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Dual eligible beneficiaries and managed care: Ensuring consumer protection through state Medicaid contracts
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i
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DUAL ELIGIBLE BENEFICIARIES AND MANAGED CARE: ENSURING
CONSUMER PROTECTION THROUGH STATE MEDICAID CONTRACTS
by
Jennifer Lee Guthrie
A Thesis Presented to the
FACULTY OF THE LEONARD DAVIS SCHOOL OF GERONTOLOGY
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degrees
MASTER OF SCIENCE IN GERONTOLOGY
MASTER OF PUBLIC ADMINISTRATION
August, 1997
Copyright 1997 Jennifer Lee Guthrie
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UMI Number: 1387820
Copyright 1997 by
Guthrie, Jennifer Lee
All rights reserved.
UMI Microform 1387820
Copyright 1998, by UM I Company. All rights reserved.
This microform edition is protected against unauthorized
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UNIVERSITY OF SOUTHERN CALIFORNIA
LEONARD DAVIS SCHOOL OF GERONTOLOGY
This thesis, written by
J e n n if e r Lee G u th rie
under the director of he r Thesis Committee and approved by all its
members, has been presented to and accepted by the Dean of the Leonard
Davis School of Gerontology in partial fulfillment of the requirements for the
degree of: M aster o f S c ie n c e in G e ro n to lo g y /M aste r o f_____
University Park
Los Angeles, CA 90089
P u b lic A d m in is tra tio n
Dean
THESIS COMMITTEE
M i l — y .
Chairman
‘ S fa h '1
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ii
ACKNOWLEDGMENTS
This thesis is the result of much dedication and research concerning elder issues. It
is the final product of my dual Masters degree program and was an obstacle I had to
overcome, both in my confidence in writing, and in my confidence of the subject matter.
I want to thank the following individuals, without whose support, I would never
have completed this task:
my two committee members, Dr. Kate Wilber and Dr. Lisa Greenwell, for their
continued patience, support and leadership;
my husband, Raymond, for his love, support, amusing nicknames and sense of
humor;
.
my mom, Terry, for her prodding and love and Stacey, my sister, for her
| understanding;
my friends and family in San Diego, who never wavered in their belief in me; and
»
| finally, thanks to the Center for Health Care Rights. For it was all of you who
\ supported me, listened to me (on a daily basis!), gave me direction, and gave me a
job where I could put gerontology and public administration into practice. Thank
you for your flexibility and understanding of my deadlines. I will miss you.
4
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Ill
TABLE OF CONTENTS
ACKNOWLEDGMENTS............................................................................ ii
LIST OF TABLES........................................................................................ v
LIST OF FIGURES ...................................................................................... v
EXECUTIVE SUMMARY........................................................................... vi
CHAPTER I INTRODUCTION .................................................................. 1
Background ...................................................................................... 4
Policy Considerations ....................................................................... 6
Importance of the Study ................................................................... 9
* CHAPTER2 LITERATURE REVIEW......................................................... 1 1
r
| Section I Dual Eligibles and Managed Care .................................. 13
1 Section II Protecting Dual Eligibles in Managed C are....................... 18
I Chapter Summary ............................................................................. 31
I CHAPTER 3 METHODOLOGY.................................................................. 33
I
Study Research Questions.................................................................. 34
Variables ......................................................................................... 35
Criteria for Evaluation ..................................................................... 38
» Stucfy Design ..................................................................................... 43
| Data Collection ................................................................................. 46
? Limitation of the Study ...................................................................... 47
t Chapter Summary ............................................................................. 47
CHAPTER 4 ANALYSIS AND FINDINGS ................................................ 49
Medicaid Waivers ............................................................................ 49
; Examination and Description of State Dual Eligible Programs ............ SI
Overview of Four State and One Multi-state Medicaid Managed Care
Programs for Dual Eligibles .................................................. 53
Integration: Care, Financing, or Both?................................................ 57
Access to Care ................................................................................ 65
Quality of Care ................................................................................ 75
Reimbursement ................................................................................ 88
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Chapter Summary ............................................................................ 97
CHAPTERS SUMMARY AND CONCLUSIONS ...................................... 99
Summary......................................................................................... 99
Conclusion ........................................................................................105
REFERENCES ............................................................................................. 110
I
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LIST OF TABLES
TABLE
Table I
Table 2
Table 3
Table 4
Tables
TITLE
Waivers Used by Selected States
Integration
Access to Care
Quality of Care
Reimbursement
PAGE NUMBER
51
63
73
86
96
LIST OF FIGURES
!
TITLE PAGE NUMBER
Medicaid Beneficiaries and 7
Expenditures, By Enrollment
Group, 1993
Medicaid Spending per Beneficiary, 8
By Type of Care, 1993
■ r
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FIGURE
Figure 1
Figure 2
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vi
EXECUTIVE SUMMARY
Few studies of dual eligibles enrolled in managed care have included an in-depth
discussion of consumer protection issues. This thesis attempts to describe and analyze,
using contracts, requests for proposals, and other planning documents, four state and one
multi-state dual eligible Medicaid managed care program. The thesis reviews the recent
literature concerning managed care, dual eligibles, and the four identified consumer
protection issues: integration, access, quality and reimbursement. The study design is a
- comparative case study analysis using identified criteria for exemplars to compare and
contrast dual eligible programs and then to draw conclusions of “best-practice” models of
; delivering care to this population. The dual eligible programs described in this thesis do
8
I not represent the fifty state Medicaid programs, but are identified as a means to give the
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I reader a sense of the innovations occurring within Medicaid in terms of managed care for
special populations. For this reason, the study has limitations and should not be used to
draw conclusions about other programs excepting for those identified in the thesis.
The analysis concentrates on a description of how the dual eligible programs, as
stated in their planning or programmatic documents, plan to ensure access to high-quality,
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appropriate health and long term care using the criteria for exemplars set forth by the
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National Academy for State Health Policy, the Henry J. Kaiser Family Foundation and
the Consumer Coalition for Quality Health Care. The state dual eligible programs
examined include Arizona, Florida, Minnesota, and Oregon. The multi-state program
reviewed is the New England States Consortium program for dual eligible adults. The
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V I1
results of the comparative case study analysis reveals that further implementation,
research and development concerning Medicaid managed care and dual eligibles must be
conducted. Some state dual eligible programs referenced in this thesis use strong
contracting specifications in their planning or programmatic documents to ensure
adequate access to cost-effective, high-quality health and long term care for dual eligible
beneficiaries.
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By-a tWWTPHMfc*-'
CHAPTER 1 : INTRODUCTION
1
This thesis describes four state and one multi-state Medicaid managed care
programs (hereafter state programs) for dual eligible individuals (either operational or
planned) and draws conclusions of program effectiveness based on the standards and
guidelines outlined by the National Academy for State Health Polity (NASHP), the Henry
J. Kaiser Foundation and the Consumer Coalition for Quality Health Care. Much of the
framework for comparing state models relies on the work of these groups, however, other
groups’ recommendations, standards and guidelines are used where appropriate. These
standards and guidelines, to the extent possible, are identified in Chapter 3, the
methodology section of this thesis.
NASHP has conducted extensive research and has set forth very detailed
programmatic guidelines for dual eligibles in managed care. The group is made up of
| steering committees consisting of volunteers from various executive branch agencies, state
j
universities and legislatures. The Henry J. Kaiser Family Foundation established the
Kaiser Commission on the Future of Medicaid in 1991 to function as a policy institute and
serve as a forum for analyzing, debating, and evaluating future directions for Medicaid and
other health reforms (Kaiser Family Foundation, 1995). Their overarching goal is to
| improve access to care for low-income Americans. The Consumer Coalition for Quality
I Health Care shares the Kaiser Foundation’s goal, but this group attempts to achieve its
objectives by participating in advocacy activities, developing and strengthening consumer
protection regulations, and establishing private-public partnerships to address quality of
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care issues. This group is dedicated to protecting and improving the quality of health care
for all Americans. The guidelines of these groups are used as the standard by which state
programs are judged as these groups are regarded as having considerable expertise and
experience not only concerning managed care enrollees in general, but also the unique
issues of relevance to dual eligible persons.
Dual eligibles, for the purpose of this thesis, are defined as any person entitled to
the full benefits available under Medicare, a health care program generally for the elderly
and disabled, and Medicaid, a health care program generally for low-income persons and
persons with disabilities. States are moving toward managed care arrangements for
beneficiaries eligible for both Medicare and Medicaid for several reasons. First, the
number of persons considered dually eligible is growing rapidly, in part attributed to the
growth in the elderly population, but also because more people are considered disabled,
due to chronic illnesses. Roughly 5 million persons nationwide are estimated to be dually
eligible. From a federal perspective, 5 million represents less than 15% of the nearly 40
million Medicare beneficiaries. For states, these 5 million people represent nearly all
elderly Medicaid beneficiaries and a significant portion of younger Medicaid beneficiaries
with disabilities (Saucier, 1996).
Second, states are enrolling persons with disabilities and those who are elderly into
managed care organizations (MCOs) hoping to extract more savings and decrease the
inefficiencies of the health care system. Expenditures for the group identified as dual
eligibles are increasing dramatically each year. While the elderly account for only 12
percent of Medicaid’s beneficiaries, they consume nearly 30 percent of total expenditures.
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The disabled comprise 15% of Medicaid beneficiaries and the largest share of Medicaid
spending (Lyons et aL, 1996).
A third reason states are using Medicaid managed care arrangements for dual
eligibles is in response to the growing gap in coverage between Medicare and Medicaid. In
1993, Medicaid spent 8.7 billion on acute care to supplement Medicare’s coverage for
low-income elderly people (Lyons et al., 1996). O f this amount, Medicaid paid 2.7 billion
to the Medicare program on behalf of low-income Medicare beneficiaries for premiums,
and 6 billion to augment Medicare’s coverage of hospital and physician care and to cover
other services, such as prescription drugs, not covered by Medicare (Lyons et al., 1996).
Finally, states are using managed care arrangements for dual eligibles as these are
j presumed to deliver care in a more systematic, coordinated fashion. Medicaid spending on
behalf of elderly beneficiaries largely reflects gaps in Medicare’s coverage of various
services, particularly long-term care. Of the 34 billion dollars Medicaid spent in 1993 for
low-income elderly beneficiaries, acute care services and Medicare payments accounted
for one quarter of spending, while long-term care accounted for three-quarters of spending
(Lyons et al., 1996). States suspect these services could be delivered more effectively if
they were integrated, or at least closely coordinated with the primary and acute services
that are overseen by Medicare-reimbursed physicians (Saucier, 1996).
The state programs under investigation in this thesis are representative of those
states which face both increasing expenditures for dual eligible individuals and significant
growth in their populations. In order to receive a full package of integrated and
coordinated benefits, the states identified in this thesis restrict enrollment into only
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Medicaid managed care systems. States report this allows enrollees to receive a seamless
package of both Medicare and Medicaid benefits, generally from the same MCO. Either
states integrate Medicare benefits into the Medicaid managed care system, or the provider
or contractor is required to bill Medicare for the services rendered fee-for-service. Where
states allow dual eligibles to enroll in Medicare managed care, they are excluded from
participating in the dual eligible program. The different managed care arrangements in
operation are of significance as they represent the variety of programs states are using to
provide care to dual eligibles. Further, an analysis o f the different state arrangements
reveals which, if any, states include in their contracting or planning documents strong
consumer protections where dual eligibility issues are concerned.
Background
The purpose of this thesis is to examine the Medicaid managed care arrangements
states are using to attempt to provide health care to dual eligibles in five selected dual
eligible programs. The dual eligible managed care arrangements proposed, in early stages
or currently operating, are examined in an attempt to answer the two following research
questions:
1) What integration, access, quality and reimbursement requirements are
included in state Medicaid managed care arrangements or programs to
deliver comprehensive and appropriate Medicare and Medicaid-covered
services to dually eligible beneficiaries; and
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2) Based upon identified criteria, which of the programs can be considered
exemplary (i.e., considered to be “best practice” models of delivering care
to this population)? If a state operates an exemplary program, it
incorporates the standards set forth by the National Academy for State
Health Policy, the Henry J. Kaiser Foundation and the Consumer Coalition
for Quality Health Care.
The above research questions are important to study because the states and federal
government are increasingly using managed care to deliver the care of all publicly-assisted
| beneficiaries. The National Academy for State Health Policy’s 1996 survey of state
i managed care initiatives found that the estimated number of Medicaid beneficiaries
enrolled in at least one managed care program in 1996 was at least 12 to 1 3 million and
more than 1.3 million of these were elderly persons or persons with disabilities (National
! Academy for State Health Policy, 1996). Similarly, the overall enrollment in Medicaid
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I managed care increased from 3 million in 1990 to 7.5 million in 1994.
»
)
The demographics of the older population are rapidly changing. Older persons are
living longer with more chronic and disabling conditions and are thus consuming more
f
health care dollars. Similarly, Medicare and Medicaid expenditures are increasing
currently and are projected to continue to grow into the future. By looking at the
contracting arrangements, requests for proposals or other planning documents in addition
to demographic data about the population under consideration, conclusions as to each
particular state’s ability to protect its dual eligible consumers can be drawn and
recommendations to improve or enhance existing or proposed programs can be offered.
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While some states have little or no experience serving the health care needs of
dually eligible beneficiaries, several states have more than five years experience enrolling
dual eligibles into managed care. States chosen for this thesis represent managed care
innovations that pertain directly to the dual eligible population. To the extent that they
represent new and evolving managed care trends, the states examined in this thesis attempt
to use managed care to control the costs of health care, while providing accessible, quality
and integrated care to a specified population. While these states are not representative of
all the Medicaid managed care dual eligible arrangements, the results of this analysis may
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| have implications for whether these particular programs can serve as guides for other
f proposed state arrangements.
Policy Considerations
The elderly and people with disabilities face significant challenges concerning
access to health care and the preservation of available income. These two issues exist in
tandem. For it is only with adequate income that one can purchase or access appropriate
preventive health care. With access to preventive health care and likely improved health
comes the freedom to spend available resources on things other than preserving health.
Figure 1 demonstrates that thirty-two million people received services through
Medicaid in 1993 at a total cost to the states and federal government of more than $125
billion. Of these 32 million beneficiaries, the elderly represented nearly 12% and persons
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(
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Figure 1
BpendHuras and Beneficiaries, By Enrolment Group, 1963
23j0%
OM T2M »j
1*»
B M rU M
Expenditures = S125 Billion
Source: The Urban Institute, 1994
Beneficiaries = 32 million people
i
with disabilities comprised almost 16%. Expenses for these two groups alone totaled
nearly 70% of Medicaid expenditures.
The higher level of Medicaid spending per beneficiary that is associated with the
elderly is primarily related to their more intensive use of services, particularly nursing
home care (see Figure 2). About three-quarters of Medicaid spending on the elderly goes
toward long-term care services.
The National Academy for State Health Policy’s 1996 Survey of State Managed
care initiatives found that the estimated number of Medicaid beneficiaries enrolled in at
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Figure 2
Medicaid Spending Per Beneficiary, B y Type of Care, 1993
$8000
$2.067
$4000
$1,191
$2000
Elderly Disabled
| Long-term Care
Adults Children
H Acute Care
Source: The Urban Institute analysis of Health Care Financing and Administration data
a
least one managed care program in 1996 was at least 12 to 13 million, and more than 1.3
million of these are elderly or persons with disabilities (National Academy for State Health
Policy, 1997). This overall enrollment number is up from approximately 7.5 million in
1994 and 3.6 million in 1990, reflecting unprecedented growth in the last seven years.
There was a similar dramatic growth in Medicaid expenditures observed between 1989
and 1992 that can be attributed to three major factors: expansions in enrollment, increases
in medical price inflation, and growth in expenditures per beneficiary (Kaiser Family
Foundation, 1995). Many states are seeking to restructure their Medicaid programs as a
way to control state spending for Medicaid and other health care programs while
expanding coverage to other groups.
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Importance of The Study
This thesis identifies, describes and analyzes state Medicaid managed care
programs for dual eligible persons. This is an important undertaking as the findings and
conclusions can help to guide future state Medicaid managed care programs for this
group. Further, to date, few studies have included a description and analysis of programs
seeking to integrate both care and funding while preserving access and high quality care
for dual eligibles.
