Managed Care and Privatization

Most people picture Medicaid as a card that a doctor swipes. In Idaho for most enrollees that picture is still accurate: a doctor treats a patient, bills the state, and the state pays the bill. In about forty other states a private insurance company sits in the middle. Idaho passed a law in 2025 to join them. This lesson explains what that change means in plain terms, who decides the details, and where an ordinary resident, a reporter or a provider can still change the outcome. It builds on Lesson 4 (who writes the rules) and Lesson 5 (the budget fights), and it points ahead to Lesson 8 on appeals.

Two ways to pay for the same care

Fee-for-service: the state pays each claim

Under fee-for-service the state Medicaid agency publishes a rate for each service, a provider delivers the service, and the agency pays that rate on the claim. The agency carries the financial risk. If more people get sick than expected, the state pays more. If the state wants to hold spending down, it has two levers: change the rate it pays or change which services it covers. That is why the budget fights in Lesson 5 so often come down to provider rate cuts, such as the 4% rate adjustment in 2025 and the residential habilitation cut in House Bill 863 (2026).

Managed care: the state pays a plan a monthly rate

Under comprehensive managed care the state signs a contract with a private plan. Each month the state pays the plan a set amount for every enrolled member, called a capitation payment or a per-member-per-month (PMPM) rate. The plan then arranges and pays for the member's care. KFF describes the rates as set by the state and its actuaries, reviewed by the federal Centers for Medicare and Medicaid Services (CMS), and required to be "actuarially sound" for a 12-month rating period. Because the payment is fixed, the plan takes on the risk. If members cost less than the rate, the plan keeps more. If they cost more, the plan absorbs the loss.

Notice what moves in that design. The state trades price certainty and less day-to-day claims work for less direct control over each decision. The plan's incentive is to manage use of services, which can mean care coordination and fewer duplicate tests. It can also mean prior authorization requirements and denials. Both are real, and the evidence on which dominates is, according to KFF, limited and mixed.

Feature	Fee-for-service	Comprehensive managed care
Who pays the provider	The state agency, claim by claim	The private plan, from the state's monthly payment
Who carries cost risk	State and federal taxpayers	Shared: the plan carries risk inside the contract, with state tools such as risk sharing and remittances
Main state control	Rate schedule and covered-service list	Contract terms, rate setting, oversight and penalties
Where a denial is first reviewed	The state agency	The plan, then a state fair hearing
Who the member calls	DHW or the provider	The plan's member services line

Where Idaho stands today

Idaho is an outlier, and the numbers show it

KFF reported that about 78% of Medicaid enrollees nationwide, about 66 million people as of July 1, 2024, received care through comprehensive risk-based MCOs, and that payments to comprehensive MCOs made up about 50% of the $919 billion in total Medicaid spending in fiscal year 2024. KFF counts 42 states (including DC) that contract with comprehensive MCOs as of July 2025, and Idaho is not among them. KFF notes Idaho ended its primary care case management (PCCM) program effective January 1, 2026 and expects comprehensive MCOs in January 2030. Capital Sun reporting in June 2025 put the share of Idaho enrollees in comprehensive managed care at only about 6%, roughly 15,000 people who are covered by both Medicare and Medicaid.

That is not the same as Idaho having no managed care at all. Idaho already uses a private contractor for one slice of Medicaid: behavioral health. The Idaho Behavioral Health Plan (IBHP), run by Magellan Healthcare, Inc., covers outpatient, inpatient, residential and crisis services for Medicaid members and also manages some non-Medicaid state behavioral health services. DHW lists July 1, 2024 as the IBHP start date. DHW's June 27, 2023 announcement of the award described a contract worth $1.2 billion over an initial four-year term. The Idaho Capital Sun's March 30, 2026 report also gives $1.2 billion over four years. Section four of this lesson comes back to what IBHP taught the state.

What House Bill 345 ordered

Gov. Brad Little signed House Bill 345, the Medicaid Reform and Cost-Containment Act, on March 19, 2025, with an emergency clause. Every one of the 90 Republicans voted yes and all 15 Democrats voted no, according to the Capital Sun. Among its provisions was the move to managed care for all benefits and the removal of primary care case management. The fiscal note, which the Legislature's own cover page says is "prepared by a proponent," projected net savings of $15.9 million in total funds ($5.3 million general fund) in fiscal year 2026 and $27.2 million total ($9.0 million general fund) in fiscal year 2027 and each year after, with timing dependent on federal approval. Treat those as the sponsors' projections, not as audited results. Lesson 9 returns to how to read fiscal notes.

