Capitated Medicaid Managed Care in a Rural Area: The Impact of Minnesota's PMAP Program

CONTEXT: Although states have had difficulty extending Medicaid managed care (MMC) to rural areas, rural models of capitated MMC are expected to grow in response to new federal regulations and the serious budget problems facing nearly all states. As such, understanding the effects of capitated MMC in rural settings is important for policy considerations. PURPOSE: To evaluate the effects of capitated MMC on beneficiary access and use in rural Minnesota. METHODS: We took advantage of delays in the timing of the introduction of MMC across rural counties in Minnesota to estimate the effects of managed care on adults and children under Medicaid using a difference-in-differences framework. FINDINGS: We found that Minnesota's shift from fee-for-service Medicaid to MMC in its rural counties had little effect on access to health care for either adults or children. CONCLUSIONS: Because Minnesota reports that Medicaid costs under MMC are below expected costs under FFS Medicaid, it appears that the primary accomplishment of Minnesota's rural MMC initiative is one of cost savings: MMC provides the same access to care as FFS Medicaid, but at lower cost. With steep budget deficits in nearly all states, other states may want to consider Minnesota's rural MMC model as a mechanism for reducing their Medicaid costs.