This thesis uses a comparative case study research design to examine the
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I qualitative aspects of state Medicaid managed care programs for dual eligibles. The focus
| of this thesis is the dual eligible population enrolled in Medicaid managed care programs in
the five programs. By applying the criteria for Medicaid managed care program
development set forth by NASHP, the Henry J. Kaiser Family Foundation, and the
Consumer Coalition for Quality Health Care, the specific state programs are evaluated for
j their potential as exemplars or models that may be useful in other state health reform
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efforts. An analysis o f state contracts in terms of integration, access, quality, and
reimbursement. These methods are adequate to answer the identified research questions
^ as they show how proposed state programs compare not only to each other, but also to
the identified criteria for program effectiveness.
The rationale for using a comparative case study analysis approach for this thesis
t
■ is that by contrasting different state arrangements and comparing these to identified
standards and guidelines, conclusions can be drawn as to each state’s proposed or
demonstrated ability to safeguard dual eligible beneficiaries enrolled in managed care
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systems. States are experimenting with demonstration projects, pilot programs and
Medicaid waivers to deliver integrated acute and long-term care to dual eligibles under
entirely new prepaid capitated arrangements. Some states, including Arizona, Oregon and
Minnesota, have a history of providing integrated care to dual eligibles. Because of their
experience with providing health care to these beneficiaries, other states may use these
programs or certain program components as models in their search for providing health
care to dually eligible beneficiaries.
The following chapter, Chapter 2, is a review of the relevant literature pertaining
| to dual eligibles in terms o f the consumer protection issues under investigation;
| integration, access, quality and reimbursement. Chapter 3 presents the methodology used
I to analyze the five state programs using specific state contracts, requests for proposals
(RFPs), or other planning documents. Chapter 4 describes, analyzes and evaluates specific
state programs. Finally, Chapter 5 provides a summary and concluding remarks.
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CHAPTER 2: LITERATURE RE VIEW
Although there have been several studies that examine Medicaid managed care
programs for dual eligibles in general, this comparative case study analysis examines the
effect of managed care on consumer protections for dually eligible individuals. Consumer
protections such as access, cost, and quality of care for Medicare and commercial
beneficiaries enrolled in managed care have been explored to some extent in recent
literature. The extent to which consumer protection issues are in place is not well known
I for beneficiaries of both Medicaid and Medicare enrolled in risk-based managed care
i
arrangements. This literature review attempts to summarize what is currently known
about dual eligibles in managed care. Literature pertaining to the relationships between
Medicare and Medicaid, the history of managed care and Medicaid managed care, and
literature pertaining to the four consumer protections are explored.
In the past, difficulties existed in describing and analyzing managed care
arrangements for dual eligibles because few states actually enrolled this population into
specially-designed programs to address their health care needs, fit feet, states that
operated dual eligible managed care programs were usually county-specific or limited by
subpopulation.
There are programs similar to dual eligible managed care arrangements. Among
the most well known are the Program of All Inclusive Care for the Elderly (PACE) and
Social Health Maintenance Organization (S/HMO) models. These arrangements,
however, are excluded from this thesis for several reasons. First, this analysis attempts to
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discuss specifically developed dually eligible Medicaid managed care programs. PACE
and S/HMO models generally are not considered exclusive to Medicaid; rather; they are
pilot or demonstration programs incorporating Medicare, Medicaid and private funding
and services. Second, PACE models arrange health care services for frail elderly under
combined funding from Medicare and Medicaid, with enrollment limited to those age S S
and older who are certified for nursing home admission. They emphasize
community-based care, preventive care, and rehabilitation therapy, hoping to reduce
admission to nursing homes and hospitals. Last, S/HMO enrollees are primarily restricted
to Medicare beneficiaries who voluntarily enroll in the program and pay a premium for
additional services. While PACE and S/HMO models may incorporate many of the
elements of the state programs examined in this thesis such as voluntary enrollment and
integration of funding, PACE and S/HMO programs are not identified as Medicaid
managed care programs primarily concerned with the needs of dual eligible state
populations. PACE and S/HMO programs address service delivery issues, not the
population as a whole. Further, information concerning PACE and S/HMO models is
readily available from other sources.
The literature review that follows is divided into two sections. The first section
examines the relationships between Medicare and Medicaid and discusses how these
programs operate when serving dual eligibles. An overview of the relationships between
these two programs is meant to give the reader a sense o f the apparent fragmentation
existent in the traditional system of fee-for-service health care delivery for dual eligibles.
Also included in this first section is an overview of managed care. Medicaid managed care
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13
is discussed not only in terms of the dually eligible, but also for the Aid to Families with
Dependent Children (AFDC) population, as these individuals were the first Medicaid
population enrolled in managed care.
hi the second section, the importance, conditions and constraints of ensuring
consumer protections in Medicaid managed care is discussed. This section examines the
four major consumer protection issues analyzed in detail in Chapter 4. Integration, access,
quality, and reimbursement for dually eligible beneficiaries are described in terms of the
relevant literature. For the purpose of this thesis, integration of care and services is
discussed separately from integration of funding.
Section I
Dual Eligible Persons and Managed Care
The following discussion examines how Medicaid and Medicare currently operate
to deliver health care to dual eligibles. Because fragmentation and coordination problems
currently exist in the health care system for dual eligibles (Weiner and Skaggs, 1995),
managed care has often been viewed as a means to better integrate health services. This
section also explores the development and history of managed care. This exploration
serves to provide the reader with an explanation of the reason states are transitioning dual
eligibles to managed care.
The relationship bet ween M edicaid and M edicare. Designed to serve low-
income persons of all ages, Medicaid is the government health care financing program that
complements Medicare coverage for the elderly population, providing assistance to more
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14
than one in ten Americans age 65 or older. Nearly four million low income elderly people
receive Medicaid assistance with medical and long-term care expenses, accounting for
over one-quarter of total Medicaid spending (Lyons et al., 1996).
This program plays three essential roles for people age 65 or over. First, Medicaid
makes Medicare affordable for low-income beneficiaries by paying Medicare’s premiums,
deductibles, and other cost-sharing requirements, hi 1993, Medicaid spent 8.7 billion on
acute care to supplement Medicare’s coverage for low-income elderly people (Lyons et
al., 1996). Second, Medicaid provides coverage of medical benefits that Medicare does
not cover, such as prescription drugs, dental and vision services. Of the 8.7 billion paid
for acute care, Medicaid paid 2.7 billion to the Medicare program on behalf of low-income
Medicare beneficiaries for premiums and 6 billion to augment Medicare’s coverage of
hospital and physician care and to cover other services not covered by Medicare (Lyons et
al., 1996). Third, Medicaid stands alone as virtually the only public source of financial
assistance for long-term care in both institutional and community settings (Lyons et al.,
1996). A significant number of dually eligible people use such long-term care services,
and states suspect those services could be delivered more effectively if they were
integrated, or at least closely coordinated with the primary and acute services that are
overseen by Medicare-reimbursed physicians (Saucier, 1996).
In most states, a dual eligible individual is permitted to join a Medicare HMO if
s(he) is not enrolled in a Medicaid managed care health plan. Conversely, if a dual eligible
individual enrolls in a Medicaid managed care plan, s(he) is generally not allowed to enroll
in a Medicare HMO. Further, if an MCO is not present for either system, both programs
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are administered as fee-for-service. Under fee-for-service, Medicare is administered by
the Federal government, is regulated by Federal policies and contracts with particular
Medicare providers. Medicaid is a state program, with state rules, regulations and a
unique set of providers. Segregated arrangements such as these operating concurrently
often lead to poor administration and oversight in addition to fragmentation and poor
coordination. The incentive to overuse and incur excessive costs to the state and federal
governments in fee-for-service generates both cost and quality problems. An individual
who seeks frequent care from multiple providers not only imposes huge costs on both
• systems, but also puts him or herself at risk for drug interactions and overlapping
I treatments.
An overvi ew o f managed care. Managed care can be broadly defined as any
system of payment or delivery arrangement where a health plan attempts to control or
coordinate use of health services by its enrolled members in order to contain spending,
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[ improve quality, or both (Alliance for Health Reform, 1995). For the purpose of this
thesis, managed care is defined as a system of health insurance that focuses on managing
$
costs characterized by a network of contracted providers. As examined in this thesis, one
approach to managing care is to provide health benefits to a defined population for a fixed
payment. Health care services are controlled in a managed care plan by primary care
physicians (PCPs) often referred to as “gatekeepers” (Consumer Coalition for Quality
Health Care, 1996). As used in this thesis, managed care arrangements for dual eligible
beneficiaries generally use health plans which are known as Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA) health maintenance organizations. These
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arrangements allow for full-riski contracting between Medicare and health plans and are
regulated by the federal government
The challenge for policy makers and program designers is to tap the potential
benefits of managed care for target populations while guarding against its dangers.
According to the Health Care Financing Administration, between 1994 and 1995,
Medicare managed care grew 27% (Consumer Coalition for Quality Health Care, 1996).
Supporters o f the move to managed care for all Medicaid populations report that states
and the federal government eliminate much of the excess spending in the Medicaid budget
by paying MCOs a set, or capitated, monthly fee for every Medicaid patient they enroll.
This approach makes sense when replacing emergency room visits with preventive care,
but it is far from clear that a wholesale move by Medicaid to managed care for other types
of care such as long-term care can result in significant savings (Romano, 1995).
Little is known about managed care enrollment of the elderly and people with
disabilities who are eligible for Medicaid, the vast majority of whom are also covered by
Medicare. States differ in how they handle these individuals. State Medicaid agencies
have usually exempted low-income aged and disabled individuals receiving Supplemental
Security Income (SSI)1 from mandates to join MCOs (MCOs), unlike recipients of Aid to
Families with Dependent Children (AFDC) (Leutz, 1995). Many states contract with
MCOs only for the AFDC population; few do so for elderly people (Saucier and Mitchell,
1995). Of those that do contract for the elderly, the incentive for beneficiaries to join
1 In most states, a person who is eligible for Supplemental Security Income is
automatically eligible for Medicaid benefits.
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managed care is small because the Medicaid benefit package in most states is very
comprehensive, making it difficult for HMOs to compete by liberalizing benefits (Fox and
Fama, 1996). It may be similarly difficult to entice dual eligibles into managed care
arrangements as their benefit package is even more extensive. Dual eligible individuals
who understand Medicare and Medicaid rules, regulations and provider networks; who
can coordinate the care Medicare and Medicaid; who can maintain Medicaid eligibility;
and who can seek care from providers who accept both programs have the ability to
navigate this bifurcated health care system and thus enjoy an all-inclusive health care
package. HMOs, however, may still actively market to people who are eligible for both
Medicare and Medicaid, with the major inducement being the assurance of access to
quality services and the coordination of care (Fox and Fama, 1996).
For MCOs, payment difficulties and overlapping regulatory structures can provide
disincentives to seek Medicaid and Medicare contracts. Problems may arise because states
may hold Medicaid contractors at risk for the whole range of care needed by dually
eligible beneficiaries even though these providers cannot control the delivery of Medicare
services. A significant problem of developing managed care programs for low-income
elderly and disabled individuals is that neither the federal nor state government can
monitor their total care, making it impossible to hold a single health plan accountable.
Also, a Medicaid plan generally receives a capitation based on a certain amount of
Medicare fee-for-service, but if the dually eligible person joins a Medicare plan, the
Medicare fee-for-service reimbursement becomes unavailable. Dual administrative
requirements for Medicaid and Medicare plans may cause administrative frustrations as
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well as differing eligibility dates for the dually eligible persons as Medicare enrollment into
a plan can take up to 60 days while enrollment in a Medicaid plan occurs within a month.
States may not seek to establish managed care plans for dual eligibles because they may
find it difficult to hold Medicaid contractors accountable for the care of dually eligible
persons when beneficiaries choose to receive their Medicare services from fee-for-service
providers.
Section II
Protecting Dual Eligible Beneficiaries in Managed Care
As states step up the pace of Medicaid managed care enrollment, the elderly and
disabled are increasingly targeted as the next generation of recipients for managing care
and costs. However, this group remains beyond state policy makers’ grasp where
consumer protection issues are concerned. To date, few states have significant experience
with this population upon which other state programs can draw. Similarly, dual eligibles
have historically been excluded or uninterested in enrolling in managed care, possibly
because of coordination problems or the perceived decreased access to specialty
providers.
There are many consumer protection issues important to keep in mind when
developing managed care programs for all populations (see Dallek et al., 199S). This
section of the literature review concentrates on those consumer protection issues that can
be particularly challenging when developing dual eligible managed care programs and is
divided into four parts. In addition to protecting dual eligible consumers through creating
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integrated systems of care and financing, protections relating to access to care, quality of
care, and reimbursement are discussed.
Integration of Care
Much has been written in recent years about the desirability of integrating acute
and chronic or long-term care (Fox and Fama, 1996; Weiner and Skaggs, 1995; National
Academy for State Health Policy, 1995, 1996). While these may be the goals, there are
several concerns states need to address before developing an integrated service package.
Dually eligible persons and their families navigate a complex system in which the federal
government (through Medicare) is responsible for primary, acute, and growing amounts of
chronic care, and states (through Medicaid) are responsible for long-term care and
“wraparound” coverage (such as payment of Medicare premiums and copayments). Two
common approaches to addressing the complexities of accessing services through separate
systems is to design dual eligibility programs which either integrate acute and long-term
care or integrate Medicare and Medicaid benefits as well as the funding of both programs.
Many states are interested in pursing a more active role to ensure that Medicaid
and Medicare work well together for the maximum benefit of dually eligible persons (Kane
and Starr, 1996). This includes integrating and coordinating the acute and long-term care
services as well as social services a beneficiary is entitled to. Persons with disabilities tend
to use many services, and frail elders often use both acute and long-term care services
simultaneously or sequentially making coordination and flexibility key aspects of any new
program (Leutz, 1995). Integration of Medicare and Medicaid benefits offers states the
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opportunity to demonstrate how better care can be provided by using resources more
effectively. However, the complex needs of the SSI population require not only the
traditional primary and acute care services generally covered by managed care plans, but
also institutional and community-based long-term care services for chronic illnesses and
conditions (Booth, 1996).
Integration
Given growing emphasis on managed care in both the Medicaid and Medicare
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programs, states are increasingly interested in using managed care to collapse the two
funding streams and merge the benefits into unified, seamless health packages for dually
eligible persons. As stated above, Medicaid is responsible for wraparound coverage. The
phrase “wrap around” suggests that these two funding sources complement one another,
and they do to the extent that Medicaid covers gaps in Medicare coverage for dually
eligible persons (National Academy for State Health Policy, 1995). But the existence of
two payers does not, by itself ensure integration of care. For example, a hospital
discharge planner, under pressure to place a patient quickly, may arrange for a short term
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i nursing home stay for a patient because Medicare will pay for it, and because the
^ discharge planner cannot easily and quickly access Medicaid-fimded home-based services
for the patient (National Academy for State Health Policy, 1995). The following section
• presents the disadvantages and advantages of integrating health care services and funding
for dual eligible individuals.
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Advant ages. When elderly persons need acute care services, they enter a different
part of the service delivery system where Medicare is the major payer. Typically, this part
of the service system is disconnected from the long-term care portion, making transitions
abrupt and traumatic for consumers. Integrating both care and financing of the two
programs may correct problems of cost shifting and overlapping service provision while
the two systems work together for the maximum benefit of consumers.
Integrating the primary, acute and long-term care services in addition to the
financing of those services attempts to unify a core package of services for dually eligible
beneficiaries, reducing fragmentation and resulting in more creative, less restrictive care
plans that are not circumscribed by a particular funding stream Integrated systems also
improve cost effectiveness of the managed care program There are fewer administrative
difficulties and fewer obstacles associated with operating within two or more separate
systems. Further, the opportunity to shift costs between the state and federal government
is minimized when funds are pooled. In theory, such an approach could result in “one-
stop shopping” for beneficiaries, and would enhance accountability by making
participating managed care entities responsible for both Medicaid and Medicare services
and facilitating the development of flexible, individualized service packages (National
Academy for State Health Policy, 199S).
While some speculate that the greatest potential savings are in reduced hospital
use, and that Medicare will therefore enjoy the greatest benefit, others believe that
Medicaid will also realize savings. They argue that Medicaid payments to Medicare for
“wrap around” services have been increasing rapidly, and reduced hospital utilization
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would temper this growth. Also, Medicaid would enjoy the bulk of any nursing home
savings that accrue since it pays most of those bills. To policy makers, one of the major
attractions of the integration of acute care and long-term care services is the potential for
cost savings in acute care that could be used to finance long-term care or to reduce overall
expenditures (Weiner, 1996).
In separate systems, the Medicare program is responsible for payment of most
charges associated with inpatient hospitalization (up to a certain limit), whereas Medicaid
pays for most long-term care, including custodial-level nursing home services. A
I precondition for integration of the two is the consolidation of both the funding and the
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| administrative processes. The current structure fosters administrative complexity and
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I confusing cost-shifting from one program to the other. Yet, collaboration between the
states and the federal government in this regard has increased as evidenced by the number
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of states seeking waivers to experiment with integrated programs.
