The increase in U.S. Medicare and Medicaid beneficiaries has been accompanied by growth in managed care’s presence in those two sectors of health benefits. In 2014, 30% of all Medicare beneficiaries are enrolled in managed care plans, while 60% of those covered by Medicaid are in similar arrangements. Tighter medical and drug management in the public sector means MCOs are putting higher out-of-pocket cost burdens on individuals, limiting drug formularies, and more frequently using drug utilization controls.

In addition to changing the financial responsibilities of individuals in Medicaid and Medicare, the managed care plans have required higher standards from providers. The programs are signing accountable care and shared savings reimbursement agreements with hospital systems and physician groups, thus requiring them to be more attuned to drug and medical cost decisions. At the same time, MCOs are excluding from their networks the providers that are less efficient or operating below quality standards.

Questions Answered in This Report:

  • How is the growth in the number of Medicare beneficiaries impacting treatment of therapeutic areas? 68% of Medicare beneficiaries have more than one chronic condition. Medicare Advantage managed care plans focus on hypertension, diabetes, arthritis, chronic obstructive pulmonary disease, coronary artery disease, and dyslipidemia. In addition, Medicare plans are also putting more focus on management of behavioral health issues that are co-morbidities to the primary diagnoses.

  • How is the Affordable Care Act impacting drug management in the public sector? About half of U.S. states have chosen to expand their Medicaid programs under terms outlined in the law. As a result, Medicaid enrollment grew by some 6 million individuals in 2014. Drug benefits are required for both those newly eligible for Medicaid benefits and those enrolled into commercial insurance plans through the exchanges. Finally, while the law does not specifically expand Medicare benefits, it does provide for the eventual closure of the donut hole in the Part D benefit, requiring manufacturers to contribute more to the cost of drugs for individuals who reach the donut-hole level.

  • Which managed care plans benefit most from the expanded enrollments? Managed care plans in large population states, such as California¾which also decided to expand its program¾are seeing significant increases in enrollment in 2014. These plans include WellPoint, Health Net, and LA Care. In addition, health benefits companies primarily focused on the public sector, such as Molina Healthcare, Centene, and AmeriHealth, are also experiencing large enrollment gains.


Markets covered: United States.

- Secondary research, primary research of U.S. health plans.

Author(s): Sheri Sellmeyer
Jane DuBose