Managed care and long-term care: a potential solution?

This brief summarizes research by Sparer (2003) and Hughes (2002) on managed care issues for people with long-term care needs. Managed care has been proposed as a solution to the difficult problem of managing the health of this complex population. Sparer's research examines the reasons behind the failure of states' attempts to encourage commercial managed care plans to take on this task. He argues that understanding these reasons can yield important lessons for the mostly provider-sponsored plans that currently serve the long-term care population, as well as for states, that aim to save money and better serve this population. Hughes' evaluation of a small, provider-sponsored organization found that when the organization became a managed care provider, it faced significant organizational challenges that forced it to become more efficient. Importantly, it showed that the use of capitation reimbursed the plan more effectively than fee for service, increased the range of services provided to clients, and maintained client satisfaction; however, capitation did not affect the rate of nursing home admission.