The Effects of Medicaid Managed Care on Long-Term Services and Supports (LTSS) for Older Adults: Empirical Evidence from Minnesota

Abstract

The United States is facing an aging population and a growing need for long-term services and supports (LTSS), which include institutional care (most commonly in nursing facilities (NFs)) and various home and community-based services (HCBS). Medicaid is the nation’s primary payer for LTSS, and states increasingly favor Medicaid managed care to provide LTSS as opposed to the traditional fee-for-service approach. With capitated payments, managed care plans may have financial incentives to provide LTSS more efficiently, but they may also face pressure to reduce costs, which could lead to under-provision of services, with potential adverse impacts on beneficiaries’ health. My dissertation fills the literature gap in the effects of Medicaid managed care on LTSS use, by investigating a Medicaid policy change in Minnesota which shifted more LTSS, including both HCBS and NF services, from fee-for-service to managed care for a group of Medicaid older adults (aged 65 and older) in the Minneapolis–St. Paul (MSP) metropolitan area during calendar years 2008–2009. I found that, after this policy change, the overall use and intensity of most HCBS did not change for the affected enrollees, except for a decrease in non-medical transportation. I found limited evidence suggesting that shifting LTSS to managed care had any effect on NF services. In addition, I found no change in the use of hospital and physician services after this policy, potentially implying that providing LTSS via managed care did not have negative effects on the older adults’ health status. Later, I investigated changes in Medicaid older adults’ demographics and LTSS use across the entire state of Minnesota during calendar years 2005–2017. My findings suggest that the state is facing a more diverse Medicaid LTSS population and that HCBS have taken over NF services as the primary LTSS option for the state’s Medicaid older adults.