Financial risk reduction for people with disabilities in Medicaid programs

A growing number of states are enrolling Medicaid beneficiaries with disabilities into prepaid health plans. This shift from fee-for-service insurance to pre-paid insurance typically transfers the risk from the state to the health plans. However, health plans want the state Medicaid program to minimize their financial risk. Interviews with Medicaid officials in six states provided insights into how each state selected its financial risk reduction method. Officials also offered advice for other states. Widespread recommendations included allowing ample time for discussions with disability advocacy groups and health plans, allowing two years for financial modeling and start up, and selecting a method that is politically acceptable, financially feasible, and actuarially sound. The primary impediment to diagnostic-based payments is lack of data.