Managed care and fee-for-service (FFS) are two possible models that states use to deliver benefits under their Medicaid programs. Most states provide a combination of these two delivery models, which offer different financial incentives. Nationally, more than half of Medicaid beneficiaries are enrolled in a managed care plan. States contract with MCOs to provide a specific set of Medicaid-covered services to beneficiaries, and MCOs are expected to report encounter data to state Medicaid programs that allow the Medicaid administrators to track the services received by enrolled beneficiaries. The state pays the MCO a predetermined amount per beneficiary per month—known as capitation—and, in turn, the MCO pays providers for their services. According to CMS, by contracting with various types of Medicaid MCOs to deliver services, states can reduce program costs and better manage utilization of health care services. However, since MCOs receive a fixed amount per beneficiary regardless of the number of services used, we have noted in our prior work that there may be financial incentives for MCOs to limit access to services, potentially compromising quality of care and leading to underutilization of services. Historically, most Medicaid programs relied on a FFS delivery model. Under the FFS model, states pay providers directly for each service provided to a Medicaid beneficiary and the data included on a Medicaid FFS claim includes a specific amount for services delivered to a beneficiary. Certain states continue to use the FFS model to provide Medicaid services, such as behavioral health and dental care. We have noted in our prior work that, unlike managed care, the FFS model may give providers an incentive to use more services than necessary. Despite the fact that states have been required to submit encounter data to CMS since 1999, little is known about the utilization of services by Medicaid beneficiaries in MCOs. Historically, encounter data have been relatively incomplete and unreliable; thus, little is known about these data. At the behest of CMS, Mathematica Policy Research published a number of studies focused primarily on the usability and completeness of 2007- 2010 Medicaid encounter data, as reported in MAX. These studies first reported that encounter data were suitable for research purposes in 2012. CMS has provided guidance to states on methods to improve the completeness and accuracy of encounter data. In 2012, CMS released a protocol for validating Medicaid encounter data that states receive from MCOs. The protocol specifies a procedure for assessing the completeness and accuracy of encounter data that Medicaid MCOs are required to submit. Additionally, PPACA strengthened the requirement that Medicaid MCOs provide encounter data to states by withholding federal matching payments from states that do not report encounter data to CMS in a timely manner. The service utilization patterns of beneficiaries enrolled in Medicaid managed care plans can vary substantially and be related to a variety of factors, including the characteristics of beneficiaries and the scope of state Medicaid benefits offered. Beneficiary participation in managed care: States vary in the populations enrolled in managed care plans. States that enroll their most medically needy beneficiaries into managed care plans are likely to have higher service utilization. Conversely, states that enroll broader, generally healthier populations—such as children—into managed care plans are likely to have a larger pool of beneficiaries and potentially lower service utilization. The amount, duration, and scope of services covered by MCOs: Consistent with federal requirements, a state may determine the amount, duration, and the scope of benefits covered in their Medicaid programs. Thus, variations in service utilization patterns could reflect states’ benefit choices that are independent of their service delivery choices. Variation in Medicaid managed care payments: Medicaid MCO payments to providers for specific services vary substantially across states and this variation could affect the service utilization of beneficiaries. Specifically, we previously reported that in 23 states where we compared MCO and private insurance payments for E/M services, managed care payments were 31 to 65 percent lower in 18 states. Access to Providers: Access to providers who serve beneficiaries enrolled in Medicaid managed care plans can vary substantially within a state, such as between urban and rural areas, and also across states. Geographic variation in provider access, which can be driven by the breadth of an MCO’s network and the availability of providers in a given geographic area, can affect the type and amount of services used by beneficiaries. Based on our analysis of encounter data, the number of professional services utilized by adult and child beneficiaries per year in the 19 selected states ranged widely, with adult beneficiaries typically receiving more services. States also varied in how adult and child service utilization for professional services were distributed across service categories, and by whether beneficiaries were enrolled in comprehensive managed care plans for all of 2010 or part of the year. A detailed, interactive display of the data used to support our findings is available at http://www.gao.gov/products/GAO-15-481. For the 19 selected states, the number of services per beneficiary per year for adults