commonly used measure of market 

concentration and is one of the measures used by the Department of Justice (DOJ) and the Federal 

Trade Commission in assessing the effects of mergers on market competition. In general, the more 

concentrated a market is, the less competitive it is considered to be. The thresholds for classifying

varying levels of market competitiveness are based on DOJ guidelines.
Enclosure III

 38 GAO-12-872R Medicaid Managed Care

Figure 14: Commercial Health Maintenance Organization Market Competition Index by State, January

2009

Notes: GAO analysis of data from American Medical Association (AMA), Competition in health insurance: A comprehensive 

study of U.S. markets—2011 Update (Chicago, Ill.: AMA, Division of Economic and Health Policy Research, 2011). Data for 

Alaska, Montana, North Dakota, and Wisconsin are excluded above. Data for Alaska, Montana, and North Dakota were 

excluded because those states do not have measureable commercial HMO markets. Data for Wisconsin were excluded 

because data were unavailable. We use “states” to refer to the 50 states and the District of Columbia.
Enclosure III

 39 GAO-12-872R Medicaid Managed Care

Number of MCOs per 100,000 Medicaid Beneficiaries

This indicator measures the number of MCOs with which each state contracts per 

100,000 Medicaid beneficiaries, on the basis of state-reported enrollment data and 

the number of MCO contracts in a state as of October 1, 2010.8 The number of 

MCOs per 100,000 Medicaid beneficiaries ranged from 0.12 in Illinois to 2.79 in 

Oregon, and averaged 0.75 in the 36 states with MCOs. However, this indicator has 

limitations and needs to be considered within the broader context of states’ Medicaid 

programs. For example, while Tennessee has the highest MCO enrollment of all 

states, the number of MCOs serving Medicaid beneficiaries in the state is among the 

lowest because the state purposefully limits the number of MCOs with which they 

contract. Similarly, in some states, such as California, certain MCOs operate in 

limited regions of the state and are not available to Medicaid beneficiaries outside of 

those areas. Nonetheless, on average, groups of states with more MCOs relative to 

the size of their Medicaid population also had high percentages of Medicaid 

beneficiaries enrolled in MCOs, such as states in Groups 3 and 4.

 

8

See K. Gifford, V. K. Smith, D. Snipes, and J. Paradise, A Profile of Medicaid Managed Care 

Programs in 2010: Findings from a 50-State Survey (Washington, D.C.: Kaiser Family Foundation, 

Kaiser Commission on Medicaid and the Uninsured, September 2011).
Enclosure III

 40 GAO-12-872R Medicaid Managed Care

Figure 15: Number of Managed Care Organizations (MCO) per 100,000 Medicaid Beneficiaries in States 

Contracting with MCOs, October 2010

Notes: GAO analysis of data from K. Gifford, V. K. Smith, D. Snipes, and J. Paradise, A Profile of Medicaid Managed Care 

Programs in 2010: Findings from a 50-State Survey (Washington, D.C.: Kaiser Family Foundation, Kaiser Commission on 

Medicaid and the Uninsured, September 2011). GAO used data on the number of MCOs each state contracts with and the total 

number of Medicaid beneficiaries in each state to calculate the number of MCOs per 100,000 Medicaid beneficiaries. We use 

“states” to refer to the 50 states and the District of Columbia.
Enclosure III

 41 GAO-12-872R Medicaid Managed Care

Medicaid Expansion Index

This indicator provides an estimate of the degree to which states would need to 

expand their Medicaid eligibility to fully implement PPACA’s eligibility requirements.9

The Medicaid expansion index assumed all states would expand Medicaid eligibility 

up to 133 percent of the FPL and was developed prior to the U.S. Supreme Court 

ruling that states may choose not to expand coverage under PPACA and forgo only 

the federal matching funds associated with such expanded coverage. The Medicaid 

Expansion Index sets the average of all states at 100; states with index values 

greater than 100 have a higher than average potential expansion and states with a 

value lower than 100 have a lower than average potential expansion.

