Medicaid Managed Care, Dental and the Future of Health Equity

The Centers for Medicare & Medicaid Services (CMS) is launching a new pilot in 8 states focused on achieving health equity and lowering overall health care costs. While a state’s Medicaid program model has a direct and significant effect on its ability to provide high-quality care and maintain costs, traditional health care economic models are not set up to meet all our increasing needs and expectations. That’s why so many states are looking to strike the right balance between Medicaid funding, improved access and outcomes, patient experience, and provider satisfaction – also known as the quadruple aim. This CMS pilot will encourage medical system adoption, but states are finding Medicaid dental programs, specifically, must move beyond traditional payment models to successfully address all four aims simultaneously.

Medicaid models nationwide vary significantly because of how Medicaid is financed – federal dollars go to states, then states determine whether they want to directly pay providers or subcontract to managed care organizations (MCOs), which have some flexibility in, for example, setting provider payment rates and offering additional benefits.

Now dominant for medical, Medicaid managed care ensures those best equipped to administer dental benefits take the reins. This increases budget predictability for states and improves access to care for enrollees while promoting competition among MCOs competing for business. 

At a macro level, state Medicaid dental programs generally operate in one of these economic models: dental carved out, dental carved in or the traditional fee-for-service (FFS).

1. Carve out: State creates a separate budget and program for the Medicaid dental benefit and contracts directly with one or more dental vendors.
2. Carve in: State integrates the dental benefit into its comprehensive risk-based contracts with medical MCOs.
3. FFS: State pays for and administers the dental benefit itself. 

Approximately 42% of states employ the carve-out model, which can be administrative services only (ASO) or capitated. The risk that dental claims costs will exceed the budget falls to whomever is responsible for paying claims – the state under an ASO carve out and the dental MCO under a capitated model. Capitation pushes dental MCOs to innovate and modernize, otherwise they must cover budget overages. Since 2010, 80% of states that moved to a dental carve out have done so using a capitated financial arrangement. Prior to 2010, it was the exact opposite – 80% of states used an ASO financial arrangement.

This trend is important – and here’s why more states should follow.

In the early 2000s, Medicaid program leaders emphasized administrative efficiencies, hoping streamlined processes would yield cost savings while also increasing access to dental services. But over the next 10 years, lawsuits hit states regarding federal requirements for Medicaid-enrolled children’s dental screenings and treatment. It became increasingly clear that Medicaid dental would improve with expert management. By 2014, many states redesigned their Medicaid dental programs to better leverage MCOs’ expertise and shift the risk.

Today, health improvement goals continue to evolve, with health equity at the forefront. Yet, a key piece is lagging – we need to move beyond traditional payment models to keep goals within reach and make progress on equitable health care for all. 

In contrast to FFS, the ultimate goal of value-based care programs within a managed care carve out is to shift dental care delivery from “the more you do, the more you get paid” to “the healthier the patient becomes, the more you get paid.” Payment structures that reward prevention empower states and plans to advance their population health management strategies and innovate together, driving efficiency, quality and competition.

There’s opportunity within an economic model that incentivizes lifelong healthy outcomes for states and health plans seeking a more sophisticated approach to managing dental benefits. As an expert at managing value-based dental benefits programs, we at DentaQuest know the managed care carve-out model delivers wins for everyone: Medicaid enrollees can access top-quality care from providers dedicated to a great member experience, dental providers can focus on and be rewarded for proactive and preventive care, health plans accelerate their quadruple aim journeys for long-term savings, and states gain predictable Medicaid dental budgeting year after year and an overall healthier Medicaid population.