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I Di sadvant ages. Pooling the funding streams of Medicare and Medicaid alone does
I not guarantee integration of or improvements in services. For example, some aging
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I advocates fear that the principles, philosophy, and cost-effectiveness of the social model
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will be lost and MCOs will overmedicalize the delivery of long-term care (Parsons, 1996).
ri
Thus, new models must address the reality that merging acute and long-term care will
result in the “medicalization” of some services. At a systemic level, the pooling of funding
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streams and thus the blending of two systems may prove unfavorable as it may cause more
administrative duties for state Medicaid agencies and MCOs. By creating a “medical
home” for dual eligible beneficiaries by combining Medicare and Medicaid funding and
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using the combined funding to pay a single entity for a comprehensive package of
benefits, it is possible that MCOs may rely more heavily on medical types of services (such
as prescription drugs and outpatient surgeries) rather than on more intensive, less
expensive social services (such as counseling and social support services).
The shift to managed care has implications for consumers, MCOs and state
governments. A state may decide to combine, or blend the care and funding of Medicare
and Medicaid by developing an integrated program. Older persons and persons with
disabilities often require a wide range of primary, acute and long-term care services.
These services are typically only available from a fragmented array o f medical
organizations and social service agencies. The preceding examination of the advantages
and disadvantages of developing integrated managed care systems indicates that states will
experience great challenges when developing integrated managed care systems for dual
eligibles. Clearly, an integrated system has the opportunity to enhance service
coordination and convenience for dual eligibles. Thus, quality of care may be improved
under a unified Medicaid managed care health plan with a single point of accountability.
Access
Access to appropriate care is a significant issue for dual eligibles. Corresponding
with the nature of their entitlement to both programs, dual eligibles are characterized by
increased age, disability and fewer financial resources. Access issues for these groups
include physical access to buildings and rooms; access to appropriate specialists; and
timely appointments, referrals and authorizations.
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Purchasing specifications are defined as a state’s attempt to clearly outline a
package of services it wishes to purchase in a managed care context. Specifications
concerning access standards, requirements for a quality assurance plan and the calculation
of capitation payments or amount of assumed risk can be included in a state’s purchasing
specification standards. Purchasing specifications are used by states as tools to assist with
designing accessible, high-quality, consumer focused managed care programs for elderly
people and persons with disabilities. Use of purchasing specifications can identify and
address the access issues of particular relevance to dual eligibles. Mobility impairments,
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I communication disorders and long-term service needs all present particular access
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I challenges. States which outline these access specifications in requests for proposals
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I (RFPs) and contracts tell potential contractors that the inclusion of accessibility standards
are of significant importance to the state.
Another issue states must address is whether MCOs will be able to assemble
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adequate networks of providers to address the needs of dual eligibles. The extension into
■ long-term care requires MCOs to develop contracts not only with nursing facilities but
also with a broad range of small community-based providers ofhomemaking, personal
care, adult day services, residential care, rehabilitation and transportation (Fox and Fama,
1996). To monitor access concerns, uniform data from each managed care plan must be
collected. Unfortunately, managed care plans have not been required to produce uniform
information for each patient encounter because individual financial claims are not routinely
generated. States seeking to develop managed care programs for dual eligibles may
address access concerns by specifying in their requests for proposals (RFPs) how each
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potential contractor plans to provide these data. Such data, aggregated and profiled on a
routine basis by independent quality evaluators, permit comprehensive assessment of
patient access to health care services. It allows a plan’s performance to be measured
against standardized quality indicators (Consumer Coalition for Quality Health Care,
1996).
Quality
By definition, managed care plans provide a full range of services in the face of
stringent resource constraints. Vet, the quality of health care delivery varies from plan to
plan, depending on the expertise, commitment, and resources of each MCO. Incentives to
control costs inherent in managed care may result in difficulty in obtaining referrals and are
likely to lead to underservice, particularly for the sickest individuals and other at-risk
populations (such as children with special health care needs and mentally disabled
individuals). The potential for managed care plans to decrease quality of care by
restricting services is one o f the leading consumer concerns in managed care (Consumer
Coalition for Quality Health Care, 1996).
In an effort to address beneficiaries’ and their families’ needs for disclosure of
information, better data about the performance of individual MCOs might be gathered and
disseminated, particularly with regard to how well they serve Medicare beneficiaries who
have chronic conditions or other severe medical problems. Consumers equipped with this
information are able to make informed choices about the quality of particular health plans.
Similarly, advocates, care managers, and traditional providers must ask how MCOs
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dominated by the medical model of professional care and corporate models of business
management plan to create appropriate models of user control for beneficiary groups and
their particular circumstances.
Standards of care, assessments, intervention and follow-up are quality
improvement tools that apply across all populations. With the inclusion of Medicare in the
Medicaid managed care mix, there may be a tendency to move toward a medical model of
service delivery (Booth, 1996). Design features of new dual eligible programs should
include safeguards for ensuring that delivery systems are not dominated by institutional
j medical providers and that there are adequate provisions for promoting more flexible, non
medical services that are essential for bridging the social/clinical service needs of elderly
and disabled persons.
An argument in favor of managed care systems is that quality of care and
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consumer satisfaction is improved because explicit barriers (such as multiple care systems
|
operating simultaneously) between providers will be eliminated (Weiner, 1996). Formal
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| studies of quality of care received by Medicare HMO beneficiaries show mixed results.
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" Although evaluations of Medicare managed care generally show that they produce
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| outcomes roughly comparable to those of the fee-for-service sector, those enrolled in
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^ HMOs may have worse outcomes. Some studies find that the outcomes for people with
disabilities and people with chronic illness are worse in HMOs (Ware et al., 1996).
j Similarly, dual eligibles may encounter quality of care problems regarding cost-minimizing
strategies imposed upon their care. For example, many dual eligibles prefer and are used
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to using specialists as primary care doctors. An MCO which eliminates the provision of
accessing a specialist as PCP imposes quality issues on that person.
Reimbursement
Capitation rates have a direct impact on the quality of care received by
beneficiaries. Some believe that the incentives included in capitation have the potential to
improve care. Capitation and prepaid financing have the ability to incorporate flexibility in
decision making for managed care plans that are not bound by fee-for-service rules and
regulations. Additionally, adequate capitation generates incentives to promote patient
empowerment and engage in preventive health care, particularly for enrollees with chronic
illness, to reduce hospitalization (Booth, 1996). Capitation may provide a mechanism for
shifting compensation to services provided by non-physicians such as social workers and
nurse practitioners. MCOs are likely to offer patients incentives such as expanded benefits
or community education programs for seeking less expensive, non-institutional care.
Several factors complicate calculating the capitation of payment for care to a
group of dually eligible beneficiaries. First, the elderly and persons with disabilities tend to
use many services, often specialty services and often simultaneously. Second, they need a
wide range of health and social services, including varying levels of long-term care, that
many managed care plans aren’t equipped to provide. Last, the rules governing Medicare,
which primarily covers acute care, and Medicaid, which covers the bulk of long-term care,
are not well-coordinated and are sometimes in conflict.
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A payment mechanism prescribed by law is intended to pay MCOs 95 percent of
what would have been paid in the fee-for-service sector based on the adjusted average per
capita cost (AAPCC), a county specific number. States must be able to set payment rates
high enough to avoid market failure (Fox and Fama, 1996). There has been market failure
for Medicare managed care in many parts o f the country, and MCOs could avoid whole
states or a least the parts of states where beneficiary costs are likely to exceed Medicaid
revenues (Fox and Fama, 1996).
Another issue states must address is how to develop payment and enrollment
systems to manage financial risks. The various SSI aged and disabled groups are small in
number, high in average costs, and high in cost differences among individuals. Most states
have difficulty developing capitation rates that adjust for likely cost differences because
their information systems are not sophisticated enough or do not contain proper software
and thus cannot link health status and expenditure data (Fox and Fama, 1996).
Another cost issue central to the discussion of managed care is the likely increase
or decrease in costs to providers. The shift to managed care will affect long-term care
providers and extend beyond provision of subacute care services. This shift has
implications for long-term care providers, who receive 9% of their revenues from
Medicare and 52% from Medicaid (Lyons et al., 1996). Opponents of this shift fear that
long-term care will suffer from Medicaid budget cuts as it moves into managed care.
Long-term care providers in states moving toward Medicaid managed care must increase
their knowledge of managed care issues, analyze local markets for opportunities to
provide additional services, and know how to measure quality outcomes (Fisher, 1995).
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Research suggests that successful Medicaid managed care plans can produce
savings of between five and 15 percent over fee-for-service (Kaiser Family Foundation,
1995). However, the overall estimate of savings from Medicaid managed care is limited
because managed care enrollment presently focuses on the least costly of the Medicaid
population groups: children and adults in low-income families. Acute care expenditures
for low-income families account for less than a quarter (23%) of total Medicaid spending
(Kaiser Family Foundation, 1995). Therefore, even if managed care saves five to 15%
relative to fee-for-service and all adult and child beneficiaries are enrolled in successful
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| managed care arrangements, overall Medicaid savings would amount to only one percent
| to two percent of total expenditures (Kaiser Family Foundation, 1995).
| The bulk of Medicaid expenditures are for those populations considered “special”:
| those who utilize the most frequent, expensive care. These populations are also those
I who are the most likely candidates for newly created managed care programs or are
I transitioning into managed care where before they existed solely in the fee-for-service
system. Due to the costs of serving “special” populations in Medicaid, states are turning
> to alternative arrangements for the delivery of health services. The practice of developing
2 '
alternative systems for the delivery of acute and long-term care services forces states to
£
address the implications of transferring responsibility for care, access, quality and
financing to MCOs.
The major push for managed care in all sectors is twofold: to hold constant
escalating costs, or generate cost savings; and to provide accessible, quality care. General
consensus seems to be that managed care for “special populations” can control costs
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without sacrificing quality, but only if certain consumer protections are in place. Some
advocates are concerned that specifically targeted managed care systems may lead to
“dumping” of more costly patients onto out-of-plan providers (Families U.S A , 1996).
By limiting access to appropriate specialists or making physical access impossible, special
needs populations have no other option but to seek care outside their health plan.
Creating new, specialized programs for particular populations helps alleviate these
problems by specifying explicit contracting requirements addressing these issues.
Although managed care arrangements vary widely, some say the most successful ones
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* have effective administrative oversight because they create financial incentives for
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| providers and develop organizational structures that are aligned with those of health plans.
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A review of the literature reveals that as states move toward managed care for the
dually eligible, they will navigate bifurcated systems of possible care arrangements. There
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is no consensus regarding the best way to serve elderly persons and persons with
3
disabilities in risk-based managed care. Approaches are varied, and because many of the
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; programs are new or not fully evaluated, no clearly preferable approach has emerged.
X
Managed care for government sponsored benefit programs to date compels states to
' i acknowledge that their relationship with providers, consumers and federal regulators must
be a balance of oversight and plan performance.
I Traditional health plans have little experience serving people with disabilities or
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elderly beneficiaries, but now have more resources and greater incentives to gain that
experience and provide quality care. States who move in the direction of managing the
care of the dually eligible must address the concern of the lack of guidance concerning
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how to effectively monitor and improve the quality of care for dually eligible populations
enrolled in managed care.
CHAPTER SUMMARY
This chapter reviewed the literature concerning managed care arrangements for
dual eligible individuals. Specifically, the chapter examined the current system of
providing health care to dual eligibles, gave an overview of managed care in the context of
all individuals, and presented the consumer protection issues most useful to examine in
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i terms of dual eligible persons.
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In the first section,, the issue of dual eligibles in managed care was described. To
illustrate how the current system without managed care operates, the relationship between
Medicare and Medicaid was described and revealed that the current system of providing
health care to dual eligible beneficiaries often operates as two separate systems with little
| coordination creating confusion and administrative difficulties. This section was further
developed to include a discussion and overview of managed care. This section defined
managed care in the context of this thesis, presented recent statistics concerning the
enrollment of the dual eligible population in managed care and reviewed the history of
managed care in terms of Medicaid populations. The section of the literature review
revealed, with recent managed care statistics, that states are increasingly transitioning
more elderly and disabled individuals into managed care arrangements. This section
further showed that historically, Medicaid managed care arrangements existed solely for
the least expensive populations: low-income families with children. The potential
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prospects and pitfalls o f transitioning dual eligible persons into managed care
arrangements was reviewed and was found to show that states are increasingly enrolling
dual eligibles to assist them in curtailing the increasing costs of providing health care to
this population.
The second section reviewed the consumer protection issues relevant to dual
eligible beneficiaries. These consumer protections are integration, access, quality, and
reimbursement. The literature review revealed that, to date, few studies have examined
dual eligibles in managed care arrangements. It is therefore difficult to make definitive
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i statements about these consumer protection issues. However, because o f incentives for
I limiting or denying care and ensuing affects on access and quality in an effort to control
§ costs, it is increasingly important to examine consumer protections for this next generation
of managed care consumers.
An examination of the literature concerning managed care, dual eligibles and
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! consumer protections demonstrates that there is still very little known about how managed
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; care arrangements impact access to and quality of care for dual eligibles. This literature
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, review, then, supports the need to assess consumer protection issues as relevant to dual
eligible beneficiaries, in more detail. The previous review provides the necessary
I. foundation for examining in the following chapters how specific Medicaid managed care
! arrangements plan to safeguard access to quality services provided to dual eligibles.
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CHAPTER 3: METHODOLOGY
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As described in the previous two chapters, the purpose of this thesis is to examine
five state models for enrolling dually eligible individuals into Medicaid managed care
programs. These different models’ contracts between providers and states, requests for
proposals, and program planning documents are examined in the context of consumer
protections in state Medicaid managed care models. The process used to draw
conclusions about the ability of state models to be considered as “best practices” or
1 exemplary is to compare and contrast the consumer protection issues o f integration,
I
\ access, quality, and reimbursement with the standards developed by the National Academy
I for State Health Policy, the Henry J. Kaiser Foundation and the Consumer Coalition for
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Quality Health Care. As discussed in the introductory chapter, the work of these groups is
useful as a guide to evaluate dual eligible programs because these groups are considered
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I by states and advocates alike to be experts on issues concerning dual eligibles and
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managed care.
(;
; The research questions, variables, criteria for evaluation, study design (including
?
methods of data collection), and limitations of the study design are discussed in the
" following section. Most states examined in this thesis have less than five years of
experience serving the health care needs of dually eligible beneficiaries in integrated
; programs. The dual eligible programs examined in this thesis were not chosen for their
experience with serving dual eligibles; rather, they were chosen to demonstrate the range
of innovations states are using to attempt to provide effective and efficient care to the dual
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eligible population. These states were selected as they represent a new and evolving trend
in health care: using managed care to control the costs of dual eligibles’ health care, while
providing integrated, accessible, quality and cost-efficient care. While these states are not
representative of all the Medicaid managed care dual eligible arrangements, they are
noteworthy and may serve as a guide for other proposed state arrangements.
Programs and states referenced in this thesis are restricted to those which are
published or documented and thus may not reflect the full range of developments and
innovations occurring around the country. Also, some of the programs reviewed are in
the early stages of development and may change considerably in the future.
Study Research Questions
Examples from the literature concerning the achievement of both Medicare
managed care and other managed care programs enrolling the dually eligible provide
substantial evidence of the potential contributions and limitations of state and federally
developed dually eligible managed care programs. The purpose of this research is to give
the reader a better sense of the arrangements states are using to attempt to provide
accessible, high-quality health care in a cost-conscious manner.
This thesis aims to answer the following research questions:
1) What integration, access, quality and reimbursement requirements are
included in selected state or multi-state Medicaid managed care
arrangements or programs to deliver comprehensive and appropriate
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Medicare and Medicaid covered services to dually eligible beneficiaries;
and
2) Based upon identified criteria, which of the programs can be considered
exemplary (i.e., considered to be “best practice” models of delivering care
to this population)?
Variables
In the past, effects of enrolling dual eligibles into state Medicaid programs were
not measured, and in fact few programs existed. Therefore, no concrete measure currently
exists to determine the efficacy of these managed care arrangements for protecting dually
eligible consumers. However, an examination of four basic consumer protections are
examined to reveal their particular relevance to dual eligibles.