The calendar: 2026 to 2030

A year added to the schedule

In May 2025 DHW Deputy Director Juliet Charron presented a 2029 start to the Medicaid Review Panel, the legislative panel that tracks the project. By the following spring the date had moved. On March 26, 2026, Medicaid Administrator Sasha O'Connell told the same panel the state would push comprehensive managed care back by a full calendar year. The Capital Sun reported the cause as a dispute over a different contract: the new Medicaid claims system, called the Medicaid Management Information System (MMIS), which handles more than $300 million in medical claim payments each month. The state awarded that contract to Acentra Health. The previous vendor, Gainwell Technologies, sued in August 2025. On March 17, 2026, a Fourth District judge issued a temporary restraining order delaying the rollout. A ruling on a preliminary injunction was pending when the Capital Sun reported on April 30, 2026. O'Connell said running two systems back to back would put continuity of care at risk and cost taxpayers more.

The point for a resident or a reporter is practical. A managed care program cannot start before the state has a working claims and enrollment system to feed it. A procurement fight over the computer system therefore moved the date for the whole policy. When someone says the start date is firm, ask what else has to work first.

What the blackout is

DHW's managed care page says the RFP blackout period begins December 1, 2026. Staff working on the RFP will sign non-disclosure agreements, and DHW says it will not discuss the contract, the RFP or pending decisions until the RFP is posted. Before December 1, DHW says it continues meeting with potential bidders about publicly available information. A blackout is standard in large procurements. It protects the fairness of the bidding by keeping any one bidder from getting an inside track. It does not close the Legislature, and it does not close public records. Lawmakers can still pass or amend statute in the 2027 session, which convenes January 11, 2027 (see Lesson 10). A resident can still testify, and a reporter can still request records that exist. What the blackout does stop is a conversation with the agency staff who are writing the RFP. If you have a design idea, send it before December 1.

Date	Event	Source
March 19, 2025	HB 345 signed; managed care ordered	Capital Sun
May 22, 2025	DHW presents a 2029 start to the Medicaid Review Panel	Idaho Capital Sun
January 6 to May 28, 2026	Seven listening sessions (Caldwell, virtual, Tribal, Gooding, Boise, Coeur d'Alene, Lewiston)	DHW managed care page
March 17, 2026	Court restrains the MMIS claims-system rollout	Capital Sun, April 30, 2026
March 26, 2026	State announces a one-year delay	Capital Sun, April 30, 2026
July 1, 2026	Procurement reform law (HB 889) in effect	Idaho Legislature
December 1, 2026	RFP blackout begins	DHW managed care page
Later in 2027	RFP expected to post	DHW managed care page
January 1, 2030	Planned start of comprehensive managed care	DHW managed care page

The contract terms that decide whether it works

The medical loss ratio and what 85% means

The medical loss ratio (MLR) is the share of premium dollars a plan spends on claims, quality improvement and fraud prevention. Under 42 CFR 438.8, if a state sets a minimum MLR, the minimum must be at least 85%. KFF adds that plans must target at least 85% but federal rules do not require remittances (repayments to the state) when a plan falls short. Whether Idaho sets a floor, and whether it requires a repayment, are state design choices. DHW's Key Decisions Log says the state will have a medical loss ratio and will likely share risk with plans toward the beginning of the contract.

KFF reports that the average MLR for Medicaid MCOs rose from 88% in 2023 to 91% in 2024, the highest in about a decade. One reading is that plans are spending more on care. Another is that rates did not keep pace with costs and plans are squeezed. The ratio alone does not say which.

The design decisions DHW has put on the table

DHW says it is evaluating more than 50 design decisions with the Medicaid Review Panel. The topics it lists show where public input could matter most.

Design topic	Question to ask
Network adequacy	How many miles or minutes from home, by provider type, and how is it measured and posted?
Provider rate floors	DHW says providers will have to be paid at least the fee-for-service rate for a period after the transition. How long is that period, and for which services?
Medical loss ratio	What floor, and is repayment required below it?
Centralized credentialing	Does a doctor fill out one form for all three plans or three forms?
Late-payment penalties	How many days before a plan pays a clean claim, and what is the penalty?
Quality withholds	What share of payment is held back until the plan hits measured goals?
Local presence	Must a plan keep offices and staff in Idaho?
Special investigations units	Do they refer suspected fraud to the Attorney General's Medicaid Fraud Control Unit?
Continuity of care	Can a member keep a current doctor or treatment for a transition period?
Auto-assignment and enrollment broker	How are members assigned, and who helps them choose?

