Medicaid managed care is a way states contract with private insurance companies to deliver Medicaid benefits instead of paying doctors and hospitals directly

When you are on Medicaid managed care, you choose or are assigned to a managed care plan — a private insurance company that your state pays a fixed monthly amount to cover your medical needs. That plan then decides which doctors you can see, which hospitals you can use, and which medicines are covered. The plan keeps any money it does not spend on your care, which creates an incentive to limit services. This is different from fee-for-service Medicaid, where the state pays each provider directly for each visit or service you receive.

Most states now use managed care for at least some Medicaid members. As of 2023, roughly 70 percent of Medicaid enrollees were in managed care plans, though this varies widely by state and by which group you belong to — elderly people, people with disabilities, and parents of children often have different rules than other adults.

Key Takeaways

  • In managed care, you pick or are assigned to one insurance plan that coordinates all your care, rather than Medicaid paying each doctor separately.
  • You must use doctors and hospitals in your plan's network, and you usually need a referral from your primary care doctor to see a specialist.
  • Your plan decides which medicines and treatments are covered, and can deny or delay services that your doctor recommends.
  • If your plan denies a service, you have the right to appeal, and your state Medicaid office can overturn the plan's decision.
  • Some groups — elderly people, people with disabilities, and people with serious mental illness — may have different managed care rules or exemptions in your state.

How your plan controls costs and access

Managed care plans use several tools to manage what they spend. The most common is the network — a list of doctors, hospitals, and other providers the plan has contracts with. You are expected to use only those providers. If you go to someone outside the network without permission, you may have to pay the full bill yourself, or the plan may refuse to pay at all.

Plans also require prior authorization for many services. This means your doctor has to call the plan and get approval before you have a procedure, get certain medicines, or see a specialist. The plan reviews whether it thinks the service is medically necessary. If the plan says no, your doctor can appeal, but the service is usually delayed while that happens.

Another common tool is the formulary — the list of medicines the plan covers. If your doctor prescribes a medicine not on the formulary, the plan may refuse to pay for it, or require you to try a cheaper medicine first. You can ask the plan to cover the medicine anyway, but this also takes time and is not always approved.

Choosing a plan or being assigned one

In most states, you have the right to choose which managed care plan you want to join from the plans available in your area. Your state Medicaid office will send you information about each plan's doctors, hospitals, and coverage rules. You can change plans once a year during the open enrollment period, and sometimes more often if your circumstances change — for example, if your doctor leaves the plan or you move to a different county.

If you do not choose a plan by the deadline, your state will assign you to one automatically. This assigned plan may not include your current doctor. If that happens, you can request a change to a plan that does include your doctor, though the process and timeline vary by state.

Some states also have passive enrollment, where they automatically move you from one plan to another if you do not actively choose. This can happen even if you were happy with your old plan, so it is worth checking your Medicaid mail each year to see if you need to take action.

What happens when your plan says no

If your managed care plan denies a service, medicine, or referral that your doctor recommended, you have the right to appeal. The plan must tell you in writing why it said no, and must give you at least 60 days to file an appeal. You can ask your doctor to write a letter explaining why you need the service, and you can submit other medical records or evidence.

The plan will review your appeal and make a decision. If the plan says no again, you can ask your state Medicaid office to review the decision. This is called a state fair hearing. The state can overturn the plan's decision if it finds the plan was wrong. This process takes longer — usually several weeks or months — but it is free and you can do it without a lawyer.

While you are appealing, you can ask the plan to keep paying for the service anyway if you think waiting will harm your health. This is called expedited review. The plan has to decide faster — usually within 72 hours — and must keep paying while the appeal is happening if there is a good chance you will win.

Managed care rules for elderly people and people with disabilities

States have more flexibility in how they run managed care for elderly people and people with disabilities. Some states exempt these groups from managed care entirely and keep them in fee-for-service Medicaid. Other states put them in managed care but with special rules — for example, allowing them to see any doctor without a referral, or covering more services without prior authorization.

A few states run integrated plans that combine Medicaid and Medicare for people who have both. These plans can coordinate care across both programs, but they also have their own networks and rules. If you are over 65 or have a disability and are on Medicaid, ask your state Medicaid office whether you are in managed care and what your specific rights are, because the rules differ significantly from state to state.

How to find your plan's network and coverage rules

Your managed care plan is required to give you a member handbook that lists all the doctors and hospitals in the network, explains which services need prior authorization, and shows the formulary of covered medicines. You can ask for this in writing, by phone, or online through the plan's website. The handbook should be free.

You can also call your plan's customer service line — the number is on your Medicaid card — and ask whether a specific doctor is in the network or whether a specific service is covered. Write down the name of the person you talk to and the date, in case you need to prove later that the plan told you something different.

If you cannot find the information you need, your state Medicaid office can also tell you which plan you are in and can help you understand your coverage. Many states have a Medicaid ombudsman — a free advocate who helps people understand their managed care rights and can help you appeal a denial.

Frequently Asked Questions

Can I keep seeing my current doctor if they are not in my plan's network?

Not usually. If your doctor is out of network, the plan will not pay for visits, and you may have to pay the full bill. However, if your doctor was in the network when you joined and then left, many states allow you to keep seeing them for a limited time. You can also ask the plan to make an exception, though this is not always approved.

What if I need a specialist but my plan will not give me a referral?

You can appeal the plan's decision using the process described above. You can also ask your state Medicaid office to review it. If your doctor believes you need urgent care, ask for expedited review so the decision happens within 72 hours instead of weeks.

Do I have to stay in the same managed care plan every year?

No. You can change plans once a year during open enrollment, which your state announces by mail. If your circumstances change — your doctor leaves the plan, you move, or you lose coverage — you may be able to change plans outside of open enrollment. Contact your state Medicaid office to ask.

What is the difference between managed care and fee-for-service Medicaid?

In managed care, one insurance plan coordinates your care and the state pays that plan a fixed amount. In fee-for-service, the state pays each doctor or hospital directly for each service. Fee-for-service usually means more freedom to choose providers, but managed care can offer better coordination if the plan works well.

Can I get Medicaid without being in managed care?

This depends on your state and which group you belong to. Some states exempt certain people — elderly people, people with disabilities, or people with serious mental illness — from managed care. Others offer fee-for-service as an option. Ask your state Medicaid office what choices you have.