Integration o f Care and Financing. Integration is defined as the process by which
activities are formed, brought together, or blended into a functioning or unified whole
(Webster’s n, 1984). It must first exist as a “whole” — that is, something must be brought
together from different elements (Shortell, Gillies, Anderson, Erickson and Mitchell,
1996). Shortell et al. (1996) defines three types of integration to include clinical,
functional and physical. It is believed that these three types of integration are the key
elements in creating an organized health delivery system. Functional integration can be
loosely defined as the extent to which key administrative and functional support systems
are coordinated across the operating system to add the greatest value to the system.
Physician integration is the extent to which physicians are economically linked to the
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system, facilities and services and are active in the overall administration of the operational
aspects of the delivery system. Finally, clinical integration is the extent to which patient
services are coordinated with the operating system to maximize the value of services
delivered.
This thesis examines only functional and clinical integration where dual eligible
beneficiaries enrolled into Medicaid managed care arrangements are concerned. State
programs are examined in the context of the extent to which they either (1) clinically
integrate (care and services only), or (2) clinically and functionally integrate (essentially
i
combining the clinical functions with the functional aspects of funding and operating
systems). The states that integrate care and services, in effect, combine the services of
both Medicare and Medicaid, creating a coordinated, unified package: a unified whole
made from two distinct programs. This is an example of clinical integration.
Similarly, this thesis examines state programs that integrate both the services and
funding of Medicare and Medicaid. These states create a new program, bringing together
the services and financing of two distinct, once separate programs, to create a completely
new program. Integrating funding and services is a combination of clinical and functional
integration.
Access. Each person should have access to an adequate level of health care. This
requires minimizing financial, geographic, and cultural barriers to care; distributing health
care resources in a manner acceptable from an impartial point of view; and treating similar
health care needs similarly, without regard to the patient’s membership in a group or class
(Priester, 1992).
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The issue of access goes beyond a simple tally of the total number of managed care
contracting physicians and facilities. Access depends on the capacity of contracting
providers to serve members enrolled in their particular group — too few providers, too
many enrollees, or lack of geographically accessible primary and speciality providers
compromises access (Dallek et al., 1995).
Each person should have access to a specified level of health care that allows them
to achieve a reasonably full and satisfying life. For access to be nondiscriminatory, health
care needs should be treated similarly, without regard to the patient’s age, gender,
! [disability], race, religion, national origin, education, place of residency, sexual orientation,
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j ability to pay, or presumed social worth (Priester, 1992). Access/availability of care; use
of specialists as PCPs and access to appropriate specialty care; and referral process and
utilization review are the factors use to comparatively examine state contracts relating to
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j access.
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j Q uality. Health care should maximize the likelihood of desired health outcomes
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for individuals and populations, be consistent with current and emerging professional
knowledge, and be humanely and respectfully provided (Priester, 1992). The use of
standardized medical practices, a unified medical record system and internal peer review
system permit MCOs to monitor provider practice patterns and establish self-correcting
systems to address quality of care problems and promote quality of care (Dallek et al.,
1995). Requirements of a quality assurance plan; standards by which decisions to deny
care are made; and accountability, monitoring and oversight are the factors used to
comparatively analyze state contracts.
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Rei mbursementL The health care system should be efficient — this is, should
achieve desired outcomes with the least expenditure, thereby providing good value for the
money spent (Priester, 1992). Reimbursement, defined as capitation, is simply the flat fee
payment made per patient to providers of services. The description and analysis pertaining
to reimbursement examines each states’ method of calculating the capitation rate paid to
providers for services to dual eligibles. Factors such as basing the capitation on fee-for-
service history and use of the average adjusted per capita cost (AAPCC), such as using
age, geography and other risk adjusters, are examined.
j j
I Criteria for Evaluation
I As state Medicaid administrators begin to understand their role in developing
managed care programs for dual eligibles, they must acquire the tools needed to fulfill this
! role. Much work has been done to improve the understanding of the characteristics and
f
needs of populations currently being served. Administrators must concentrate on the
needs of the populations not currently served in managed care. As these needs are better
f i understood, programs can be tailored appropriately, reducing unnecessary or duplicative
■ e
services and increasing access to needed care through suitable network development and
reimbursement mechanisms.
Several documents are used in this thesis to create a framework to evaluate state
r Medicaid managed care programs for dual eligibles. Included in this framework are the
criteria for creating appropriate managed care programs pertaining to the consumer issues
of integration, access, quality and reimbursement. The work of the National Academy for
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State Health Policy, the Henry J. Kaiser Foundation, and the Consumer Coalition for
Quality Health Care are used to create this framework for evaluation. Specific criteria
contained in documents published by these groups are used in order to compare and
contrast state dual eligible programs. These documents include, but are not limited to:
1) M anaged f a r ? fh r Dually Eligible Beneficiaries: Key Design Choices for
States (National Academy for State Health Policy, 1996);
2) Look Before You Leap: Assuring the Quality of Care of Managed Care
Programs Serving Older Persons and Persons with Disabilities (National
Academy for State Health Policy, 1996);
3) A Framework Document for the Development of Managed Care
Contracting Specifications for Dually Eligible Adults (New England States
Initiative for Dually Eligible Persons, Health Care Financing Administration
Technical Advisory Group with assistance from the Center for Vulnerable
Populations at the National Academy for State Health Policy, 1996);
4) Managed Care in Medicare and Medicaid (Kaiser Family Foundation.
1995); and
5) The Quality Imperative Under Managed Care: Questions and Answers
(Consumer Coalition for Quality Health Care, 1996).
The five Medicaid managed care programs are evaluated based on their ability to
address the four key consumer protection issues as the criteria for consideration of “best
practice” or exemplary is outlined in the above documents. The specific contracting
specifications in several of the above documents are not included here as they are
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considered exhaustive. What follows, however, are the specific issues examined in detail
in the description and evaluation sections of Chapter 4. Each of the five programs’ ability
to meet the criteria of integration, access, quality and reimbursement are used to judge
whether or not they are able to be considered exemplary models worth replicating either
based on a combination of all the consumer protection issues, or based upon a single issue.
Integration
A state that operates a clinically integrated dual eligible program may not
i
have the ability to protect its consumers to the furthest extent possible. A State
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1 that operates a combined integrated clinical and functional program integrates
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| care, services and financing into a single unified program. A state that operates a
program of this type can be considered a best practice.
Access
A state that ensures access to care and availability of care by outlining strict
requirements concerning physical access, compliance with the Americans with
Disabilities Act, and timeliness standards for appointments, referrals and
authorizations can be considered a best practice. Best practice standards include:
street level access or wheelchair accessible ramp into facilities, wheelchair access
to lavatory, elevator operable from wheelchairs; and accessible examining rooms,
tables, diagnostic and other equipment. Further, states that require Contractors
who can not provide for the particular needs of the specified population must
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arrange to have the appropriate services delivered by qualified referral providers
are considered exemplary programs. States that operate exemplary dual eligible
programs require Contractors to have in place methods for effective
communication for members with communication-affecting conditions.
A dual eligible program that allows specialists to act as PCPs is considered
a best practice program. Also, states requiring health plans to ensure access to
specialists using timely referrals and authorizations are considered best practice
programs. Exemplary programs allow new members to continue care under the
direction of their existing PCP if the PCP is a member of the health plan’s
contracted network. Best practice models require Contractors to ensure that the
member has the option of retaining that PCP upon enrollment. States operating
best practice dual eligible programs require Contractors to ensure access to
speciality care that addresses the needs of members with disabilities or chronic
conditions. This must include access to inpatient and outpatient specialty centers
including those which are located outside the service area when needed by the
member.
A dual eligible program that provides and sets forth specific referral and
utilization requirements such as emergency appointments within 24 hours of
referral, urgent care appointments within 3 days of referral, and routine care
appointments within 30 days of referral are considered exemplary programs.
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Quality
A program requiring a detailed quality assurance system including
provisions for consumer satisfaction surveys, annual quality goals, quality
committees (and who can participate in the committee), and external reviews are
considered best practice programs.
A state requiring detailed specifications concerning the standard by which
decisions to approve and deity care are made using specific definitions of medically
necessary or medical appropriateness are considered best practice dual eligible
programs.
A dual eligible program which includes in its contract a requirement that
states conduct monitoring and oversight activities in order to hold plans
accountable and identify sanctions for noncompliance are considered best practice
models.
A state that collects a wide variety of quality data such as long-term care
utilization data by age, gender and disability data; community-based services
utilization data; and clinical indicators data can be considered best practice
programs.
Reimbursement
A state which uses specific risk adjusters, historical fee-for-service data,
and other state’s experiences with capitation rates for the target population to
calculate capitation rates are considered exemplary programs. Programs that
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allow phased-in risk to allow the health plan and the state to learn how to capitate
the care of dual eligible persons are considered best practice models.
The above criteria are used as a framework to compare, contrast and evaluate the
five dual eligible programs under investigation. Their ability to address/answer these
criteria concerning each variable is then evaluated in a separate section where a conclusion
of “best-practice” or exemplary is concluded. If a state operates or develops a “best
practice” or exemplary model, it incorporates the standards for dual eligibles in managed
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- care set forth by the National Academy for State Health Policy, The Henry J. Kaiser
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I Family Foundation, and the Consumer Coalition for Quality Health Care.
Study Design
\
This research design is a comparative case study analysis examining the qualitative
I aspects of state Medicaid managed care programs for dual eligibles. The study population
consists of the five states that enroll dual eligibles in Medicaid managed care. A
description of their contracts in terms of integration of care and financing; access; quality;
and reimbursement is used as a guide to comparatively analyze state arrangements. These
methods are adequate to answer the research questions as they show how proposed state
; programs conform to the standards and guidelines of program effectiveness set forth by
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NASHP, the Henry J. Kaiser Foundation and the Consumer Coalition for Quality Health
Care for serving the health care needs of dually eligible beneficiaries under Medicaid
managed care arrangements.
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The research study involves the analysis of written records of state Medicaid
managed care programs for dually eligible individuals. In addition to the analysis of the
Medicaid managed care programs, this study examines consumer protections in state
managed care arrangements to draw conclusions about the five state programs on four
consumer protection dimensions previously identified. Supporting materials are used
where contracts are not available for state Medicaid programs. Examples of supporting
materials may include federal waiver documents, background materials or other written
materials describing the program in detail. These materials are reliable and are official
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f documents produced by state Medicaid offices.
I
The first phase of this research study involved an extensive analysis of available
literature pertaining to managed care arrangements and dually eligible individuals. In the
second phase, five dual eligible programs were identified, contacted, and asked to send
either their contracts, requests for proposals (RFPs) or other planning documents. In
:
1 addition to requesting these documents, the state representative was asked a series of
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’ questions about the overall program operation or planned implementation. The programs
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, , were identified based upon their reputation in the dual eligibility, managed care and
* advocacy community. The currently operating programs have been the subject of recent
publications concerning their operation and these were selected based upon the literature
available about them. The currently planned multi-state program was identified during my
recent analysis of Medicaid managed care specialty programs for Families USA. It was
selected to review for this thesis as it represents many of the programmatic components
the NASHP views as particularly relevant to dual eligibles.
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The exploratory nature of managed care arrangements for dually eligible
individuals led to the decision to use a comparative case study research design. The
decision was also supported by the acceptance of the usefulness of state case studies “in
assessments that have utilized a careful sampling strategy for the choice of states
warranting intense examination” (Lammers and Klingman 1994,11). Further, it is not
uncommon for research in aging to focus on the dynamics of case studies in an effort to
obtain depth of understanding in an area where little is known (Sinnott et al., 1983).
The next stage of the analysis involved analyzing each contract, RFP or planning
document to explore each o f the variables under investigation. Either contracts, RFPs
were analyzed for each Medicaid managed care program. Minnesota is the only exception
and only the financing documents were analyzed as both the contract and the RFP were
not available. This is not a critical oversight, however, as the financing of the Minnesota
Senior Health Options program is the variable most unique about its operation.
After each variable was identified, the provisions in the contract, RFP or planning
document was compared and contrasted with the identified guidelines and standards. This
allowed for conclusions to be drawn about the ability of the state to be considered an
exemplary program or a “best practice” model.
The final stage of the research involved reviewing the analysis and findings of each
state program and providing recommendations. The final chapter of this thesis provides a
summary and conclusions based upon the analysis and findings of Chapter 4. Additionally,
it offers suggestions states can use to develop or plan for dual eligibles in managed care.
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Data Collection
Data collected for use in this comparative case study analysis were archival data,
written records, and personal communications with key informants involved in state
Medicaid managed care. A comparative case study analysis is used to determine to what
extent current or proposed state Medicaid managed care models for dual eligibles conform
to the key design choices set forth by NASHP, the Henry J. Kaiser Foundation and the
Consumer Coalition for Quality Health Care. The archival data used for this research
include: (1) contracts and requests for proposals (RFPs), (2) other planning documents,
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(3) consumer protection studies, (4) specific studies of managed care and dual eligible
populations, and (5) various published journals, manuscripts, monographs and books.
.
j j The strengths of using archival data include: (I) they may span long periods of
time; (2) they cover large populations of people or other units of observation; and (3) they
[qualify] reactions to events which researchers are unable to assess for practical or ethical
f
\ reasons (Judd et al., 1991). Archival data can be obtained from a variety of sources and
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are usually rich sources of data. Archival data, written records and personal
I * communications are used in this thesis to lay the foundation to analyze specific state
contracts for Medicaid managed care. Archival data provide not only the basis from
j
which to begin this analysis, but also the tools to draw conclusions and recommendations
I about the state contracts.
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Limitation of the Study
Despite attempts to address the problems of internal and external validity, this
study has limitations. For example, this thesis examines relatively new and untested
programs that have has little evaluation (exceptions include Oregon and Arizona). Further
the approach of this thesis is to identify and describe exemplary programs. The thesis is
limited in that it does not identify programs that may not be operating to protect dual
eligibles according to the standards of NASHP, the Henry J. Kaiser Family Foundation
and the Consumer Coalition for Quality Health Care. Programs were not selected to be
| representative of how fifty state Medicaid programs operate and thus do not represent
I similarity in particular state demographics or state government structure. Instead, they
I
1 were selected to demonstrate the innovative directions states are moving in to provide
health care to dual eligibles. These problems and the small sample size, limit the
applicability of the study. Given these considerations, caution should be taken in
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; replicating models to other state Medicaid managed care arrangements for dually eligible
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individuals.
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J CHAPTER SUMMARY
This chapter has identified two research questions and outlined methods employed
by this study to compare four state and one multi-state Medicaid managed care
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arrangements for dual eligibles. As part of the discussion of the methodology, this chapter
defined the variables and the expectations of the study, and reviewed the research strategy,
sample selection, data collection and limitations. The following chapter presents the
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findings for each of the six state case studies, and the comparison of the case studies to
consumer protections in state managed care laws to draw conclusions and measure the
overall performance of the variables.
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CHAPTER 4: ANALYSIS AND FINDINGS
States are moving toward creating alternative Medicaid health delivery systems for
a variety of reasons. Typically, the target populations are those which are most expensive
under a fee-for-service system. A state that develops an entirely unique health delivery
system for these populations seeks to control costs by limiting acute and long-term care.
With the development of alternative health care arrangements, a state hopes to increase
the emphasis of consumer-directed care in the least restrictive setting, creating alternative
services to substitute for high cost care. Thus, a system fostering greater efficiency,
| provider coordination, increased accountability in terms of quality and access to care is
| sought.
Medicaid Waivers
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i Generally, alternative health care arrangements are specially arranged Medicaid
managed care programs. In order to enroll Medicaid beneficiaries into managed care,
\ states must first obtain either an 1115 or 1915(b) waiver of the federal Social Security
: i Act. States apply for these waivers through the Health Care Financing Administration
(HCFA) and both waivers generally allow states to implement Medicaid managed care
| programs using federal funds ordinarily prohibited under the Social Security Act.
| Following are summaries of these two waivers’ provisions:
1115 waiver: research and demonstration waiver which allows states to expand
the use of managed care by requiring some or all categories of Medicaid
beneficiaries to enroll in partial- or full-risk managed care plans. The savings
afforded due to managed care are used to provide coverage to those individuals
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not typically eligible for Medicaid. Under the 1115 waiver, that do not meet
federal statute requirements may still participate in Medicaid managed care. They
may also develop cost based reimbursement strategies for different providers such
as federally qualified health centers, rural heath clinics, and hospitals.
1915(b) wai ver: allows states to waive certain requirements under the Social
Security Act, most frequently the freedom of choice requirements. By waiving
these freedom of choice requirements, states mandate Medicaid beneficiaries’
enrollment in managed care. In addition, these waivers allow states to waive
statewide effectiveness and comparability requirements. 1915(b) waivers are
granted for two years and are usually renewed.
