Commercial Health Plan Participation in Medicaid Managed Care: An Examination of Six Markets

Abstract

This study examines six local health care markets to gain a better understanding of the factors associated with the decision by commercial plans to participate in Medicaid managed care (MMC). Findings suggest that no single factor explained why plans chose to participate in MMC in a particular market. Instead, a combination of factors—generally economic but not always—determined whether a plan participated. While rate adequacy was central, it was not the only factor. Results indicate that it is capitation rates relative to other factors (such as provider costs, administrative costs, enrollment volume, growth opportunities in other markets) that matter rather than simply the level of rates.