States may pay for Medicaid services on a fee-for-service basis or:

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States may pay for Medicaid services through contracts with managed care organizations. This is a way to control costs and ensure that beneficiaries receive coordinated care. It involves paying a set amount per person per month to the managed care organization, which is responsible for providing all necessary services to the beneficiary. This type of payment system is becoming more common in Medicaid programs across the United States.

States May Pay for Medicaid Services on a Fee-For-Service Basis