Once a state obtains a Medicaid waiver to deliver services through managed care,
the state can then decide which populations or services to target. Unique systems of
Medicaid managed care can be provided through a number of arrangements, including:
• The Medicaid agency contracting directly with an MCO or HMO for the
delivery of covered services;
• contracting with an MCO then allowing that MCO to sub-contract to
another organization;
• maintaining a fee for service arrangement; and
• contracting with several private or non-profit health organizations.
Once a state has obtained the necessary waivers from HCFA, it can then begin
preparing RFPs and contracts — laying the foundation — of how it will deliver the care and
services to its target population(s). While states generally try to use one of the four
arrangements identified above, the states examined in this thesis generally use Medicaid
managed care for the delivery of care to dual eligibles. Some states choose to subcontract
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to other organizations for the provision of services such as social supports, long-term
care, or other services that the MCO can not provide. Each of the states examined in this
thesis is innovative in its approach to delivering services to the dual eligible population.
While these states are enterprising and concerned about the existing fragmented service
delivery available to dual eligibles, their approaches are largely untested and few external
evaluations are available.
Table 1
WAIVERS USED BY SELECTED STATE PROGRAMS
STATES 1915(b) waiver 1115 waiver
Arizona X
Florida X
Minnesota X*
N ew England States Consortium X
Oregon X
* Minnesota uses a combination o f Medicare and Medicaid waivers. The state uses a Medicaid 1115 waiver
in addition to a Medicare 222 waiver which allows the state to make capitated payments to entitles other than
Medicare plans.
Examination And Description of State Dual Eligible Programs
The following section describes and analyzes each state’s dual eligible program
with respect to addressing the two questions principal to this thesis:
1) What integration, access, quality and reimbursement requirements are
included in state Medicaid managed care arrangements or programs to
deliver comprehensive and appropriate Medicare and Medicaid covered
services to dually eligible beneficiaries; and
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2) Based upon identified criteria, which of the programs can be considered
exemplary (Le., considered to be “best practice” models of delivering care
to this population)?
This chapter focuses on four key consumer issue areas relevant to all managed care
enroUees in general. However, the thrust o f the discussion centers around how these
consumer issues are applicable to dual eligibles. The state programs are analyzed with this
population in mind and look specifically at:
1. Integration of care or financing;
2. Access to care;
3. Quality of care; and
4. Provider or health plan reimbursement.
To answer the research questions above, specific state contracts, framework
| documents, requests for proposals (RFPs), or other sources of program information are
examined. The consumer protection sections are structured in such a way to (1) present
an overview of the consumer protection issue(s) under examination, (2) identify selected
state responses, and (3) systematically evaluate selected states’ consumer protections
based upon the design choices and guidelines for achieving effectiveness outlined by the
National Academy for State Health Policy, the Consumer coalition for Qualify Health
Care and other reliable sources. These standards and guidelines are used to draw
conclusions concerning exemplary dual eligible models either based on individual
consumer protections or based on collective programs. A major portion of evaluation is
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contained within this chapter; however, Chapter Five also uses the criteria of replicability
and achievement to summarize and review the states that appear to plan or operate
effective programs.
Overview of Four State and One Multi-State Medicaid Managed Care Programs
For Dual Eligibles
The following discussion of dual eligible programs highlights the programmatic
aspects of each dual eligible program evaluated in more detail in the next sections. This
section is meant to give the reader an idea of how these dual eligible programs currently
or plan to operate their programs, the purpose of the program, their goals, and how they
attempt to achieve those goals. In the consumer issues sections which immediately
follow this overview section, the consumer concerns of integration, access, quality and
reimbursement are discussed in detail as they relate to the dual eligible population.
Further, each dual eligible program is evaluated based on the criteria set forth in Chapter
3 to determine if any particular program can be considered exemplary.
Arizona
The Arizona Long-term Care System (ALTCS) is a Medicaid program to provide
nursing facility and home health care services to residents of Arizona who also participate
in the Arizona Health Care Cost Containment System for acute care. The program enrolls
approximately 91,000 aged and disabled persons in Medicaid managed care. Beneficiaries
of the program are dually eligible for Medicare and Medicaid and also have a need for
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skilled care and have income and resources at or below program limits. The objective of
ALTCS is fivefold:
1. To operate a prepaid, capitated managed care health care system using
public/private partnerships.
2. To integrate health services by bundling acute, long-term and behavioral
health services.
3. To use a preadmission screening to identify those who are in need of skilled
services (those at risk for institutionalization).
4. To provide a full continuum of services (home and community based to
institutional) to ensure members are placed in the least restrictive, most
cost effective care.
5. To use PCP/case managers as gatekeepers to coordinate care (Arizona
Health Care Cost Containment System, 1996).
Florida
The purpose of the Frail Elderly Option in the Medicaid Prepaid Health Plan is to
manage a wide variety o f services (including health and social supports) for the frail
elderly who are at risk of institutionalization placement. The Frail Elderly Option
currently serves 2,000 frail elders and the Prepaid Health Plan serves more than 18,000
dual eligibles. The Frail Elderly Option is intended to operate in the manner consistent
with the Florida Medicaid Prepaid Health Plan but goes on to further describe additional
requirements of providers of the Option. Included in these additional requirements are:
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expanded support services, Member management, nursing home placement requirements,
marketing and enrollment, disenrollment, method for calculating capitation rates and
reporting requirements (Alsentzer, 1997).
Minnesota
Minnesota has developed a model for serving dual eligibles that benefits both
Medicare and Medicaid using a combination of Medicaid waivers. Persons aged 65 or
older, dually eligible for both Medicare and Medicaid (including both institutional and
[ community based), and residing in a seven-county metro area number approximately
1 18,000. The Minnesota Senior Health Options (MSHO) program offers voluntary
a __
j enrollment to these individuals. There is a single enrollment process conducted by each of
the seven counties with the assistance of the Prepaid Medical Assistance Program
}
(PMAP), administered by the State. Services provided through PMAP include all covered
Medicare benefits, including deductibles and co-insurance. Under MSHO, enrollees are
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entitled to receive all Medicaid services in addition to all PMAP services (Minnesota
Department of Human Services, 1997).
The MSHO pools Medicare and Medicaid funds and integrates acute and long-term
care purchasing and service delivery for dual eligibles under a single contract managed by
!
| the state. Dually eligible persons have a choice of the regular Medicaid managed care
i
program which does not include Medicare or long-term care or the new combined MSHO
program which covers both Medicare and Medicaid including home and community based
services and 180 days of nursing home care. These individuals have another option and
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that is to choose to enroll in a Medicare risk plan and receive Medicaid services in the fee-
for-service system (Minnesota Department ofHuman Services, 1997).
New England States Consortium
While not yet implemented, The New England states - Connecticut, Maine,
Massachusetts, New Hampshire, Rhode Island, and Vermont - are seeking the authority to
enter into partnership with HCFA in order to better serve the health care needs of older
persons and person with disabilities who are dually eligible for Medicare and Medicaid.
This partnership, as envisioned by the Consortium, will be realized through the
development and implementation of quality, cost-effective programs specifically targeted
to address deficiencies in the existing Medicare and Medicaid programs while retaining
those aspects of these programs which have proven effective (New England States
Consortium, 1997). The states wish to introduce new health care and long-term care
system models, named Integrated Service Networks (ISNs), which allow for the
integration of the delivery and financing of Medicare and Medicaid covered services.
Through a capitated reimbursement system, states will attempt to design and promote the
delivery of quality health care and long-term care supports in the most life enhancing,
appropriate settings, given consumer needs and preferences (Perrone, 1997).
Oregon
In 1995, Oregon began enrolling dual eligibles in MCOs participating in the Oregon
Health Plan. Currently, the state enrolls more than 52,000 dual eligibles into Medicaid
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managed care plans. Whenever possible, dual eligibles are enrolled on a voluntary basis in
one of the six plans that also provide the Member’s Medicare managed care. Managed
care for dual eligibles is capitated for all acute services, but not for long-term care. The
state uses exceptional needs care coordinators (ENCCs) who assist all participants not
only in managing their heath care, but also their environment (Hanson, 1997).
Integration: Care, Financing or Both?
This section examines one of the most widely discussed issues surrounding managed
care for dual eligibles. An attempt to integrate only the care an enrollee receives addresses
the issue of coordinating that care in the health delivery system. However, a state which
integrates both the care and financing addresses the coordination of care issues in addition
to the administrative, policy and systemic issues associated with integrating funding for
special populations. For the purpose of this thesis, integration of care and services is
discussed separately from integration of funding.
Integrating the services of Medicare and Medicaid is an example of clinical
integration. Clinical integration is defined as the extent to which patient care services are
coordinated across people, functions, activities, processes, and operating units so as to
maximize the value of service delivery (Shortell et al., 1996). A state that integrates both
care and financing of Medicare and Medicaid combines clinical integration with functional
integration. Functional integration is defined as the extent to which key support functions
such as financial management, human resources, information systems, strategic planning,
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and total quality management are coordinated across the operating units o f a given system
so as to add the greatest overall value to the system (Shortell et al, 1996).
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Integration Consumer Issue # 1:
Integrating Care: Creating a Blended, Streamlined System
Issue: The distinguishing feature o f programs for dual eligibles which attempt to
integrate care and services is the emphasis on unifying two or more service systems into
one. Examples of this type of system may include HCFA authorizing states to enroll
dually eligible persons into a single service system that includes both Medicare and
Medicaid services (Saucier, 1996). Another example of an attempt to integrate the care
system is when states collect, and share with HCFA, Medicare and Medicaid access,
quality and cost data to assist in future evaluation and development efforts (Saucier,
1996).
The integrated care model focuses on all aspects of health care, including social
supports, so as to provide the most appropriate care in the most appropriate setting (Snow
et al., 1993). This model of integration does not attempt to combine the funding streams
of Medicare and Medicaid, it focuses solely on integration of care. This leads to a system
of Medicaid managed care whereby health plans receive a Medicaid capitation payment,
but providers must still bill Medicare on a fee-for-service basis.
The integrated care model blends social services with long-term care and acute care.
By managing elders’ health care in this way, many dual eligible issues can be addressed in
a sort of “one-stop-shopping” system of health care. An ideal integrated system provides
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a “medical home” for dual eligibles and their families and ensures more consistent and
reliable care. Dual eligibles are more likely to be characterized by fragile health
conditions, an ongoing need for long-term care, and repeated, unpredictable needs for
acute care ( Saucier and Riley, 1994). In broadening the scope of care from medical
services to social services as well, the integrated care model has the potential to avoid
unnecessary institutionalization (Snow et al., 1993).
To achieve the goals of an integrated care system, a state must require contracted
health plans to provide an integrated benefits package; implement a systematic process for
/
I generating or receiving referrals and share clinical and treatment plan information across
£
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| providers. An integrated care system must include adequate provider training such as
j
developing organizational charts showing providers who must receive and share
information. Other important aspects of integrating care are the coordination of pharmacy
benefits; dental services; links to community organizations and residential facilities; and
I
\ ensuring confidentiality of records (National Academy for State Health Policy, 1996).
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S State Response: The unique feature of an integrated system of care is the emphasis
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' on making two service systems appear and feel as one to the consumer.
The goal of the Arizona Long-term Care System (ALTCS) is to provide incentives
for the delivery of appropriate long-term and acute care services, including behavioral
health, through a managed care system which serves the elderly and persons with
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disabilities in the least restrictive setting (Snow et al., 1993). Capitated Medicaid funds
are pre-paid to program contractors through a negotiated contract Case managers act as
gatekeepers to the most appropriate and cost-effective services for all ALTCS enrollees
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and charges for case management are included in the per member, per month payment to
participating health plans. Managed care Contractors are required to provide acute care
services to ALTCS enrollees but must bill Medicare for these services for dually eligible
enrollees (Snow et al., 1993).
The Florida Frail Elderly Option through the Medicaid Prepaid Health Plan program
provides care for the state’s frail elderly Medicaid population through integrating medical
and social services so as to delay or avoid institutionalization (Snow et al., 1993). Those
determined eligible are enrolled into a participating health plan which receives a capitated
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rate from the state to care for Medicaid recipients. Nursing facility coverage as well as
social support services are provided (Snow et al., 1993). Examples of such services
include homemaker/personal care, housekeeping/chore services, home repairs or
adaptations, adult day care, respite care, caregiver training and support and financial
education and protection.
\ The New England States Consortium has developed a very comprehensive attempt
^ at integrating the services of Medicare and Medicaid for dual eligibles. It identifies care
F coordination as composed of several systems: integrated benefits packages, a systematic
I
process for generating and receiving referrals, training, links to community organizations
and giving PCPs the ability to oversee care (New England States Initiative for Dually
Eligible Persons, 1997).
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Integration Consumer Issue # 2:
Integrating Medicare and Medicaid Funding Streams
Issue: States which integrate Medicare and Medicaid funding are able to provide
better clinical and cost incentives for services to dual eligibles. Integrated Medicare and
Medicaid capitations provide the flexibility needed to reduce conflicts between Medicare
and Medicaid policy. Integrated financing allows health plans and long-term care
providers to develop collaborative clinical delivery structures and strategies to improve
quality and accountability for services to seniors. Once these financing barriers are
eliminated, health plans and providers are free to coordinate their care management across
the full range of acute and long-term care services and address clinical conflicts and
problems of cost shifting. Both states and Medicare are protected from cost shifting since
one entity is responsible for the full range of services. Integration of Medicare and
Medicaid funding offers states the opportunity to demonstrate how better care can be
provided by using resources more effectively. With greater flexibility and consolidated
resources, states develop integrated systems that promote consumer choice; provide a
broader array of services, many of which are less restrictive with more socially-oriented
services; and improve quality by focusing on continuity of care and health promotion
(Saucier and Riley, 1994). Incentives to shift costs, to use expensive forms of care, and to
I increase units of care are reduced, resulting in a more effective system that costs no more
5
than the current one (Saucier and Riley, 1994).
State Response: The purpose of Minnesota’s Long Term Care Options Project
(LTCOP) is to encourage the coordination of long-term care and acute services for the
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dually eligible elderly, and to provide incentives for delivering preventive care as well as
the lowest-cost appropriate services (Snow et al., 1993). To be eligible for the program,
potential participants must be at risk for institutionalization because of chronic illness,
functional difficulties, or advanced age, or they must be current residents of nursing
facilities. Medicare and Medicaid funds are pooled and result in one capitated rate paid to
managed care networks. By combining state and federal funding sources, Minnesota
hopes to eliminate cost-shifting incentives that lead to less effective and more costly care.
The state also seeks to promote prevention, early intervention and provision of services in
| the least restrictive setting by emphasizing managed care systems in which service
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providers share financial risk with the state and federal governments (Saucier and Riley,
1994).
The New England States, in the New England States Framework Document,2 report
that the states developing their own unique programs will evaluate and possibly use
several different reimbursement schemes, including integration of Medicare and Medicaid
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- funding. This issue is not concretely explained in the planning documents and it is unclear
at this time whether or not any of the states will choose to integrate the funding streams of
Medicare and Medicaid.
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2 A guide prepared by the New England States Initiative for Dually Eligible Persons in
conjunction with the Health Care Financing Administration Managed Care Technology
Advisory Group and the National Academy for State Health Policy to outline
contracting specifications.
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Table 2
INTEG RATIO N
ST A TES Integration of Care Integration of Care and Financing
Arizona X
Florida X
M innesota X
N ew England States
Consortium
X*
Oregon X
* The N ew England States Consortium plans to examine and test several methods o f integration, including
integrating both care and financing
Evaluation: The Center for Vulnerable Populations of the National Academy for
State Health Policy (1996) maintains that care coordination is assumed to be a benefit of
any managed care plan. The organization goes further to say that states attempting to
provide a seamless package of services to dual eligibles must include primary, acute and
long-term care services. To be effective, these services must be provided through a
single, understandable, rational plan, and the plan must be coordinated well with social
services and other natural support systems that exist outside the plan (National Academy
for State Health Policy, 1996).
An excellent example of an integrated service approach is Oregon’s enrollment of dual
eligibles into MCOs. The state, HCFA and MCOs have gone to great lengths to make the
Oregon Health Plan (through which most Medicaid beneficiaries are enrolled in managed
care) work well with the substantial TEFRA (Medicare HMO) market that exists in the state.
Dually eligible beneficiaries who elect a Medicare HMO for their Medicare have their
Oregon Health Plan benefits delivered through that same plan, though the state
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has no direct oversight of Medicare services (State Health Watch, 1996). The MCO
remains under contract and accountable to HCFA for Medicare services, and maintains a
separate contract with the State for Oregon Health Plan services.
