Medicaid Managed Care in 2021: The Year that Was

The Medicaid managed care ecosystem is huge and complex. (If you need a primer, the health policy podcast Tradeoffs has a short and entertaining one). As of March of this year, forty states and the District of Columbia were contracting with over 280 different managed care organizations (MCOs). The federal government and states combined spend in the neighborhood of $360 billion per year paying these MCOs to provide covered services to approximately 70 percent of all Medicaid beneficiaries and 80 percent of child beneficiaries. The MCOs pay tens of thousands of network providers—hospitals, clinics, practitioners, pharmacies, etc.—to furnish covered services to enrolled beneficiaries. With all of these moving parts, it’s hard to keep track of how well Medicaid managed care is working for children and families, particularly given the lack of transparency. Here are the developments in 2021 that we thought were notable.

The MCO Industry

2021 has been all about growth, both in enrollment and in revenues. We have some indication of this from the quarterly financial reports of the publicly-traded companies, who likely control as much as half of the Medicaid managed care market nationally. As of September, Medicaid enrollment for the “Big Five”—Aetna/CVS, Anthem, Centene, Molina, and UnitedHealth Group—totaled 39.4 million, an increase of 14.5% year-to-year. For the three companies that reported Medicaid revenues, growth rates (compared to the first nine months of 2020) ranged from 12.9% (Centene) to 40.1% (Molina).

In past years, some of these companies grew their Medicaid business largely through acquisition of other Medicaid MCOs; the poster child is Centene’s acquisition of WellCare. While the big fish continue to hunt the little (and not-so-little) fish, most of the enrollment and revenue growth in 2021 was attributable to the pandemic-related growth in Medicaid enrollment generally. In the forty managed care states and DC, that general enrollment growth often translated directly into MCO enrollment growth.

Investors generally appreciate double-digit growth rates in revenues. But in the case of Centene, some activist investors want even better earnings and higher share values, despite the focus of its CEO on increasing his company’s margins. They reportedly hope to reduce administrative costs in part by using artificial intelligence to make prior authorization decisions. And, after settling claims with a number of states over their prescription drug pricing practices, Centene decided it would be prudent to stop operating its own PBM.


The agency is under new management, who have had a lot of damage to undo courtesy of their predecessors and a lot of Medicaid challenges to address courtesy of the pandemic. (CMS recently called on state Medicaid agencies to work with their MCOs to maximize continuity of coverage when the public health emergency ends). Despite these distractions, there has been some movement forward on the managed care front.

In June, the agency issued guidance to states on managed care monitoring and oversight tools. After four prior years of laissez-faire federal oversight, CMS announced that, as part of its “overall strategy to improve access to services,” it would be requiring states to submit the annual managed care program reports called for in its 2016 regulations. The first reports are due in December of 2022. Along the same lines, CMS gave notice in the Fall 2021 Regulatory Agenda that it is developing regulations that will “assure equitable access to health care for all Medicaid and CHIP beneficiaries across all delivery systems.” This is a 180 from the previous management’s repeal of the Access Rule and its watering down of network adequacy requirements in the Managed Care Rule.

In June, CMS also released T-MSIS Analytic Files for managed care plans. This initial release covered only calendar years 2014-2016 and is only available to researchers, but it does open up possibilities down the road for understanding the use of services by children and other beneficiaries enrolled in specific MCOs. Once updated, these files might also help fill the conspicuous hole in the agency’s Medicaid and CHIP Scorecard for State Administrative Accountability for managed care performance (“Measure to be included in a future Scorecard.”)


In July, North Carolina joined the “Medicaid Managed Care Club,” bringing the number of states contracting with MCOs to forty (plus DC). Oklahoma’s Governor and Medicaid agency attempted to transition the state’s program to risk-based managed care but in June the state Supreme Court ruled that they did not have legislative authority to do so. Iowa’s State Auditor also issued a report questioning the state’s 2016 transition to a managed care delivery system that led to a dramatic increase in illegal denials of services.

