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Office of Program Policy Analysis and Government Accountability

Follow-up Review of Medicaid Managed Care Administered by the Agency for Health Care Administration , Report No. 94-47, April 1995

  • In fiscal year 1993-94, the statewide average prepaid health plan (PHP) fee established by the Agency for AFDC clients was lower than average fee-for-service costs. However, the lower PHP fees may not be resulting in cost-savings if favorable selection is occurring. Favorable selection occurs when the clients who enroll and remain in PHPs are, on average, healthier than fee-for-service clients.
  • When favorable selection occurs, fee-for-service clients will, on average, use more medical services than healthier clients in PHPs. This will increase Medicaid's average cost of serving fee-for-service clients. Since Medicaid PHP fees are based on average fee-for-service costs, the state could pay more for PHP clients than it would have paid if the clients were served on a fee-for-service basis. According to a General Accounting Office study published in September 1994, PHPs serving Medicare clients have benefited from favorable selection. As a result, researchers estimated that payments to Medicare PHPs were approximately 6% to 28% higher than the cost of serving those same clients on a fee-for-service basis.
  • In Florida, Medicaid fee-for-service utilization data and PHP enrollment data indicate that favorable selection could be occurring in some counties.

What were our earlier findings?

Report No. 97-11 Follow-up Report on Medicaid Managed Care Options, published in October 1997.
Report No. 94-18 Performance Review of Medicaid Managed Care Options, published in April 1995.

Which Government Program Summaries contain related information?

Medicaid Health Care Services
Agency for Health Care Administration

What other OPPAGA-related materials are available?

  • Report No. 01-61 Justification Review: Expected Medicaid Savings Unrealized; Performance, Cost Information Not Timely for Legislative Purposes, published in November 2001.
  • Report No. 01-39 Justification Review: Medicaid Program Integrity Efforts Recover Minimal Dollars, Sanctions Rarely Imposed, Stronger Accountability Needed, published in September 2001.

Copies of this report in print or alternate accessible format may be obtained by telephone (850/488-0021), by FAX (850/487-9213), in person, or by mail (OPPAGA Report Production, Claude Pepper Building, Room 312, 111 W. Madison St., Tallahassee, FL 32399-1475).
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