As the only dual eligible program which attempts to integrate both the health, long
term and social services enrollees receive and the funding streams which finance those
services, Minnesota offers an example of an exemplary model of integration. This state
can be considered a “best practice” model of combined clinical and functional integration
where beneficiaries receive one comprehensive health care package. The state notes that
Medicare payment policies contain strong incentives for providers to shift costs to state
j j Medicaid programs for dual eligibles. For instance, the use of diagnostic related groups
| (DRGs) to induce early hospital discharges can increase Medicaid costs for nursing home
placements. Cost shifting can work both ways as states also have little incentive to help
\ reduce Medicare costs. States have no way of sharing in any resultant Medicare cost
savings to make up for increased Medicaid expenditures which might result from attempts
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to reduce Medicare hospital or home care costs. As a result, conflicts between Medicare
and Medicaid for dual eligibles increases costs for both programs and produces
fragmentation of care and poor clinical incentives. Capitating pooled Medicare and
Medicaid funds is Minnesota’s attempt to address this problem.
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Access to Care
While many traditional access specifications (such as timeliness of appointments)
apply to all managed care enrollees, the access specifications states require o f dual eligible
managed care plans must take their particular needs into consideration. Mobility
impairments, communication disorders and long-term service needs all present particular
access challenges, but the goal, as with any group, is to have timely care provided in the
most appropriate setting (National Academy for State Health Policy, 1996).
This thesis examines the consumer protection issues in terms of state programs in an
effort to reveal which states provide comprehensive access to appropriate care for dual
eligibles. Access and availability of care is discussed as the first consumer issue as it is the
principal problem experienced in managed care. The use of specialists as PCPs and access
to appropriate speciality care is discussed second. This is an issue which is paramount
when discussing dual eligibles, but is not the primary problem they experience in managed
care. Finally, referral and utilization are discussed.
Dual eligibles in managed care may experience problems when their particular health
care plan is unable to provide for their particular needs. For example, a dual eligible who
is elderly and is diagnosed with multiple sclerosis may require access to a specialty
neurologist who can treat increasing hand tremors. If the health plan does not contract
with a neurologist experienced in treating slow-progressive multiple sclerosis, it should be
able to refer or provide access to the provider who can treat these particular problems.
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Access Consumer Issue # 1: Access/Availability of Care
Issue: In order to provide high-quality care, medical providers must be accessible
to patients. Their facilities must be accessible to disabled patients, they must conform to
the Americans with Disabilities Act, and they must not prohibit access by being
geographically inaccessible. The need to travel long distances for care or to wait
excessive amounts of time for an appointment or in a physician’s office poses a hardship
for patients who are elderly or who have disabling conditions. Imposing physical access
barriers and time and distance requirements creates inappropriate barriers to care, and
results in delays in obtaining needed treatment (Families U.S.A., 1996).
State Response: The Florida Model Contract for the Medicaid Prepaid Health
Plan, in outlining its manner of service provision, intends to contract with those MCOs
which have facilities with access for persons with disabilities, adequate space, supplies,
good sanitation, smoke free, fire and safety procedures in operation (State of Florida,
Agency for Health Care Administration, 1996).
The New England States Consortium uses a Framework document to assist the
states involved in developing their own specific dual eligible program. It contains model
access specifications relevant to the elderly and persons with disabilities. The Framework
outlines Contractor requirements in the following way:
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Contractors shall ensure compliance of providers with the requirements of the
Americans with Disabilities Act of 1990. Physical access includes, but is not limited
to:
a) Street level access or wheelchair accessible ramp into facility;
b) wheelchair access to lavatory;
c) elevator operable from wheelchair; and
d) accessible examining rooms, tables, diagnostic and other equipment. (New
England States Initiative for Dually Eligible Persons, 1997, 28-29)
The New England States Consortium outlines additional access standards in the
Framework pertaining to bidders. Bidders are required to demonstrate their ability to
meet several access requirements in addition to those identified above. Health care
delivery system access requirements are expected to apply broadly to Integrated Service
Networks (ISNs) in all of the New England states. Each state’s specification must include
detailed requirements for physical, linguistic, appointment, geographic, communication
and telephone access (New England States Initiative for Dually Eligible Persons, 1997).
The Administrative Rules for the Oregon Health Plan outline, in detail, twenty-two
> access issues important to managed care enrollees. Of these, several are critical to dual
eligibles including: compliance with the Americans with Disabilities Act, access to
specialty providers unique to special needs enrollees, and requirements of Contractors to
arrange for alternative providers if the Contractor cannot provide services to certain
populations. The Rules state:
Contractors shall have written policies and procedures that ensure compliance with
the requirements of the Americans with Disabilities Act of 1990. Contractors shall
also have a written plan for compliance with these requirements. Contractor shall
monitor plan and compliance with procedures sufficient to determine whether
OMAP Members are receiving accommodations for access. The plan shall be
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sufficient to determine what will be done to remove existing barriers and/or to
accommodate the needs of OMAP Members. This plan shall include the assurance
of appropriate physical access to obtain Capitated services for all OMAP Members
including, but not limited to: street level access or accessible ramp into facility;
wheelchair access to lavatory; and wheelchair access to examination rooms.
(Oregon Department ofHuman Resources, 1995,27)
Access Consumer Issue # 2:
Use of Specialists as Primary Care Physicians and
Access to Appropriate Specialty Care
Issue: Adequate access to speciality care is a managed care issue that raises
concern among health plans, providers and consumers alike. This is an issue both of
specialists acting as PCPs, and also when the enrolled individual is assigned to a PCP,
having the ability to access appropriate speciality care. This issue is of special significance
for dual eligible consumers as many of these consumers are eligible for two heath care
systems (Medicare and Medicaid) not only based on age and income criteria, but also due
to disabilities. In such cases, access to appropriate specialty care is critical.
MCOs use PCPs (usually defined as family physicians, general practitioners,
pediatricians and internists) as gatekeepers to accessing care. A “gatekeeper,” whose job
is to oversee the use of care in MCOs, is likely to be someone who is unfamiliar with
special needs populations and their unique conditions.
Many dual eligible individuals entitled based on disabilities are new to the managed
care system. This population has not historically been enrolled in any type of system other
than fee-for-service. The dual eligible person who is familiar with the fee-for-service
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system is used to having the freedom to choose any physician they feel can provide the
necessary care; often a specialist is chosen, hi managed care, an enrollee is generally
assigned a PCP, and must obtain a referral in order to see a specialist. This issue may
cause continuity o f care problems when the enrollee is transitioned into managed care,
meaning (s)he may lose access to specialists and instead be assigned to a PCP, who may
be a generalist. While these are problems everyone in managed care may experience, the
problems dual eligible beneficiaries face are compounded by their particular disabilities or
age. They not only face issues related to their health, but also issues of disabling
conditions. Mental disabilities and speech or hearing impairment may increase a dual
eligible individual’s inability to demand appropriate access to care.
With persons with chronic or disabling conditions using specialists as their PCPs,
managed care enrollees and specialists argue that managed care is too rigid in its
? restrictions on who can and cannot serve as PCP. They point to the Institute of
Medicine’s definition of primary care which emphasizes the service, not the provider’s
speciality (Families U.S.A., 1996):
Primary care in medicine is distinguished from other levels of care by the scope,
character, and integration of the services provided. The services, not the speciality
of the provider, form the basis of the definition of primary care. (Institute of
Medicine, 1977)
State Response: The Administrative Rules for the Oregon Health Plan outline the
responsibilities of Contractors in terms of PCPs, teams and clinics when acting as primary
care providers. Contractors are required to have written procedures in place that allow
and encourage choice of a primary care practitioner or primary care dentists by each
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OMAP Member. These procedures enable OMAP Members to choose a participating
primary care practitioner, dentist, health care team, or clinic to provide primary care to
arrange, coordinate, and monitor other medical and/or dental care on an ongoing basis
(Oregon Department o f Human Resources, 1995).
In the New England States Initiative, the role of the PCP, the PCP selection process,
and options for changing PCPs are outlined in addition to a more extensive examination of
PCP choice, access to speciality care, and the responsibilities of PCPs to oversee care of
Members (New England States Consortium, 1997). The Initiative requires Contractors to
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i ensure access to s p e c i a l t y care that address the needs of Members with disabilities or
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| chronic conditions. This includes, but is not limited to, access to inpatient and outpatient
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speciality centers, and includes those located out of the service area when needed by the
| Member (New England States Consortium, 1997).
The Florida Contract for the Medicaid Prepaid Health Plan summarizes physician
i choice to say that Plans must agree to offer each enrollee a choice of a PCP to the extent
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L feasible and appropriate. The Plan shall identify in writing to the Agency monthly any
\ primary care providers approved to provide services under the contract who shall not
- accept new patients (State of Florida, Agency for Health Care Administration, 1996).
I' While the contract identifies its requirements for access to specialists with pediatric
| expertise, the contract is silent when addressing access to specialists with knowledge of
[
frail elderly, chronic conditions or disabilities.
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Access Consumer Issue # 3:
Referral Process and Utilization Review
Issue: To control utilization of services, MCOs often require PCPs to obtain
approval for some or all referrals. In addition to preauthorization requirements, MCOs
often require approval of continuation of some services (such as additional days in a
hospital) (Families U.S.A., 1996). Providers argue that referrals or continued
authorization for services are at times inappropriately denied; that the individuals making
referral and utilization decisions lack the appropriate training and expertise to make sound
judgments; that referral decisions are often based on rigid criteria which are not responsive
to the enrollee’s needs; that obtaining referrals is often very time consuming; and that
difficulties in obtaining a referral decision results in delays in obtaining needed care for
enrollees (Families U.S.A., 1996).
MCOs’ utilization review and referral systems can pose both access and quality of
care problems for dual eligibles: if referral decisions are not made in a timely fashion or are
inappropriately denied, access is affected, and if the standards by which referral decisions
are made are too restrictive, quality is compromised.
State Response: The ALTCS RFP appointment standards section outlines
contractor responsibility for speciality referrals. Program Contractors must be able to
provide:
a. Emergency appointments within 24 hours of referral.
b. Urgent care appointments within 3 days of referral.
c. Routine care appointments within 30 days of referral. (Arizona Health
Care Cost Containment System Administration, 1996)
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The Administrative Rules of the Oregon Health Plan set forth Contractor
requirements concerning referrals for care to Members.
Contracts shall develop and maintain a formal referral system consisting of a
network of consultation and referral providers including applicable Alternative Care
Settings, for all services covered by Contractors’ agreement with OMAP.
Contractors shall ensure that quality of care provided in all referral settings is
monitored. Referral services and services received in Alternative Care Settings shall
be reflected in the OMAP Member’s medical or dental record. Contractors shall
establish and follow written procedures for participating and nonparticipating
providers in Contractor’s referral system Procedures shall include the maintenance
of records within the referral system sufficient to document the flow of referral
requests, approval and denials in the system. (Oregon Department ofHuman
Resources, 1995, 20)
Further, the Administrative Rules outline requirements relating to prior notice of the
referral to referral providers, designation of staff to arrange, coordinate and monitor the
referral system, requirement that the person denying care must be a Health Care
Professional3 , and procedures for training and educating staff on the appropriate use of
Contractor’s referral procedures (Oregon Department ofHuman Resources, 1995).
The Florida Contract outlines referral processes in general terms. Contractors must
provide appropriate referral and scheduling assistance for enrollees needing s p e c ia lty
health care/transportation services. Contractors must have procedures for determining the
need for non-covered services and procedures for referring enrollees for assessment and
3 Health Care Professionals are defined as persons with current and appropriate
licensure, certification, or accreditation in a medical or dental profession, which
[ include but are not limited to: Medical Doctors, Dentists, Osteopathic Physicians,
' Registered Nurses, Nurse Practitioners, Licensed Practical Nurses, Certified Medical
Assistants, Physicians Assistants, Dental Hygienists, Denturists, and Certified Dental
Assistants. These professionals may conduct health or dental assessments of OMAP
Members and triage OMAP Members within their scope of practice, licensure, or
certification. The term Health Care Professionals includes Medical Practitioners
(Oregon Department ofHuman Resources, 1996).
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referral to the appropriate service setting. Contractors may seek assistance from the Area
Medicaid Program office, as needed.
The New England States Initiative provides specific standards concerning access to
referral providers. If the contractor does not have the capability to meet the particular
needs o f elderly people and people with disabilities, contractor shall arrange to have the
appropriate services delivered by qualified referral providers (New England States
Consortium, 1997). In the New England States Consortium’s Framework and elsewhere
in the Initiative, the requirements for service delivery are well defined in terms of who
may act as providers in addition to access to appropriate care:
It is intended that each consumer’s PCP will assure access to and the delivery of
quality, cost-effect acute health care services. Each consumer will select his or her
i own PCP within the Integrated Service Network he or she chooses. PCPs will be
f required to work closely with consumers to develop individualized care plans.
I Individuals performing PCP functions may include a primary care or specialty care
I physician, nurse, nurse practitioner or a care coordinator (New England States
I Initiative for Dually Eligible Persons, 1997,22).
I Table 3
I ACCESS TO CARE
STATES
Access/Availability of
Care
Use of Specialists as PCPs
and Access to Appropriate
Specialty Care
Referral Process
and Utilization
Review
Arizona X1
Florida X X X
Minnesota*
New England States
Consortium
X X X
Oregon X X X
* Data n ot available.
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Evaluation: What is clear from the above discussion is that most or all of the states
examined have stringent requirements concerning access. The states include in their
contracts comprehensive requirements concerning some o f the most frequently cited
access issues relevant to dual eligibles enrolled in managed care. Access to buildings,
examining tables, rest rooms and other facilities within provider hospitals are examples of
the most important aspects of physical access for elderly persons or persons with
disabilities. Most states include language in their contracts, RFPs or other planning
documents specifying that health plans make reasonable accommodations for persons with
disabilities (Booth, 1996). Florida, the New England States Consortium and Oregon
ensure access to care and availability of care by outlining strict requirements concerning
physical access, and compliance with the Americans with Disabilities Act. These three
states further ensure dual eligibles’ access to care by including language concerning who
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ij Contractors who can not provide for the particular needs of dual eligibles to arrange to
: have appropriate services delivered by qualified referral providers. These three states that
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I allow specialists to act as PCPs are considered a best practice program.
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While Arizona’s contract mentioned the referral and utilization process for its dual
eligible program briefly, Florida, the New England States Consortium and Oregon
h included in their contracts or RFPs timeliness standards for appointments, referrals and
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authorizations. Because these three states incorporate the access standards set forth in
Chapter 3 pertaining to access to care, they can be considered exemplary programs
concerning the needs of dual eligible individuals.
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Quality of Care
Quality of care is impacted by the number of persons enrolled in managed care plans,
the proliferation of managed care plans, and the types o f measures managed care plans use
to ensure and evaluate the provision o f quality care. These are issues relevant to every
population enrolled in managed care, whether this is the commercial population, Medicaid
population, Medicare population or a variation of all three. As the number of
beneficiaries enrolled in managed care plans increases, several initiatives have been
implemented to ensure quality of care, including: the Medicaid Health Plan Employer Data
| Information Set (HEDIS); the Medicare HEDIS; the establishment of the Foundation for
< Accountability; the Health and Human Services Interagency Managed Care Forum; and
| the Quality Assurance Reform Initiative, which is a collaborative effort of HCFA, states,
the managed cared industry, consumer advocates, and others (Commerce Clearing House,
1997).
Quality of care is one of the most significant and crucial issues for dual eligible
beneficiaries entering managed care. Dual eligibles enrolled in managed care experience
barriers to accessing care, much less access to quality care. Dual eligibility characteristics
may imply lack of transportation, trouble requesting appropriate care or lack of
understanding about treatment options. For these reasons, dual eligibles may face
significant barriers accessing high-quality care.
States that enter into managed care arrangements for this particular population must
pay attention to their particular needs and concerns where not only acute care is
concerned, but also long-term and preventive care. For example, people who use long-
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term care services may be as concerned with courteousness and timeliness of a personal
care attendant as they are with the medical efficacy of the service (National Academy for
State Health Policy, 1996). The unique quality of care concerns of dually eligible people
must be addressed at both an administrative and a systematic level. The specific needs of
dually eligible individuals must be included in program administration as well as actual
provision of services. The management o f any managed care program specifically for dual
eligibles must be cognizant of their needs regarding access, time spent with physicians and
options they must be given as far as treatment is concerned. The following section
discusses three consumer quality-of-care protections: requirements for a Managed care
internal quality assurance plan; standards by which decisions to approve and deny care are
made; and accountability, monitoring and oversight.
