By: TAHP | Tuesday, June 4, 2024

The Big Picture: Texas Medicaid managed care is a success story, dramatically reducing hospital stays and ER visits, leading to substantial savings and healthier outcomes for Texans.

Why It Matters: Managed care is not just about cutting costs—it’s about improving the health and well-being of Texans. By focusing on preventive care and coordinated health services, Texas Medicaid MCOs ensure that patients receive timely, effective care, reducing the need for costly emergency room visits and hospitalizations.

• This approach results in healthier Texans and significant savings for taxpayers. Today, 97% of Medicaid families are enrolled in Texas Medicaid managed care, underscoring the importance of its widespread impact and success.

By the Numbers:

• $13 Billion in Savings: Texas Medicaid MCOs saved up to $13 billion between 2011-2017 and continue to deliver savings.
• ER Visits Reduced: Texas MCOs have reduced ER visits by 16%, leading to healthier Texans and significant taxpayer savings.
• Reduced Hospital Stays: Hospital stays for diabetes have decreased by 48%, and hospital stays for children with asthma have decreased by 65%.
• Drug Cost Control: Growth in drug costs has been cut in half, now three times lower than the national average.
• Efficient Spending: Administrative costs are among the lowest in the nation, with 90% of every dollar spent on direct patient care.

How Does it Work: Texas pays a monthly premium to an MCO to accept the full financial risk for providing care to each member, giving Texas lawmakers budget certainty.

• Preventive Care Focus: MCOs prioritize preventive services and care coordination, meeting state-set quality metrics and expected outcomes.
• Profit and Spending Caps: Texas caps profits and administrative spending, requiring MCOs to share savings back to the state through experience rebates.

Transparency and Accountability: Transparency and accountability are central to the program’s integrity. That’s why every dollar spent by an MCO is audited and publicly available so lawmakers and taxpayers can be sure they are getting the deal they expect.

The Bottom Line: Managed care is essential for Texas budget writers to meet the needs of nearly 4 million Texans covered by Medicaid and CHIP, while ensuring cost control and program integrity.

Go Deeper: Learn more about how Medicaid managed care improves outcomes for enrollees, and check out our 101 presentations on Medicaid and the Medicaid drug coverage program.