Medicaid plans are expected to grow 20 percent this year due to the program's expansion under the Patient Protection and Affordable Care Act.
Avalere Health analysis finds that Medicaid managed care enrollment will increase 20 percent from 2013 to 2014 and by 38 percent from 2013 to 2016.
The data analysis firm also said states using managed care organizations and other states are expanding MCOs into new regions of the state or using them to serve more complex beneficiaries.
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"States opt to use MCOs rather than paying for beneficiaries' services through a state-run fee-for-service program for a number of reasons, including budget predictability and the potential for increased care," the Avalere Report read.
Analysts noted that the expansion of Medicaid eligibility levels in PPACA also contributes to the shift.
By 2015, Avalere projects 75 percent of Medicaid beneficiaries will be covered by MCOs, up from 63 percent in 2012.
"The continuing shift toward Medicaid managed care presents a significant growth opportunity for health plans that specialize in managing these low-income populations," said Matt Eyles, executive vice president of Avalere. "Plans that currently operate in Medicaid could see significant membership growth, and those outside of the Medicaid market until now could gain market share by moving into this space."
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