Quality of Care Consumer Issue # 1:
Requirements for a Quality Assurance Plan
Issue: A strong functioning managed care quality assurance plan is one of the best
guarantees that MCOs will provide high-quality care (Families U.S.A., 1996). If they are
not well designed and maintained, medical care will be compromised. Quality assurance
plans require MCOs to continuously monitor the quality of care provided, conduct
focused reviews of that care, maintain a system to correct problems, assess the credentials
and quality of their provider network, conduct peer review activities, and monitor quality-
of-care grievances and complaints.
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State Response: The Consumer Coalition for Quality Health Care (1996) indicates
that high quality care does not just happen. In an effort to assure quality for every health
care consumer, systems must be in place to license and accredit providers as well as plans.
Systems need to continuously upgrade the skills of frontline health care workers and
encourage the involvement o f workers at all levels in quality improvement initiatives.
The ALTCS RFP sets forth requirements of Program Contractors for a Quality and
Utilization Management system. These systems work in tandem and are developed in
accordance with ALTCS Rules, the Arizona Health Care Cost Containment System
Medical Policy Manual and federal regulations. While the RFP does not state in detail
complete requirements of the quality assurance system, it does indicate that the
implemented quality assurance system of Program Contractors will respond to quality of
care issues in accordance with the time limits specified in the Arizona Health Care Cost
Containment System Administration (AHCCCSA) correspondence concerning individual
quality issues (AHCCCSA, 1996).
The Oregon Health Plan, in its Administrative Rules, goes further than any other
state in outlining its requirements for a quality assurance system. Not only does the state
conduct statistically sound member satisfaction surveys annually with respect to access to
care, quality of care and general satisfaction, the state also defines the parameters for the
internal quality assurance standards and procedures. In addition, Contractors are required
to have quality assurance committees comprised of health professionals who are
representative of the scope and services delivered by the particular Contractor (Oregon
Department ofHuman Resources, 1996). Oregon requires Contractors to designate a
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staff person (Quality Assurance coordinator) who develops, coordinates and is generally
responsible for the operations of the quality assurance (QA) program. A QA committee
must be formed and is required to meet annually, review written protocols to ensure
appropriateness, and review all aspects of Contractor performance. The QA plan must
include a requirement for quarterly reviews and analyses of all complaints received by the
Contractor, educational plans, timeliness of child or adult abuse reporting, and reviews of
whether comorbidities and complications are assessed before a service is denied (Oregon
Department ofHuman Resources, 1996).
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1 The Florida Model Contract is similarly detailed and states Contractor’s
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The Plan shall have a quality assurance review authority which shall:
• Direct and review all quality assurance activities;
• assure that quality assurance activities (QA) take place in all areas of the plan;
• review and suggest new or improved QA activities;
| • direct task forces/committees in the review of focused concern;
I • designate evaluation and study design procedures;
• publicize findings to appropriate staff and departments within the plan;
I • report findings and recommendations to the appropriate executive authority; and
• direct and analyze periodic review of enrollees’ service utilization patterns. (State
of Florida, Agency for Health Care Administration, 1996, 46)
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The Model Contract is similar to Oregon’s Administrative Rules in that it specifies
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the requirement for quality assurance staff and their responsibilities. Florida requires the
Plan’s quality assurance information to be used in recredentialing, recontracting, and/or
annual performance ratings of individuals. The Contract specifies the requirement for a
peer review component, and annual independent surveys of enrollee satisfaction (State of
Florida, Agency for Health Care Administration, 1996).
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The New England States Consortium’s Framework Document for providing services
to dual eligibles is comprehensive in terms of quality management and measurement. To
assess plan performance, numerous aspects of quality, including access, outcomes,
coordination, continuity and satisfaction are monitored (The New England States
Consortium, 1997). These monitoring activities form the basis for program standards and
quality improvement initiatives the individual states will undertake. The ultimate measure
of quality is the ability of Integrated Service Networks to improve or maintain the health
status and functional well-being of persons who are dually eligible and to satisfy consumer
> needs and preferences in the process of doing so.
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In developing their standards for quality measurement and management, the New
England states used the specifications outlined in a document prepared by the New
England States Initiative for Dually eligible persons. The section on quality is
is
comprehensive although not exhaustive. The document identifies nineteen aspects of
quality which will be used to ensure appropriate, complete and accessible care for dual
s
eligibles. The measures include, but are not limited to: annual quality goals, a quality
committee, overseeing quality of life indicators, policies to address ethical issues, practice
guidelines, provider qualifications, patient status reviews and member surveys, procedures
for member complaints, grievances and appeals, outcomes analysis and provisions for
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Quality of Care Consumer Issue # 2:
Standards by Which Decisions to Approve and Deny Care Are Made
Issue: As discussed in the access to care section, decisions about whether to deny
or discontinue care are often not made by an mdividual’s physician, but by a utilization
reviewer of a managed care plan (or by subcontracting entity). Decisions are often based
on protocols or criteria, which, some argue, are sometimes inappropriate. Most MCOs
use a definition of medical necessity in their determination of approving or denying
services that may not be included in the basic benefit package. Examples of such services
}
I include care needed by a specialist, durable medical equipment or assistive devices not
ordinarily covered, alternative therapies, and brand name prescriptions where the Member
is generally covered for a generic. The definition of medical necessity varies greatly
among states, and has emerged as a critical issue in Medicaid managed care. As states
fashion definitions of medical necessity for dual eligibility programs, they should ensure
that their definitions are broad enough to include services that are not unnecessarily
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medical in nature, but which, if not provided, may result in negative health consequences
I or functional decline of members.
, State Response: Oregon uses the following Medically Appropriate definition to
assist Contractors when approving and denying requests for care and services:
[
Medically Appropriate - Services and medical supplies, that are required for
prevention, diagnosis or treatment of a health condition which encompasses physical
or mental conditions, or injuries and which are:
u Consistent with the symptoms of a health condition or treatment of
a health condition;
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■ Appropriate with regard to standards of good health practice and
generally recognized by the relevant scientific community and
professional standards of care as effective;
■ Not solely for the convenience o f an Oregon Health Plan Client or a
provider of the service or medical supplies; and
■ The most cost effective of the alternative levels of medical services
or medical supplies that can be safely provided to an OMAP
Member or PCCM Member in Contractor’s or Primary Care Case
Manager’s judgement. (Oregon Department ofHuman Resources,
1996,4)
In addition to its definition of what care is considered medically necessary, Oregon
i outlines Contractors’ responsibilities concerning service denials. This section of the
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\ Administrative Rules lays out, in detail, Member’s rights to written responses and
disclosure regarding the service that is denied, basis for the denial and the Member’s right
to a hearing. The Contractor must include the avenues Members must navigate in
requesting a hearing and timeliness standards concerning hearings (Oregon Department of
Human Resources, 199S).
The ALTCS RFP does not define medical necessity, but does set forth timeliness
standards concerning denial of services requiring prior authorization. The RFP states:
When a service requiring prior authorization is denied, the Program Contractor shall
ensure the Member is notified of the reasons for the denial. This notification must be
given to the Member verbally or mailed to the Member within three working days
from the date the decision is made. (Arizona Health Care Cost Containment System
Administration, 1996, 210)
The RFP goes on to state that the AHCCCS Medical Policy Manual contains further
details on notification requirements. The Florida Model Contact, in its definition section,
defines medically necessary as follows:
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8 2
Medically Necessary is the requirement that the goods and services provided or
ordered must be:
a) Calculated to prevent, diagnose, correct, cure, alleviate or preclude
deterioration of a condition that threatens life, causes pain or suffering, or
results in illness or infirmity;
b) Individualize, specific, and consistent with symptoms or confirmed
diagnosis of the illness or injury under treatment, and not in excess o f the
patient’s needs;
c) Necessary and consistent with generally accepted professional medical
standards as determined by the Medicaid program, and not experimental or
investigational;
d) Reflective of the level o f service that can be safely provided, and for that
£ no equally effective and more conservative or less costly treatment is
| available; and
e) Provided in a manner not primarily intended for the convenience of the
recipient, the recipient’s caretaker, or the provider. (State of Florida,
Agency for Health Care Administration, 1996,210)
*
i
The New England States Framework document does not define medical necessity,
but outlines the needs and concerns of dually eligible adults concerning longer term
services that may not be medical in nature.
For persons who are dually eligible there is often an equally pressing need of longer
term services and personal supports. Those who need longer term services generally
have a condition which is chronic or permanent in nature. While such conditions
may require some medical interventions, either continuously or episodically, the
desire of the consumer is for personal and family supports to maximize independence
and functional level, thereby minimizing the impact of the chronic condition on the
consumer’s quality of life. These supports are rarely medical in nature and focus not
on the consumer’s deficits but rather on the consumer’s capacity to lead a full and
active life in spite of an existing functional impairment. Unlike the standard medical
benefits, consumers prefer these types of benefits to be available outside the medical
model and, ideally, at the direction of the consumer. At the very least, consumers
want choices concerning these supports; consumers want to determine what support
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they receive and when they receive them to the extent feasible within a given system.
(New England States Initiative for Dually Eligible Persons, 1997,20)
Quality of Care Consumer Issue # 3:
Accountability, Monitoring and Oversight
Issue: Requirements in state Medicaid contracts to protect managed care consumers
are only as good as state oversight and enforcement of the protections set forth in those
contracts (Families U.S.A., 1996). Quality of care may be monitored both internally and
externally. A functioning internal quality assurance plan may ensure that MCOs provide
high-quality care. However, to be effective and informative, external review is also
necessary to ensure that MCOs meet access, quality-of-care, grievance and financial
solvency requirements. The growth of MCOs seeking certification by the National
Association of Quality Assurance (NCQA) and other review organizations is evidence that
the managed care industry understands the importance of meeting standards established by
an independent quality reviewer (Families U.S.A., 1996).
State Response: All states with managed care programs require plans to have
internal procedures for receiving and resolving enrollee complaints and grievances in both
written and verbal form. Some states, such as Minnesota, allow enrollees to appeal to the
state prior to exhausting a plan’s internal process. This state has multiple avenues for
enrollees to complain in addition to the plan’s internal process, including state ombudsmen
and county advocates. The state also notifies all enrollees of their appeal rights twice a
year, including a description of enrollee rights, what to do when there are problems with
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the plan, and how to file an appeal with the state. The appeal process includes a fair
hearing process and, if either party disagrees with the Commissioner’s opinion of the fair
hearing, a judicial review (Booth, 1996).
Not only does the Oregon Administrative Rules establish general monitoring and
internal and external review requirements for its quality assurance plan, it also requires
Contractors to monitor the provision of health services. Contractors are responsible for
communicating and documenting for providers the policies and procedures that determine
medically appropriate services, regularly monitor providers’ compliance with the policies
j and procedures, and take corrective action necessary to ensure provider compliance
ji
| (Oregon Department ofHuman Resources, 1995).
I The ALTCS RFP outlines its requirements for a quality assurance system in terms of
compliance with the AHCCCS Medical Policy Manual. In addition to cooperating and
I participating in any studies or collection efforts, Program Contractors are responsible for
i
monitoring activities related to the performance of the provider network. Examples of
J.
monitoring activities include provider profiling in the areas of emergency room,
hospitalization and pharmacy utilization (Arizona Health Care Cost Containment System
£ Administration, 1996). The Medicaid agency may commission internal and external
reviews and use the results of these evaluations to determine Contractor performance.
Program Contractors are required to submit several quality management and utilization
reports. The RFP details timeliness standards for the submission of these reports.
The Frail Elderly Option available through Florida’s Medicaid Prepaid Health Plan
also sets forth detailed requirements for a comprehensive quality assurance (QA) plan (see
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above). The Model Contract states that the QA information will be coordinated with
other performance monitoring activities, including utilization management, risk
management, and resolution and monitoring of member grievances (State o f Florida,
Agency for Health Care Administration, 1996). The QA will use HEDIS Medicaid
specifications to evaluate quality indicators (State of Florida, Agency for Health Care
Administration, 1996).
The New England States Consortium requires detailed quality assurance monitoring,
management and measurement in its Initiative. In general, the New England states will
s collect comprehensive performance data which allows for monitoring of access, cost,
I
j utilization, consumer choice/preferences, outcomes of care and financial condition of the
i
1 Integrated Service Networks (ISNs). A heavy emphasis is placed on consumer feedback.
ISNs are required to analyze all consumer information throughout the year and submit a
summary o f such information to the state (New England States Consortium, 1997). The
i
■ monitoring activities of each state form the basis of program standards and quality
improvement initiatives (New England States Consortium, 1997).
With respect to performance-based contracting, states in the New England
Consortium will monitor the highest priority and highest impact requirements using
| monitoring efforts as an early detection and warning system. In the event that deficiencies
c
| are identified, states will immediately conduct more intensive and detailed investigations
r
and efforts to improve the ISN. The New England States are required to submit relevant
HEDIS measures specific to persons who are dually eligible. Standardized data collection
and sampling methodologies are developed to ensure statistically valid findings with
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respect to relatively small subpopulations o f enrollment and that, to the extent feasible,
analyses will account for the full range of disabilities (New England States Consortium,
1997). There are requirements for external evaluations o f Program effectiveness,
performance review meetings, and an opportunity for Contractors to improve if they are
not performing up to state standards (New England States Consortium, 1997).
Currently, little data exist upon which states or individuals can make an assessment
of the quality of care provided by MCOs. “It’s impossible today to be a good consumer
of health care plans, because the information’s not out there yet.” notes the publisher of
Health Pages, a magazine that disseminates what information exists on managed care in
j*
; several large cities (Gottlieb, 1996). Without data, states are unable to assess the impact
e
i of managed care and new capitated reimbursement systems on the care provided to
I specific populations.
!
Table 4
QUALITY OF CARE
STATES
Requirements for a
Quality Assurance
Plan
Standards by Which
Decisions to Deny Care Are
Made
Accountability,
Monitoring and
Oversight
Arizona X X* X
Florida X X X
Minnesota1 5 X*
N ew England States
Consortium
X Xc X
Oregon X X X
* D oes not define the criteria used to approve or d eny care (m edical necessity), but outlines tim eliness
standards concerning denial o f services.
b Data not available.
c N o definition o f m edical necessity given, but the Consortium outlines criteria for the continuing
authorization o f longer-term services not necessarily m edical in nature.
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Evaluation: Most states examined in this thesis require health plans to develop and
implement a detailed quality assurance plan including provisions for surveys, annual
internal and external reviews and the development of quality goals. Further, most states
require detailed specifications concerning the standard by which decisions to approve and
deny care are made using specific definitions of medically necessary or medical
appropriateness. Florida and Oregon define, in detail, their criteria for determining
medical necessity while the New England States and Arizona use different methods such
as timeliness standards for authorizing or denying care or criteria for authorizing non
medical services to address issues of the continued need for often non-covered services.
A dual eligible program which includes in its contract a requirement that states
conduct monitoring and oversight activities in order to hold plans accountable and identify
sanctions for noncompliance are considered best practice models. The dual eligible
programs examined in this thesis require the collection of a wide array of data, including
information specific to target populations and subgroups. A good quality assurance
system needs to monitor and improve the quality of health care services delivered to the
consumer.
A state that collects a wide variety of quality data such as long-term care utilization
data by age, gender and disability data; community-based services utilization data; and
clinical indicators data can be considered best practice programs. The Consumer Coalition
for Quality Health Care (1996) stresses that public accountability is a key issue in state
monitoring and oversight. Systems for consumer information, quality assurance, and
consumer protection must be accountable to the public. These programs should be
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independent of providers and payers of health care and free of potential conflicts of
interest. They should enable consumer control of the governance structures and provide
appropriate technical assistance. They must maximize public access to financial and other
information about health plans. They should collect and disseminate available information
in standardized formats as part of a uniform national data system. They should be
adequately funded to ensure these functions are fulfilled. The states examined in this
thesis developed or are currently operating dual eligible specific programs and therefore
require Contractors to develop and implement quality protections, indicators, and
measures specifically to address persons with disabilities and elderly issues. New England
and Oregon go further than the other states examined in this thesis as they require either
the collection and analysis of dual eligible specific data or if they do not require specific
data, they set forth such comprehensive requirements that their Contractors are likely to
collect and analyze population-specific data to attempt to address the needs of these
persons.
Reimbursement
Reimbursement Consumer Issue # I: Capitation
Efforts to enroll dually eligible persons into managed care have been associated with
the full financial or service integration of primary, acute and long-term care services.
