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Report: Managed Care Consolidation Advised as Medicaid Growth Matures

This month’s report from PricewaterhouseCoopers warns managed care organizations (MCOs) to watch their Medicaid enrollment numbers.

More states are turning to the support of private health plans as their budgets are squeezed by growing Medicaid-eligible populations. In turn, private plans “have emerged over the past few years as the beneficiaries of a confluence of exogenous events underlying growth in revenue, membership, and prominence.”

The report states that, “over the past year, private plans added 7.8 million Medicaid-eligible beneficiaries, while the number of Medicaid beneficiaries enrolled in fee-for-service or public managed care programs decreased by 1.4 million.”

Although it appears that era of “easy Medicaid growth” may be drawing to a close for managed care providers, PWC suggests that private plans may continue to “ride the market upward” as Medicaid growth levels out. To do this, they must consider “how to profitably grow in the absence of a highly supportive environment.” The report suggests three strategies for MCOs:

  • Consolidate Medicare services for longer-term scalability
  • Expand into adjacent and non-adjacent markets
  • Prepare to win in Medicaid’s remaining frontiers.

The benefits of growth thus far includes a broadened scrutiny of Medicaid programs that has regulators “poised to refresh and renew some operating constructs. . . to make the program more durable and cost-effective.”


Source: PricewaterhouseCoopers. The Still Expanding State of Medicaid in the United States.