managed care

A health care delivery system that seeks to control access to and utilization of health care services both to limit health care costs and to improve the quality of the care provided. Managed care arrangements typically rely on primary care physicians to manage the care their patients receive.


Used in two senses in health policy discussions. (1) Employer or individual mandate, in which a government body imposes a requirement on some employers to help pay for insurance coverage for their workers (and perhaps their families), and/or on certain individuals to obtain coverage. (2) State mandate, a requirement imposed by states on insurance companies to include, as part of any health insurance policy they sell, coverage for a specific service, such as well baby care, or a specific provider, such as a psychologist or optometrist.

market basket index

An index of the annual change in the prices of a selection of goods and services providers used to produce health services. Also referred to as an input price index.

matching funds

Funds that one entity pays in a set proportionate amount to funds available from other sources. For example, the federal government matches state Medicaid funding at varying rates.

meaningful use

In an HIT context, meaningful use defines the use of electronic health records and related technology within a health care organization. Achieving meaningful use also helps determine eligibility for incentive payments from the federal government under CMS Incentive Programs.

means test

A test to determine eligibility for government benefits based on an individual’s lack of means, as measured by income and/or assets. Under current Medicaid eligibility guidelines, means-testing may differ for different eligibility groups. The Medicare Prescription Drug Improvement and Modernization Act of 2003 introduced a form of means-testing in Medicare, which now sets higher premiums for higher-income seniors and provides more generous drug benefits to lower-income beneficiaries.


Public health insurance program that provides coverage for low-income persons for acute and long-term care. It is financed jointly by state and federal funds (the federal government pays at least 50 percent of the total cost in each state) and is administered by states within broad federal guidelines. (See Medicaid and CHIP chapter.)

Medicaid waiver

Authority granted by the secretary of Health and Human Services to allow a state to continue receiving federal Medicaid matching funds even though it is no longer in compliance with certain requirements of the Medicaid statute. States can use waivers to implement home and community-based services programs or managed care, and to expand coverage to populations who are not otherwise eligible for Medicaid.

medical device tax

A 2.3 percent tax on the sale of certain medical devices imposed on the manufacturer or importer of the devices that went into effect January 2013 under the Affordable Care Act. The Consolidated Appropriations Act of 2016 suspends the tax from January 2016 to December 2017.

medical loss ratio

The ratio of money paid out by an insurer for claims, divided by premiums collected for a particular type of insurance policy. Low loss ratios indicate that a small proportion of premium dollars was paid out for benefits, while a high loss ratio indicates that a high percentage of the premium dollars was paid out for benefits. The Affordable Care Act (ACA) sets minimum medical loss ratios for health plans effective Jan. 1, 2011.

medically needy

An optional Medicaid category in which states can cover individuals and families who qualify for coverage because of high medical expenses, usually hospital or nursing home care. To qualify, individuals must be categorically eligible and their monthly incomes minus accumulated medical bills must be below state income limits for the Medicaid program. This allows Medicaid coverage for people who have extensive health care needs but too much income to be eligible for Medicaid. (Also see spend-down.)

medically underserved areas and populations (MUA and MUP)

Designations that identify areas and populations that have too few primary care providers, high infant mortality, high poverty and/or high elderly population. MUAs and MUPs involve the application of the Index of Medical Underservice to a service area or population group. MUAs may include groups of census tracts that have a population-to-provider ratio indicating a shortage. MUPs may include groups of persons who face economic, cultural or linguistic barriers to health care.

Medicare Access and CHIP Reauthorization Act (MACRA)

This bipartisan legislation repealed the Sustainable Growth Rate (SGR) Formula that has determined Medicare Part B reimbursement rates for physicians and replaced it with a new system where participating providers are paid based on the quality and effectiveness of the care they provide. These value-based payment programs will be based on two new reimbursement structures: The Merit Based Incentive Payments System (MIPS) and Advanced Alternative Payment Models (Advanced APMs).

Medicare Advantage (MA)

A part of Medicare designed to offer beneficiaries a choice of managed care and other private plan options. Also called Part C of Medicare, Medicare Advantage encompasses health maintenance organizations (HMOs), preferred provider organizations (PPOs), Medicare HSAs, regional PPOs, and other options. Not all options are available in all areas. (See Medicare chapter)

Medicare Improvement Fund

Established in 2008, the fund allowed the Department of Health and Human Services to make improvements under the original Medicare fee-for-service program under Parts A and B. For fiscal year 2014 through fiscal year 2017, $19.9 billion would be made available from the Parts A and B trust funds. The Affordable Care Act (ACA) eliminated the Medicare Improvement Fund and created a new Innovation Center within Centers for Medicare & Medicaid Services, making the fund redundant.

Medicare Part A

Also known as the Hospital Insurance (HI) program, Part A of the Medicare program covers inpatient hospital care, skilled nursing care for up to 100 days after a hospitalization, home health and hospice care. It is funded by a portion of the payroll tax: 2.9 percent, with employers and employees each paying 1.45 percent.

Medicare Part B

Also known as Supplementary Medical Insurance (SMI), Part B of Medicare covers physician services, outpatient care and home health care after 100 visits. It is funded partly by premiums paid by beneficiaries. The rest comes from the federal government’s general revenue.