WASHINGTON, A Lewin Group report released revealed compelling evidence that
Medicaid managed care provides significant cost savings and high quality care.
The study synthesized more than 14 separate reports on the value achieved when
states have implemented Medicaid managed care programs.

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Since the early 1990s, Medicaid programs have turned increasingly to the
managed care model because of its potential to provide high-quality, cost-
effective care. In fact, as states continue to address fiscal pressures,
health insurance plans can be a part of the solution.
Karen Ignagni, President and CEO of AHIP, said the report provides further
evidence that Medicaid managed care organizations offer more affordable, high-
quality care than the Medicaid fee-for-service program (FFS).
"Since the early 1990s, many state Medicaid programs have turned
increasingly to managed care to improve the quality of, and access to, care
and to contain costs," Ignagni said. "This report demonstrates how our
members are fulfilling these expectations."
Some highlights of the Lewin analysis of 14 studies include:

* The studies strongly suggest that Medicaid managed care model typically
yields cost savings -- these savings range from 2-19 percent across the
studies.
* Various studies demonstrated that states' Medicaid managed care cost
savings are largely attributable to decreases in inpatient utilization.
For example, rates of preventable hospitalizations in California were
38 and 25 percent lower in managed care than in FFS for the Temporary
Assistance for Needy Families and Supplemental Security Income
populations, respectively.
* Pharmacy management is another area where such programs yielded
noteworthy savings -- Medicaid managed care programs save between 10
and 15 percent on the costs of prescription drugs compared to Medicaid
FFS. For example, Arizona's cost per member per month (PMPM) for
prescription drugs for the aged, blind and disabled Medicaid
population, which are delivered and paid for within the state's
Medicaid managed care model, were found to be far lower than the costs
PMPM of drugs for the same population under any state Medicaid fee-for-
service program.
* The studies provide some evidence that Medicaid managed care savings
could be significant for the Supplemental Security Income (SSI) and
SSI-related population -- Medicaid managed care for the SSI population
in the Kentucky Region 3 Partnership made up 25 to 34 percent of total
enrollment and accounted for 53 to 61 percent of the savings achieved
from 1999 to 2003.
* The overwhelming majority of studies analyzed revealed that, in
addition to offering considerable cost savings, managed care programs
improve beneficiaries' access to services. Medicaid health plans also
earn high satisfaction ratings from their enrollees.

"The report provides tangible evidence that Medicaid managed care is
getting results for states and the beneficiaries they serve," continued Ms.
Ignagni. "It also shows that there is a tremendous opportunity for future
growth in this important public-private partnership as more states look to
Medicaid managed care plans to meet more of their health care needs."