Summary of Report 98-028

February 1998

Report Number 98-028

Overall Conclusion

The Bureau of Managed Care (Bureau) of the Texas Department of Health has worked diligently to develop a successful managed care system of delivering health care services to Texas Medicaid clients. With limited staff, the Bureau has successfully rolled out managed care in five major areas in the State and is working aggressively to expand managed care to the entire State.

The Bureau, however, does not have adequate systems or controls in place to sufficiently monitor the managed care program. Not all cost effectiveness and program outcome information is collected or fully analyzed. The Bureau is not fully staffed to adequately manage this labor-intensive program.

Overall, the Bureau agrees with our assessment and is quickly moving to strengthen systems and controls over this new and rapidly expanding program.

Key Facts and Findings

• The Medicaid program is the single largest assistance program in Texas, serving approximately 1.9 million Texans at a cost of more than $10.4 billion in fiscal year 1997. Managed care was developed as a cost-effective alternative of providing health care to our Medicaid clients. Currently 15 percent of Medicaid recipients receive their health care through a managed care delivery system. It is expected that by the end of fiscal year 1998, 25 percent of all Medicaid recipients will receive their health care through this new delivery method.
• The Bureau is not adequately staffed to sufficiently monitor or oversee the Managed Care Program. One half of all positions within the Bureau are vacant. Additionally, not all third-party managed care information can be directly or easily accessed by Bureau staff for complete analysis of the costs and types of services provided.
• The Bureau cannot fully evaluate the cost effectiveness of managed care or ensure program outcomes are achieved because (1) written policies and procedures for updating capitation rates in future contract periods have not been developed, and (2) outcome information is not routinely collected and analyzed.
• We compliment the Department for quickly responding to provider complaints, including language in the health maintenance organization's (HMO) contracts that allows the State to share in realized profits, reevaluating information requirements to reduce the reporting burden of the managed care organizations, and coordinating and communicating with the Texas Department of Insurance on HMO complaints and solvency issues.

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