We found variation across the states with respect to the Medicaid expansion index, 

although some trends emerged. For example, states with higher than average 

potential Medicaid expansion index values were largely concentrated in the 

Southern region of the country, while states in the Northeast, Midwest, and Western

regions typically had lower than average potential Medicaid expansion index values. 

Similarly, on average, states in Groups 1 and 2 had higher than average potential 

Medicaid expansion index values when compared to the other 2 groups of states. 

For example, 3 of the 4 states in Group 1 that did not enroll any Medicaid 

beneficiaries in MCOs or PCCM programs—Alaska, Mississippi, and New 

Hampshire—were among the 10 states with the highest expansion index values.

 

9

See L. Ku, K. Jones, P. Shin, B. Bruen, and K. Hayes, “The State’s Next Challenge—Securing 

Primary Care for Expanded Medicaid Populations,” New England Journal of Medicine, vol. 364, no. 6 

(2011), DOI: 10.1056/NEJMp1011623. The Medicaid expansion index is derived from projections of 

the number of individuals considered potentially eligible for Medicaid in 2014 as a result of PPACA’s 

expansion of eligibility up to 133 percent of the federal poverty level in relation to the number of lowincome individuals in the state. National Federation of Independent Business, et al., vs. Sebelius, 

Sec. of Health and Human Services, et al., No. 11-393 (U.S. June 28, 2012). The extent to which 

states will fully implement PPACA’s eligibility expansion is uncertain at this time.
Enclosure III

 42 GAO-12-872R Medicaid Managed Care

Figure 16: States’ Medicaid Expansion Index by Group

Note: GAO analysis of data from L. Ku, K. Jones, P. Shin, B. Bruen, and K. Hayes, “The State’s Next Challenge—Securing 

Primary Care for Expanded Medicaid Populations,” New England Journal of Medicine, vol. 364, no. 6 (2011), DOI: 

10.1056/NEJMp1011623. The Medicaid expansion index was based on measures of insurance status and estimates of the 

number of nonelderly adults aged 19 to 64 with incomes below 138 percent of the federal poverty level (FPL) from the 2009 

and 2010 Annual Social and Economic Supplements (ASEC) of the Current Population Survey (CPS), and projections of the 

number of newly eligible Medicaid enrollees based on the 2007 and 2008 ASEC of the CPS and its Health Insurance Policy 

Simulation Model (HIPSM). We use “states” to refer to the 50 states and the District of Columbia.
Enclosure III

 43 GAO-12-872R Medicaid Managed Care

Primary Care Capacity Index

The primary care capacity index is a measure of current primary care capacity in 

states based on the number of primary care providers (PCP), such as physicians in 

general medicine and nurse practitioners, and the number of uninsured patients 

served at federally qualified health centers.10 The average for the index was set at 

100 across the states so that states with an index value lower than 100 are 

considered to have a lower than average primary care capacity, and those with 

index values greater than 100 are considered to have higher than average primary 

care capacity. In general, states varied with respect to their primary care capacity 

index, but two-thirds of states had lower than average primary care capacity. 

Relative to the other groups, states in Groups 1 and 4 had the greatest variation on 

this measure, and Group 3 states had the least. All states face the potential for 

enrollment increases, particularly if states fully implement PPACA’s Medicaid 

eligibility expansion. The increased enrollment will likely increase demand for 

primary care, which could be a challenge in states with low primary care capacity.

 

10See L. Ku, K. Jones, P. Shin, B. Bruen, and K. Hayes, “The State’s Next Challenge—Securing 

Primary Care for Expanded Medicaid Populations,” New England Journal of Medicine, vol. 364, no. 6 

(2011), DOI: 10.1056/NEJMp1011623. To develop this index, researchers from George Washington 

University used data from a variety of sources on the numbers of different types of primary care 

providers in 2008 or 2009, and data on the number of patients served at federally qualified health 

centers from the Health Resources and Services Administration’s Uniform Data System. Data on the 

number of nonfederal physicians in December 2008 are based on estimates from the American 

Medical Association; data on the number of nurse practitioners in 2009 are based on the Pearson 

