Puerto Rico's Medicaid Program-Mi Salud: Administration Costs for Two Different Managed Care Risk Model

During the years 2010 to 2016, Puerto Rico's Medicaid Program was administrated by contractual agreements made with different managed care organizations (MCOs). During this six year period, the government contracted on either a full or limited financial risk basis with the MCO's that managed their program. This study compares the administrative costs of MCOs at those risk levels. Data was clustered in two groups, and administrative costs were analyzed controlling for premium paid per patient. The null hypothesis was rejected and the conclusion is that there is a statistically significant difference between administrative costs of MCOs with different financial risk models when controlling for premium costs. The magnitude of the administrative costs are relevant to Puerto Rico's governmental Medicaid reform process. When assessing healthcare proposals to manage the current program, determining this real administration cost is vital among other tasks. Therefore, reliable data collection and processing is needed to study more in depth this and other program costs. To reach a more accurate conclusion, detailed analysis should be performed to properly account for all administration costs.