Page 24 - Management Theory 2023-2024 Edition

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21. Medicaid and Pharmacy Benefit Management (PBM)

Medicaid was first established by the federal government in 1965. It is Title XIX of the Federal Social Security
Act.

1. It provides services to medically indigent people.

2. The program is operated by individual states, although regulations, guidelines and policies, and
interpretations are provided by the federal government.

3. Each state Medicaid agency determines its own benefit design and expenditure according to its annual
budget. Individual states normally provide their Medicaid services through the specific government
department or agency, often called the department of public health and welfare.

4. All state operated Medicaid services are provided by both the federal and state government. The
specific ratio of funding from each source depends on the state (income), and ranges from 50 to 83%.

5. The more wealthy states with higher per capita incomes may receive less funding from the federal
government for Medicaid.

People who are eligible to receive Medicaid benefits are classified into one of the following categories:

1. People whose benefits are mandated at the federal level.

2. People whose benefits are determined by the state level.

3. Infants born to Medicaid eligible women.

4. Children under age six whose family income is below 133% of the federal poverty line.

5. Individuals who are “medically needy” and going through expensive medical treatments, even though
they do not qualify for Medicaid due to low-income criteria provided by Medicaid.

Under Medicaid, the following services are mandatory at the federal level:

1. Physician services
2. Inpatient and outpatient hospital services
3. Prenatal care
4. Laboratory X-ray services
5. Vaccinations for children
6. Family planning services and supplies
7. Rural health clinic services
8. Skilled nursing facility services

The following services are not federally mandated but if states provide these services, they will receive federal
matching funds for providing these optional services:

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