Risk Selection Among SSI Enrollees in TennCare

The issue of risk selection is especially important for states that enroll blind and disabled beneficiaries of Supplemental Security Income (SSI) in Medicaid managed care. SSI beneficiaries have persistent needs for care, have a wide variety of chronic conditions, and often need atypical and complex services. Risk selection occurs when the health care needs of beneficiaries enrolled in a specific plan differ systematically from the needs of the overall beneficiary population and payments do not reflect those needs. We assess the extent of risk selection among managed care plans for SSI beneficiaries over the first three years of Tennessee's Medicaid managed care program, TennCare. Using claims data containing fee-for-service expenditures prior to enrollment in managed care, we find substantial evidence of persistent risk selection among plans. Results are robust to most alternative measures of risk selection for most plans.