Medicaid managed care plans see revenues double, but not all turn a profit, study finds

Medicaid managed care revenues have more than doubled in the past five years, fueled in part by a more than 20 percent growth in risk-based managed care health plans, according to a study by actuarial analysis and consulting firm Milliman. However, the growth isn't always creating higher profits for the plan managers.

In its analysis of managed care orgnizations reporting more than $10 million or more in annual Medicaid revenue, excluding specialized behavioral health and community care plans, Milliman found that risk-based Medicaid managed care health plans have increased to 182 in 2014 from 150 in 2010.

Total Medicaid revenues for these MCOs soared 103 percent to $110.6 billion in 2014 from $54.6 billion in 2010, according to Milliman.

"In aggregate, the financial gains reported by the MCOs in this report have increased over the past two calendar years," Milliman wrote.

But a drilldown into the data shows a wide disparity in financial performance among organizations: 111 MCOs were profitable in 2014, while 71 lost money.

The Milliman study organized the MCOs in the study into 10 different U.S. regions.

"Healthcare delivery and premium revenue are believed to vary by geographic location," the report said. "As such, it may be inferred that at least some portion of the financial results for an MCO is correlated with the geographic area in which the MCO is operating."

On a regional basis, MCOs in the area designated by Milliman as Region 2 (New York and New Jersey) reported the highest average profit, while those in Region 7 (Iowa, Kansas, Missouri and Nebraska) reported the highest average loss. MCOs in two other regions averaged slight losses: Region 1 (New England) and Region 10 (Idaho, Oregon and Washington).

The data were gathered from the 2014 annual statements of MCOs located in 37 U.S. states and territories.

This story first appeared on Revenue Cycle Insights.

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