States decide not only whether to use MCOs to furnish services to Medicaid beneficiaries but also which MCOs they will contract with and for how long. The selection of MCO is done through state procurement procedures. Periodically states open their Medicaid markets to potential new entrants competing for contract awards with incumbent MCOs. In 2021, DE, DC, IN, LA, MN, MO, NV, RI, TN, and TX launched procurements for all or part of their managed care programs. California, the largest Medicaid managed care state, had initially planned to initiate a massive procurement in the fall but has postponed it to the spring of 2022.

In the absence of publicly accessible data on MCO performance, several media outlets stepped up with state-specific investigative reporting. Georgia Health News ran stories highlighting the lack of transparency around managed care data in the state and revealing that an MCO in Georgia did not meet an 85% medical loss ratio requirement between 2018 and 2020. The Illinois Better Government Association examined efforts of state policymakers to recoup some of the record profits accumulated by MCOs in 2020 as well as the close relationships between the MCO industry and the state Medicaid agency.  And in Iowa, the State Auditor conducted his own investigation (with the help of subpoenas), finding among other things that illegal denials of services had increased 891% since the state’s 2016 transition to managed care.


In addition to these investigative reports, the journalists at Tradeoffs examined the many peer-reviewed studies on managed care as part of their primer episode: “Has Medicaid Managed Care Delivered on Its Promise?” According to their read of the literature on managed care to-date, “Results have been mixed with a few studies showing lowered costs, expanded access or improved quality and most showing no or negative impacts.”

We took our own look at the new studies out this year and found that a few raise significant questions about how well managed care performs for the most vulnerable populations. Academics with the National Bureau of Economic Research came out with a new working paper which found that mandated enrollment in managed care for seniors and individuals with disabilities in California resulted in greater emergency department use, more hospital transfers, and a 12 percent increase in mortality. Researchers from Texas Children’s Hospital and Baylor College of Medicine found that children and youth in Texas foster care, who are enrolled in a single managed care organization, are prescribed psychotropic medication at a rate four times that of non-foster peers in Medicaid (35 percent compared to 8 percent).

Several new reports also spotlighted trends in state contracting and regulatory efforts. Health Management Associates highlighted how states are incorporating requirements related to social determinants of health and health equity into their managed care contracts. The Kaiser Family Foundation’s annual state budget survey examined how states handle pharmacy benefits through MCOs, including the high-profile issue of “spread pricing.” And, at the federal level, the Department of Health and Human Services Office of the Inspector General published a report finding that 92 percent of MCOs met a medical loss ratio standard of 85 percent according to state-selected reports from 2017, 2018, or 2019.


How did children who were enrolled in managed care organizations fare in 2021? Which MCOs provided the preventative screening and treatment services to which the children are entitled? Which ones reduced racial disparities in access to services, quality of care, and patient outcomes? For the most part, we don’t know. The culture of opacity in Medicaid managed care is long-standing and MCO-specific performance data is hard to come by. But in 2021, the needle began to move a little.

In our travels around state agency and independent advocates’ websites, we noticed some new dashboards cropping up. In Iowa, the state agency launched a dashboard, updated quarterly, which includes MCO-specific enrollment numbers and data on EPSDT screenings. In August, the Georgia state agency published a dashboard with MCO-specific results on selected quality metrics. Virginia’s Medicaid agency created a dashboard tracking MCO-specific service authorization and denial rates. Ohio’s Medicaid agency continued to update its dashboard with information about individual MCOs’ capitation revenues broken out by age group. Children Now, a children’s advocacy organization in Oakland, posted selected child health metrics for California’s MCOs.

Looking Ahead

It is safe to say that there is still room for improvement. In 2022, we’re hoping that dashboards with accessible, MCO-specific performance data become the norm, not the exception. Increasing transparency about the performance of MCOs—not just for children but for adult enrollees as well—would be relatively easy, low-cost win for CMS. Using T-MSIS, CMS could build its own MCO-specific performance dashboard into its Medicaid and CHIP Scorecard.

This dashboard would align nicely with the strategic vision of the new CMS management: “[…] collecting, understanding, and using data is essential, as is making this information transparent to stakeholders. This includes prioritizing collection of data on race, ethnicity, language, disability status and other factors, and using those data to identify disparities in access, health outcomes and quality of care. We can also build on existing efforts to provide new and more transparent data on access, quality and experience of care across both fee-for-service and managed care delivery systems.”

We couldn’t say it better ourselves.