DHW states that Katie Beckett services are not affected, and its Key Decisions Log says eligibility determinations are made exclusively by the state and that Tribal members may opt out of managed care. At a Medicaid Review Panel meeting reported by the Idaho State Journal in September 2026, Sen. Kevin Cook (R-Idaho Falls) asked for uniform forms across the three plans so providers are not told to resubmit paperwork, and DHW said standardizing prior authorization criteria was still under discussion. Sen. Melissa Wintrow (D-Boise) reported complaints that people were not getting requested in-person assessments.

What Idaho already learned from Magellan

The bid, the lawsuits and the revolving door

The IBHP is the best local test of what contracting Medicaid to a private firm looks like. Idaho awarded Magellan the contract in 2023. The Idaho Capital Sun reported on March 30, 2026 that losing bidders sued, and that Magellan's new chief executive, David Welsh, was a former state employee who had judged bids on that contract. At least three former DHW employees were hired by Magellan. Rep. Britt Raybould (R-Rexburg), who sponsored the reform bill, said she did not see wrongdoing and that the sides might be "talking past each other." That is her view, reported in the article. The record the article supports is narrower: lawsuits were filed, former state workers moved to the vendor, and the Legislature decided the rules needed tightening.

House Bill 889: the 2026 contracting reform

House Bill 889 amends and adds to Idaho's law on procurement of property by the state. The Legislature's status page lists the State Affairs Committee as sponsor with Rep. Raybould as House floor sponsor and Sen. Blaylock as Senate floor sponsor. It was introduced March 12, 2026, passed the House 57-11-2 on March 19, passed the Senate 21-14-0 on March 30, was signed by Gov. Little on April 2, 2026, and became Session Law chapter 283, effective July 1, 2026. Per the Capital Sun, it does the following.

• Allows the state to award one contract to multiple bidders, which matches the plan to contract with three MCOs.
• Imposes a one-year cooling-off period before a vendor can hire a state employee or official who took part in the solicitation, bid or contract process, and bars a former elected official from taking part in the bid process for a vendor for one year.
• Requires the state to publish how it scores bids.
• Lets the state weigh a bidder's past performance.
• Lets the Division of Purchasing administrator bar a contractor with a performance failure from state bids for up to three years, with a right to challenge.
• Requires a protester to post a bond sized to the contract, refunded if the protest wins and forfeitable if found "frivolous."

Two features cut in different directions. Publishing the scoring method helps outsiders check a decision. Protest bonds make it more expensive for a losing bidder to challenge a decision, which can speed contracting and also reduce the chance that a flawed award gets reviewed. A careful reader holds both thoughts. The text of the final bill is the authority, so read it at the Legislature's site before quoting any provision.

The mobile treatment cut and four deaths

The strongest local lesson is about what happens when a rate cut passes through a contractor. After the state cut Medicaid provider rates in 2025 following the governor's budget order, Magellan cut Assertive Community Treatment (ACT), a mobile treatment program for people with severe mental illness, and peer support services in December 2025, as reported by the Capital Sun on April 3, 2026. State health officials deny that the entire ACT program was cut, though some providers say the remaining services do not match the evidence-based program. Providers said four patients died in less than three months after the cut, and one in the 18 months before it. Sen. Kevin Cook said that "we have had four deaths that you can pinpoint directly back to these programs." That sentence is a senator's statement of causation, which the article attributes; the article does not report a medical or agency finding on causation.

The Legislature then restored the programs through Senate Bill 1446, signed by Gov. Little. Funding for the next fiscal year came from $4.6 million in tobacco settlement funds and $5.8 million in opioid settlement funds. The Capital Sun reported a total cost of nearly $31 million, with an estimated $20.5 million from the federal government. A separate bill by Rep. Ben Fuhriman to put the program back in state law never received a committee hearing.

The fair lesson for the larger plan is this. A single contractor sat between a state rate decision and a service that people depended on, and the first public alarm came from providers and then lawmakers. If three plans each make their own coverage and rate decisions across all Medicaid benefits, the number of places where such a decision can happen multiplies. That favors strong contract terms, public reporting and an easy way for a member or provider to raise a problem.