ranged from about 13 to 55 services per beneficiary per year. (See fig. 1.) Services used by adult beneficiaries included E/M services, such as office visits and emergency room and critical care services; procedural services, such as surgery and ophthalmology; ancillary services, such as pathology and lab services and anesthesiology; and other professional services, such as oxygen therapy and hospital-mandated on-call service. Service utilization levels for adult beneficiaries are affected by many factors, including the extent to which they receive services on a FFS basis. Among the states in our analysis, the percentage of professional services that adult beneficiaries received on a FFS basis ranged from 0 to about 11 percent, with a median of 1 percent. Service utilization among adults was concentrated primarily in the ancillary and E/M categories. Specifically, ancillary services were the largest category in all but one state and accounted for 53 percent, on average, of all services utilized by adult beneficiaries across selected states. E/M services made up the second largest category (27 percent), followed by procedural services (15 percent) and, lastly, other professional services (4 percent). However, states varied considerably in how service utilization was distributed within service categories, as was shown in figure 1. Ancillary: Of total services, adult per beneficiary utilization of ancillary services ranged from 37 percent in Rhode Island to 65 percent in Washington and Illinois—a difference of about 28 percentage points. Pathology/lab services accounted for 63 percent, on average, of all ancillary service utilization across selected states. E/M: Of total services, adult per beneficiary utilization of E/M services ranged from 19 percent in Connecticut to 38 percent in Rhode Island—a difference of 19 percentage points. Office visits accounted for 68 percent on average, of E/M service utilization, while emergency room and critical care services accounted for 16 percent, on average. Procedural: Of total services, adult per beneficiary utilization of procedural services ranged from 8 percent in Illinois to 23 percent in Indiana—a difference of about 15 percentage points. Surgical services accounted for the largest portion—36 percent, on average— of all procedural service utilization across selected states. Other professional services: Of total services, adult per beneficiary utilization of other professional services ranged from 1 percent in Illinois, Kentucky, Nebraska, and Washington to 15 percent in Arizona—a difference of about 15 percentage points. For slightly more than half of the selected states, total service utilization among adults was higher for partial-year beneficiaries—those in comprehensive managed care plans for less than the full-year of 2010. Specifically, in 11 of the 19 states, the number of services utilized per year ranged from 2 to 78 percent higher for partial-year beneficiaries than for full-year beneficiaries. In the remaining 8 states, service utilization for partial-year beneficiaries was 3 to 15 percent lower than for full-year beneficiaries. Of the states that had comparatively higher service utilization for partial-year beneficiaries, there were generally no major differences in service utilization among partial-year beneficiaries based on the length of their enrollment. Specifically, partial-year beneficiaries who were enrolled for 1 to 3 months, 4 to 6 months, or 7 to 11 months generally had similarly high utilization rates. Further, we found that partial-year adult beneficiaries utilized more procedural and ancillary services than full-year beneficiaries in about two- thirds of the selected states. Among those states, partial-year adult beneficiaries used 19 and 26 percent more of these services, respectively, than full-year adult beneficiaries. (See fig. 2.) The utilization of professional services by children was generally lower than adults in selected states. In the 19 selected states, the number of services per beneficiary per year for children ranged from about 6 to 16. (See fig. 3.) Services used by child beneficiaries included E/M services, such as office visits and emergency room and critical care services; procedural services, such as surgery and ophthalmology; ancillary services, such as pathology and lab services and anesthesiology; and other professional services, such as oxygen therapy and hospital- mandated on-call service. Service utilization for child beneficiaries is affected by many factors, including the extent to which beneficiaries receive services on a FFS basis. Among selected states, the percentage of professional services that child beneficiaries received on a FFS basis ranged from 0 to about 29 percent, with a median of 9 percent. In contrast to adults, for which service utilization consisted mostly of ancillary services, utilization for children was distributed more evenly across service categories. For example, on average, E/M services were utilized most commonly by children (37 percent of services), followed by procedural services (33 percent), ancillary services (24 percent), and other professional services (5 percent). However, considerable state variation existed within service categories, as was shown in figure 3. E/M: Of total services, child per beneficiary utilization of E/M services ranged from 29 percent in Minnesota to 45 percent in Georgia and Rhode Island—a difference of 16 percentage points.