Report; and data on the number of physician assistants in clinical practice in December 2008 are 

from estimates by the American Academy of Physician Assistants. Data from the Uniform Data 

System are for 2009. 
Enclosure III

 44 GAO-12-872R Medicaid Managed Care

Figure 17: States with an Above Average or Below Average Primary Care Capacity Index by Group

Note: GAO analysis of data from L. Ku, K. Jones, P. Shin, B. Bruen, and K. Hayes, “The State’s Next Challenge—Securing 

Primary Care for Expanded Medicaid Populations,” New England Journal of Medicine, vol. 364, no. 6 (2011), DOI: 

10.1056/NEJMp1011623. The Primary Care Capacity Index is based on the following data sources: estimates of nonfederal 

physicians from the American Medical Association; nurse practitioners in 2009 based on the Pearson Report; projected 

number of physician assistants in December 2008 from the American Academy of Physician Assistants; number of patients 

served in federally qualified health centers in 2009 from the Uniform Data System of the Bureau of Primary Health Care, Health 

Resources and Services Administration. We use “states” to refer to the 50 states and the District of Columbia.
Enclosure III

 45 GAO-12-872R Medicaid Managed Care

Allowable PCP Types

The indicators for allowable PCP types show information on the types of providers 

that states permitted MCOs to identify as PCPs or permitted as PCPs in their PCCM 

programs as of June 2009. Providers that were considered PCPs included general 

practitioners, family practitioners, internists, obstetricians/gynecologists, federally 

qualified health centers, rural health clinics, nurse practitioners, nurse midwives, 

Indian Health Service providers, physician assistants, psychiatrists, and 

psychologists. Within each of the four groups of states we identified, the average 

number of different types of providers allowed to participate as PCPs in MCOs or 

PCCM programs varied widely.11 Some states have a greater number of allowable 

PCP types, which could be a consideration when assessing a state’s capacity to 

provide primary care services to additional Medicaid beneficiaries.12

 

11We used state-reported data from the CMS Medicaid Managed Care Data Collection System to 

calculate the average number of PCP types allowed in a state’s MCO programs. For example, 

California reported having 11 MCO programs for which the number of allowable PCPs types ranged 

from 6 to 12. We calculated a similar average of the number of allowable PCP types across states’ 

PCCM programs.

12The Primary Care Capacity Index described previously in this report measures availability of certain 

providers including physicians, nurse practitioners, physician assistants, and the number of patients 

seen at federally qualified health centers; it does not include certain other providers, such as 

psychiatrists, psychologists, and social workers that some states report to CMS as being allowable 

primary care providers.
Enclosure III

 46 GAO-12-872R Medicaid Managed Care

Figure 18: Average Number of Allowable Primary Care Provider (PCP) Types among States with 

Managed Care Organizations (MCO) and Primary Care Case Management (PCCM) Programs, June 2009

Notes: GAO analysis of data from the Center for Medicare & Medicaid Services’ 2009 Medicaid Managed Care Data Collection 

System and K. Gifford, V. K. Smith, D. Snipes, and J. Paradise, A Profile of Medicaid Managed Care Programs in 2010: 

Findings from a 50-State Survey (Washington, D.C.: Kaiser Family Foundation, Kaiser Commission on Medicaid and the 

Uninsured, September 2011). Providers that were considered allowable PCPs included general practitioners, family 

practitioners, internists, obstetricians/gynecologists, federally qualified health centers, rural health clinics, nurse practitioners, 

nurse midwives, Indian Health Service providers, physician assistants, psychiatrists, and psychologists. We use “states” to 

refer to the 50 states and the District of Columbia.
Enclosure IV

 47 GAO-12-872R Medicaid Managed Care

GAO Contact and Staff Acknowledgments

GAO Contact

Carolyn Yocom, (202) 512-7114 or yocomc@gao.gov

Staff Acknowledgments

In addition to the contact named above, key contributors to this report were Susan 

Anthony, Assistant Director; Emily Beller; Julianne Flowers; Joanne Jee; Drew Long; 

Katherine Mack; and Jeff Tessin.

(290913)
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