If a plan says no: member appeals

Under fee-for-service a denial comes from DHW and appeals run through the state fair hearing process described in Lesson 8. Under managed care the first appeal goes to the plan. Federal rules at 42 CFR 438.402 give a member 60 calendar days from the date on the plan's adverse benefit determination notice to file that appeal. The plan must resolve a standard appeal within 30 calendar days and an expedited appeal within 72 hours (438.408(b)), and may extend by up to 14 days in limited cases (438.408(c)). After the plan upholds its decision, the member may request a state fair hearing, with no less than 90 and no more than 120 calendar days from the date of the plan's notice of resolution (438.408(f)(2)). A member may also request continuation of benefits during an appeal, but must ask within 10 calendar days after the plan sends the notice or by the intended effective date of the action, whichever is later (438.420). A provider or authorized representative can file for the member only with the member's written consent, and a provider cannot request continuation of benefits.

Step	Idaho Behavioral Health Plan today (Magellan)	Federal rule for managed care
File an appeal with the plan	Within 60 days of Magellan's decision	60 calendar days from the notice (438.402)
Plan decides a standard appeal	Within 30 calendar days	No more than 30 calendar days (438.408)
Plan decides an urgent appeal	Within 72 hours	No more than 72 hours (438.408)
Ask for a state hearing	Within 120 days of Magellan's appeal decision	90 to 120 days from the plan's notice (438.408(f))
Keep benefits during appeal	Ask within 10 days of the notice date	10 calendar days or the effective date, whichever is later (438.420)

The Idaho column comes from DHW's Youth Empowerment Services appeals page (yes.idaho.gov/appeals), which lists these figures for the Idaho Behavioral Health Plan. Magellan's member line is 1-855-202-0973 (TTY 711), 24 hours a day; the IBHP Governance Bureau takes verbal appeal requests at 866-681-7062, which must be followed by a written request, and written appeals at IBHPAppeals@dhw.idaho.gov. The comprehensive managed care program for the rest of Medicaid does not exist yet, so its member handbook, appeal clock and phone numbers will come from the contracts and rules written in 2027 to 2029. The federal numbers are the floor that the Idaho version must meet.

How to weigh the proposal

What the facts support and what they do not

The evidence supports several narrow conclusions. Most states use managed care for most enrollees, so Idaho is an outlier and the model is not experimental. The evidence that it saves money or improves access is limited and mixed according to KFF. A 2023 federal Office of Inspector General report using 2019 data found that Medicaid MCOs owned by seven large parent companies denied 12.5% of prior authorization requests, more than twice the rate for Medicare Advantage, so denial behavior deserves watching. Idaho's own sample of one contract produced lawsuits, a revolving-door controversy and a service cut tied to four deaths in the reporting of the Capital Sun. The evidence does not support a claim that Idaho will save a specific amount, because the only savings number in the record is a fiscal note prepared by a proponent and conditioned on federal approval. It also does not support a claim that private plans will necessarily cut care, because the outcome turns on the contract terms and enforcement that have not been written yet.

My position, stated plainly: the right test for a managed care contract is whether the public can see the plan's performance. Ask for published denial rates by service, published network adequacy results, published late-payment data and a working complaint line, with the data posted by the state rather than only by the plan. KFF notes that federal reporting on access and network adequacy was reduced in 2026 and that state network adequacy reports are not posted on Medicaid.gov, which makes state-level transparency requirements more important, not less. DHW's Key Decisions Log says the state aims to run a publicly posted dashboard with prior authorization approval rates and denial reasons, timely payment metrics and network adequacy measures. These are contract terms the Legislature and DHW can still choose before the RFP posts.

How to take part before the blackout and after

Where this fits in the rest of the course

Managed care is the largest structural change on Idaho's Medicaid calendar and it lands after the 2027 work requirements. The two changes interact. The state, not the plan, runs the eligibility process and the work requirement paperwork, and the interim final rule from CMS limits what managed care plans can do in that process. When a person loses coverage for missing a work requirement, the fair hearing right sits with the state, not with a plan. When a covered person is denied a service by a plan, the first stop is the plan. Knowing which door applies saves days, and days are what appeals run on. Lesson 8 lays out every deadline in one place, Lesson 9 shows where to get the numbers to hold the program to its promises, and Lesson 10 shows how a bill and a rule actually move. Before December 1, 2026, send your design comment to MedicaidManagedCare@dhw.idaho.gov and keep the reply.