GAO Reports on the Benefits of Being a Medicaid Managed Care Official

Officials with Medicaid managed care organizations earn more than state Medicaid directors, but find their jobs less complex than the public employees who oversee their contracts, according to a report from the Government Accountability Office released today.

The findings come as states increasingly turn to private contracts to squeeze costs from the system, amid criticism in some circles that this is coming at the expense of patient care. While private contractors are seen by some as better equipped to manage care coordination than state employees whose work they supplant, payment denials in states like Iowa—which has seen a highly contentious transition to Medicaid managed care—have raised questions whether the private sector is truly better.

As of July 2014, nearly 77% of all Medicaid enrollment was in some form of managed care, and that share has likely increased with Medicaid expansion. In many states, those earning between 100% and 138% of the federal poverty line are directed straight to managed care when they enroll. The GAO report said that in fiscal year 2017, Medicaid will pay for healthcare for 74 million people, costing $596 billion.

While the report found that the average managed care executive earned $84,645 more than the average state Medicaid director, the more telling part of the report may be that Medicaid directors who transitioned to the private sector told the GAO that their jobs got easier—they were no longer directly accountable to a governor or the legislature, managing budgets that ranged from $3 billion to $13 billion. Medicaid directors are also accountable to CMS, and they must whether media scrutiny if there is an error in an employee’s judgment, often due to understaffing.

Duties as a state Medicaid director are “enormous and diverse,” the report said, ranging from providing mental health services to long-term services and supports, and managing 2 different delivery models, as many services are still paid in a fee-for-service system.

Medicaid directors run the day-to-day operations of their programs, including making judgment calls on benefit determinations and deciding which contractors will provide services, and ensuing network adequacy. In states where Medicaid managed care is relatively new, many policies and procedures are still being developed, and supervising state workers is an ongoing challenge.

Managed care executives, in the meantime, oversee marketing functions and may manage operations across multiple states. They may be in charge of ensuring the organization has adequate capital to pay claims. Managed care entities take different forms as for-profit, nonprofit, or standalone plans.

The GAO surveyed salaries in 10 selected states based on data to the National Association of Insurance Commissioners (NAIC), and it compared state Medicaid directors’ compensation recorded with the National Association of Medicaid Directors in 2016. Information reported to NAIC for 2015 found that state Medicaid directors’ salaries ranged from $103,020 to $206,088, with an average of $152,439 and a median of $141,000. Salaries reported to NAMD were consistent, with directors earning between $105,000, and $260,000, with an average of $152,518, and a median of $142,000 in 2016. Medicaid directors also received health coverage, paid leave, and life insurance, and all but 1 state reported offering a retirement benefit.

Executives for managed care organizations had higher compensation in 2015—ranging from $110,740 to $1,904,431, with an average of $314,278, and a median of $270,713. Salaries for 133 of the highest paid executive in 7 of the selected states ranged from $108,598 to $796,732. Executives also had the chance to earn bonuses, stock options, and other compensation.