Medicaid is a federal-state partnership with programs established in the federal Social Security Act and implemented at the state level with federal matching funds.  Federal law provides a framework for medical coverage of eligible families, pregnant women, elderly and disabled adults, and other adults with varying income requirements.

The Health Care Authority (Authority) provides medical care services to eligible low-income state residents and their families, primarily through the Medicaid program.  Coverage for medical services is primarily provided through managed health care systems.  Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty, and ancillary health services through a network of providers.

Under a managed care program, the Authority contracts with managed health care systems to provide a comprehensive set of medical care services to Medicaid enrollees pursuant to a capitated monthly premium for each covered individual.  The managed health care systems contract with individual health care providers, group practices, clinics, hospitals, pharmacies, and other entities to participate in their Medicaid plan's network.  In negotiating contracts with managed health care systems, the Authority is required to adopt a uniform procedure for entering into contractual arrangements, in which certain factors are considered, such as standards regarding the quality of services to be provided and the financial integrity of the responding managed health care system.

Prior to the signing of a contract with a managed health care system, the Health Care Authority is required to submit final rates to the managed health care system for review at least 30 days prior to a contract signing deadline.