Page 27 - Management Theory 2023-2024 Edition

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5. Medicaid Reimbursement Policies: Medicaid reimbursement policies have two opposite effects on two
different components of the healthcare system. Many specialist-physicians do not provide these
services to patients due to the low fee structure of the Medicaid plan. Also, physicians avoid the
laboratory testing under the Medicaid plan due to a low reimbursement rate.

However, in regard to pharmacy services, the situation is different. Since Medicaid managed care plans
pay the highest reimbursement rate for prescription related services than any other third party plans,
most pharmacies have enrolled to provide pharmacy services to Medicaid plan members. This
encourages timely refills by pharmacies in order to get financial incentives, and also increases patient’s
compliance with the therapy.

Current challenges for managed care organizations providing Medicaid benefits:

Managed care organizations providing Medicaid benefits through the state contract face the following
challenges:

1. Lack of coordination of services and patients’ medical data
2. Formulary restrictions
3. Medicaid recipient turnover rate

1. Lack of Coordination of Services And Patient Medical Data: This is the major challenge faced by
managed care organizations. As previously stated, it is really difficult task to track down patients’ health
care utilization through Medicaid, since many patients do not stick to one primary physician, and there
is no advance information system which can integrate all this data at one central location. This is the
major challenge that affects the current healthcare expenditure as well as manages care efficiency to
provide medical services to Medicaid recipients.

2. Formulary Restriction: It is another challenge that managed care programs are facing right now.
According to federal and state pharmacy laws, managed care contracted through the state to provide
medical benefits to Medicaid recipients must allow patients to access any drug that is approved and
listed by federal and state laws under Medicaid services. This may affect the cost cutting strategy of
managed care organizations since this may limit the list of drugs included in the formulary.

3. Medicaid Recipient Turnover Rate: It also affects the plan efficiency and health- related services
provided by managed care organizations. Managed care plans seem more effective and efficient when a
patient stays with the one health care plan for at least a year or more. Currently, Medicaid plans have an
excessive Medicaid recipient turnover rate which has negative effects on both state Medicaid plans
(traditional Medicaid) and managed care Medicaid plans.

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