LTSS Programs: Fee-for-Service Vs. Managed Care

States are continually challenged by the high and growing cost of caring for people in need of Long-Term Services and Supports (LTSS). As a result, we’re seeing an increasing number of states providing LTSS through capitated Medicaid managed care programs called Managed Long-Term Services and Supports (MLTSS). In fact, 25 states use managed care to provide LTSS, serving approximately 2.7 million individuals.

States look to MLTSS programs in an effort to rebalance their Medicaid expenditures away from institutional care and toward home- and community-based services (HCBS). This provides a streamlined way for beneficiaries to access all of the services necessary to live their best lives in the location of their choosing.

Let’s break down the difference between providing LTSS through a managed care model versus a fee-for-service model.

Managed care vs. fee-for-service

Managed care is a capitated rate, meaning that the health plan gets a fixed amount of funding from the state per person, per month. The plan then manages all of a person’s care and services with that amount of monthly funding.

In fee-for-service (FFS), a health plan is not involved in managing the cost of a person’s care. Instead, states pay claims individually as providers deliver and bill for services and care.

When states provide LTSS under a managed care model, they experience:

  • Increased budget certainty
  • Improved care coordination for benefits and services, leading to higher-quality care and better member experiences
  • Support for care providers and caregivers dealing with a complex system
  • Fewer capacity and cost constraints, which results in fewer individuals on waitlists

MLTSS improve quality of life for members

A new study has shown that MLTSS enrollees rate their quality of life and experience of care as higher than those who live in FFS arrangements.

Let’s consider an example of how managed care can help someone coordinate care. If a person (we will call her Sue) has insurance through a managed care organization (MCO), she might go to urgent care. There, she will provide her insurance card. Because Sue’s insurance is through an MCO, she would be supported through the rest of the care journey. Sue can contact her insurance company and ask for help with finding a specialist. If she needs surgery, her doctor could easily check with the insurance company to verify coverage for the services and facilitate the movement of records. A case manager from the insurance company would follow up with Sue to confirm that she has everything she needs.

Now, let’s assume Sue goes to urgent care but her insurance is FFS. She might not know where to turn if she requires a specialist. With no insurance company to call for guidance, Sue would have to work to find doctors and facilities who take her insurance. She might find that she needs to visit multiple doctors and facilities in order to receive care. If she already requires mobility assistance or faces a lack of transportation, these extra steps would make care even more difficult for her to access.

Moving LTSS from FFS to managed care often helps reduce this fragmentation and provides cost-effective care. People who use LTSS frequently interact with the health system. MLTSS programs help provide care coordination for these individuals, removing some weight from their shoulders.

Supporting states as they transition to MLTSS programs

Today, UnitedHealthcare serves more than 300,000 individuals in nine MLTSS programs nationally. As we help more states transition to MLTSS programs, we also give members more opportunities to make health care decisions that support how they want to live. 

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