Some states examined attempt to enroll dually eligible persons into managed care
programs in which capitated payments include Medicaid services with Medicare services
remaining fee-for-service. Still other more advanced state programs enroll dual eligibles
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into managed care and then contract with one entity to deliver an integrated package of
Medicare and Medicaid services. The issue relevant to this discussion is the
reimbursement method (capitated amount) used to pay Contractors and providers who
deliver these services.
Capitation refers to the monthly contracted payment for each enrolled individual to a
managed care plan for a defined set o f benefits. If expenditures for that individual exceed
that payment the managed care plan is responsible or “at risk” (National Academy for
State Health Policy, 1996). While capitation may be an incentive for efficiency,
1
| inadequate rates can result in too few providers and poor quality of care. Capitation may
| encourage cost-conscious MCOs to rely on less-expensive therapies, such as medication,
$ forgoing more expensive treatments, such as ongoing therapy.
I Capitation rates are set differently across RFPs and contracts. Some states specify
I the exact rates they will pay in advance. Potential contractors who are willing to accept
I the rate then propose how they will structure, deliver, and manage the program within that
i
rate. An advantage of this approach from the state’s perspective is that the state can set
1
X
the per-enrollee expenditure level directly and thus have as much control as possible over
A
\ the Medicaid budget (Huskamp, 1996). A disadvantage is that it is difficult to know what
rate to set. Health plans are likely to limit, deny or delay treating high-cost people unless
the capitation rate they receive to provide all necessary care adequately covers the cost.
!
By contrast, states who set a rate too high spend more than necessary and are thus unable
to recoup any savings.
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Another approach states use is to set a maximum rate and let potential contractors
bid this rate lower. With this arrangement, bidders compete both on price and on the
features of the program they propose (Huskamp, 1996). This approach serves two
purposes:
(1) It sets a maximum per-enrollee expenditure level, so that the state knows
the upper limit of the budget for providing these services; and
(2) it lets potential contractors know the state’s estimation o f what costs are
likely to be (based on the states experience serving this population),
possibly preventing contractors from underbidding unintentionally.
(Huskamp, 1996, 32)
A third approach some states use is to provide no guidance whatsoever on setting
rates for different populations or services. This allows potential contractors significant
leeway in developing the rate they feel is appropriate. This method generates the most
competition among potential contractors, allows competition on program features and
creates a wide range of bids.
While proponents of competition argue that increasing the level of competition may
increase innovation and decrease the cost to the state without affecting quality of care,
others say that stimulating competition may result in underbidding and possible decreases
in access and quality (Huskamp, 1996). If states decide to use different capitation rates
for different populations, significant rate variation across the Medicaid managed care
program ensues. States considering the use of a specific rate for their program should first
identify the population it will serve.
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}
Most state programs use several different rate categories as risk adjusters to set their
capitation rate. Rate categories are usually based on category of eligibility for Medicaid
(e.g., AFDC, blind, disabled) and in some cases, age (Huskamp, 1996). Additionally,
some states pay different capitation rates in each geographic region covered by the
program to reflect different market conditions in the state (Huskamp, 1996).
The Bazelon Center for Mental Health Law, a well respected and authoritative
organization which concerns itself with managed care and special populations,
recommends states avoid a system that relies entirely on a pre-negotiated capitation
i
payment (full-risk). Instead, states may consider using a “soft-capitation” approach which
jf sets a basic capitation rate per enrollee but then allows some risk sharing for expected
1 additional costs between the managed care entity and the state (Bazelon Center for Mental
Health Law, 1995). Soft capitation contracts typically specify a claims target for services
£
5 covered under the program. Where contractors’ claims exceed the target, these represent
i
i
] “losses” to the organization and where claims are below the target, these represent
potential “profits” to the organization. In this arrangement, the state and the contractor
3
| can share some level of risk. The contract needs to specify the rate at which these profits
or losses will be shared between the two parties by setting a sharing ratio (e.g., a 50/50
sharing ratio would imply that the state and the contractor each pay half of any losses or
| keep half of any profits) (Huskamp, 1996).
* The Bazelon Center also suggests states use their own historic spending patterns for
services to populations as a base from which to calculate the rate (Bazelon Center for
Mental Health Law, 1995). Additionally, when states set their rates, they should not “cut
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B M W "M H W .IH L ! 1 U H H M 3 1 W W W — 1,1 1 ■
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too deeply”; states should base their rates at 90-95% of cost history. States should also
investigate rates used in other states and take into consideration that the rate for a dual
eligible benefits (acute care, long-term care and social) across the entire Medicaid
population are lower on an individual basis than a capitation rate for a specific population
such as dual eligibles.
The challenge in managed care is for states, as purchasers, to pay rates that account
adequately for various risk factors, that are generous enough to entice quality health plans
and providers into joining Medicaid, and that protect health care consumers from
underservice (National Health Law Program, 1996). The issue with alternative care
systems for dual eligibles is to set a high enough capitation rate to provide all full range of
services. If a specialty managed care plan can receive up to 95% of the dual eligibles
Medicaid fee for service historical experience and has the knowledge about how typical
managed care inefficiently delivers their care, the specialty plan can correct the problems
and provide quality care that is cost-efficient (Bazelon Center for Mental Health Law,
1995).
State Response: Appendix B of the Oregon Health Plan Agreement (Oregon
Department of Human Resources, 1996) outlines the calculation of capitation payments,
per capita costs methodology and procedures for calculating those per capita costs.
Oregon uses data on claims experience with commercial insured populations in Oregon
and charges for Medicaid recipients in Oregon. The data are adjusted to reflect the way
services are identified in a prioritized list of services and adjustments are made to derive
estimates for the costs of providing services. These costs are further adjusted by Medicaid
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93
subpopulation, geographic factors and finally, a family planning open access adjustment (a
specific adjuster made to the AFDC population) (Oregon Department of Human
Resources, 1996).
This method of calculating reimbursement is in line with generally accepted managed
care standards, but in addition to risk adjusters it uses estimates of commercially insured
individuals. This may be problematic as the elderly and persons with disabilities are
generally not enrolled into commercial health plans. If the state adds commercial health
plan experience, it may skew the capitation rate in a lower direction, but the cost of the
average commercial beneficiary is lower than the cost of providing care to dual eligibles.
The New England States Consortium’s proposed process of calculating capitation
uses multiple risk adjusters to ensure that Integrated Service Networks (ISNs) are
appropriately reimbursed and that government resources are effectively allocated (New
England States Consortium, 1997). The Consortium states:
Effective risk adjustment is very important to dually eligible persons, in general, and
particularly for the significant proportion of dually eligible persons who are frail
and/or have complex, chronic care needs. The costs for these individuals are much
higher, on average, and more predictable from year to year than other Medicare-
eligible or Medicaid-eligible consumers. Payments must accurately reflect the higher
costs o f these frail individuals in order to encourage Integrated Service Networks to
j; enroll such individuals and to develop innovative programs that will better serve this
population. (New England States Consortium, 1997,42)
The New England States plan to test a wide variety of risk adjustment
methodologies using the data files of Medicare and Medicaid. One model the Consortium
is considering concerning reimbursement is a modified Average Adjusted Per Capita Costs
(AAPCC) methodology, such as using demographic data and including a special rating
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94
category for persons who are residing in the community and who meet the state’s nursing
facility eligible criteria (New England States Initiative for Dually Eligible Persons, 1997).
The States are also planning to phase-in shared risk over time. By sharing risk with
Integrated Service Networks (ISNs), the states are able to cushion discrepancies between
actual costs and capitation rates for ISNs, while maintaining strong incentives for ISNs to
control costs. Phasing in risk allows ISNs to develop experience managing the foil
continuum of care for dually eligible persons before being placed at foil risk for difference
between actual costs and capitation rates. Other factors under consideration by the states
| include:
i
j • the level of experience developing capitation rates for the continuum of services;
i
• limitations in the availability of data and existing technology to adequately adjust
the risks of capitation payments to Integrated Service Networks in order that they
! will reflect the variation in needs among enrollees; and
• the potential for relatively low levels of enrollment initially, particularly in states
where the program will be voluntary. (New England States Initiative for Dually
| Eligible Persons, 43)
f
I
The ALTCS RFP does not state in detail how it plans to calculate reimbursements to
$
providers. The Contractor must demonstrate, however, that the capitation rates are
I actuarially sound. If awarded the contract, Contractors must be able to keep utilization at
or below its proposed levels. Arizona makes available to prospective contractors a
j Capitation Rate Calculation Sheet disc to assist in the development of capitation rates
(Arizona Health Care Cost Containment System Administration, 1996).
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Florida’s Model contract states that the capitation rates to be paid are developed
using historical rates paid by Medicaid fee-for-service for similar services in the same
geographic area, adjusted for inflation where applicable. Florida’s Frail Elderly Option
capitation rate is determined using claims data from both the community setting and the
nursing facility setting. As with Arizona, the participating health plan receives the
Medicaid capitation rate, but since Medicaid is the payor of last resort, Medicare must be
billed by the participating health plan for services for dual eligibles (Snow et aL, 1993).
The capitation rate paid to plans serving Medicaid eligibles is calculated by the state for
j each county using claims data of a comparable group of Medicaid recipients. The Frail
| Elderly Option includes an enhanced captation rate paid to health plans which serve these
specific beneficiaries.
| For the Minnesota Senior Health Options (MSHO) program, the state plans an
i
1
I innovative approach to reimbursing Program Contractors. Once per month HCFA will
5
^ make payments for Medicare services directly to Senior Health Options (SHO)
I
’ Contractors. Specific rates will be determined using the appropriate AAPCC modifiers
(age, sex, county, and institutional status). Medicare payments will not be reduced for
administrative costs by HCFA or the states. The Medicaid component of the SHO rates
will consist of the same payments that are made to existing Prepaid Medical Assistance
Program (PMAP) Contractors with numerous rate structure modifications. The
Minnesota Department of Health Services will provide each Minnesota Senior Health
Options Contractor with a monthly per capita payment per enrollee which includes the
PMAP capitation, a Medicaid Nursing Facility Add-on, and the Average Elderly Waiver
i*
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-V 'T T -y w .l'* '
payment as appropriate per Minnesota Senior Health Options policy. HCFA will make a
direct payment to each MSHO Contractor for the monthly AAPCC capitation. MSHO
provides an increased Medicare capitation for frail elderly by applying an AAPCC risk-
adjustment factor. In exchange for the two Medicare and Medicaid capitation payments,
MSHO Contractors must provide all the necessary Medicaid, Medicare, Elderly Waiver,
Nursing Facility services, and Home and Community Based Waiver services for the
individuals enrolled in MSHO (Minnesota Department of Human Services, 1997).
Table 5
REIMBURSEMENT
k
STATES R ate Setting
A ccording to S p ecific
R isk A djusters
U se o f O ther S tate’s
E xperience
Phased-in R isk
Arizona X* X
Florida X X
Minnesota1 1 X
N ew England States
Consortium
X X Xs
Oregon X
1 N o details included in the RFP.
b M innesota outlines protections against low capitation rates. Although this program is in the early stages o f
development, their plan for calculating capitation rates take into account the risk-adjustments academicians
and advocates report are necessary w hen trying to effectively serve this population.
c Various risk m ethodologies are under investigation by the N ew England States Consortium. The
Consortium has agreed to phase-in fu ll risk over tim e to allow a full understanding o f capitation for dual
eligibles.
Evaluation: Minnesota, New England and Oregon are states that operate or plan
very sophisticated methods of calculating reimbursement to providers. Minnesota uses
AAPCC methodology in addition to several relevant rate modifications (nursing home
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modification), This is the only state that combines funding of Medicare and Medicaid. The
capitation rates it creates are meant to pay for Medicare; Medicaid; elderly waiver
services; nursing facility services; and home and community-based services.
Oregon outlines explicit cost methodologies and calculation procedures. The state
uses several risk adjusters to pay providers an appropriate capitation rate. While the New
England states are not clear wether or not they will integrate funding, the Consortium
reports its plans to use other states’ experience with calculating capitation and
methodologies that are appropriate for dual eligibles. The state also plans to phase in risk
over a period of time, so that providers and the state have time to leam what
methodologies are indeed appropriate for this population.
CHAPTER SUMMARY
In most states, the goal o f providing care to dual eligible individuals in the fee-for-
service system is becoming increasingly difficult as both the population and the costs of
their care escalates. The states reviewed in this thesis are examples of five innovative
programs which attempt to deliver care in such a way as to maintain or increase
integration and coordination, access, and quality in a cost-effective manner. Each state
program appears to understand, with some level of clarity, the need for high-quality,
accessible care and correctly calculated payments, while attempting to provide services in
an integrated fashion. No single, consistent strategy can yet be defined which articulates
the ‘ 1 )6 8 1 ” way to protect dual eligible beneficiaries as states transition them into programs
of managed care. However, states are actively involved in innovative approaches to
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98
integrate their care and financing streams, ensure access, build effective systems to assure
quality care is received, and develop payment methodologies that take into account their
particular needs and concerns.
Whatever the health care arrangement, the trend is clear. States are feeling
increasingly confident in their ability to design alternative care programs for persons who
are at-risk or who have little experience with managed care. The increasing enrollment of
elderly persons or persons with disabilities into Medicaid managed care has been slow, but
steady. States are taking the initiative and are now willing to take more of the financial
| risk when providing their care, because they feel there is some limited amount of
*
|
i experience. States are using the recommendations and frameworks developed by the
National Academy for State Health Policy, other respected groups, and their own external
evaluations to guide contracting requirements to ensure access to high-quality care. As
i
their expertise continues to grow, the proliferation o f Medicaid managed care programs
f
i for dual eligibles is likely to grow as well.
< !
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CHAPTER 5: SUMMARY AND CONCLUSIONS
This thesis has identified and described five state programs which are planning or
operating Medicaid managed care programs for dual eligibles. This is a population which
requires significant protections when transitioning to managed care. Because of their
unique ailments and requirements, the following aspects of state contracts were examined:
1 . Integration;
2. Access to appropriate care;
3. Quality of care; and
4. Reimbursement strategies.
The examination of five specific state contracts reveals that each of the dual eligible
programs analyzed are competent in some aspects of these four measures. It is also
apparent, however, that some of the state programs do not develop specific requirements
to protect dual eligible beneficiaries based upon the identified consumer protection criteria
set forth in Chapter 3.
Summary
Dual eligibles have unique needs; thus, managed care systems specifically developed
to address those needs must be able to respond to a variety of social, health and long-term
care needs as well as to a culturally diverse population. The states examined in this thesis
appear to have experimented with a variety of approaches to address these concerns.
t
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Using the work of the National Academy for State Health Policy, the Henry J. Kaiser
Family Foundation, and the Consumer Coalition for Quality Health Care, the five states
were evaluated in terms of their ability to protect dual eligible consumers.
Integration
Integration is a key issue concerning managed care for dual eligibles. Integration, as
used in this thesis, was separated into integration of care only and integration of care,
services and financing. Integration of care was defined as clinical integration and refers to
the extent to which patient care services are coordinated across people, functions,
activities, processes, and operating units so as to maximize the value of service delivery
(Shortell et al., 1996). Integration of care, services and financing was determined to be a
combination of clinical integration and functional integration. Functional integration is
defined as the extent to which key support functions such as financial management, human
resources, information systems, strategic planning, and total quality management are
coordinated across the operating units o f a given system so as to add the greatest overall
value to the system (Shortell et al., 1996).
The two questions used to compare, contrast and evaluate the five state Medicaid
managed care programs concerning integration were: (1) does the state integrate care and
services only; or (2) does the state integrate care, services and financing?
Of the five state programs examined, the Oregon Health Plan appears to be the best
example of an integrated care model. The state uses exceptional needs care coordinators
to achieve the results of a seamless program. The state has implemented a Medicaid
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administration which is accountable to Oregon Health Plan members. The team-approach
used by Oregon is designed to make consumers feel they as if they are accessing a single,
unified system, where in reality the financing systems o f Medicare and Medicaid remain
separate. ENCCs monitor eligibility for both Medicare and Medicaid and assist
beneficiaries in enrolling in managed care plans to ensure a smooth transition. They are
responsible for addressing all aspects of care management so that the needs of the total-
person are address, regardless of the funding or type of program.
Minnesota is the only state which integrates all of the services that dual eligibles are
j. entitled to, in addition to the funding of those services. This state’s innovative use of
I Medicare and Medicaid waivers is an example of a best-practice model. Minnesota
i
recognizes that pooling Medicare and Medicaid funds into a combined capitated package
of Medicaid and Medicare services allows rearrangement of fiscal and clinical incentives,
•i
jj and provides flexibility for cost effective service delivery, administrative efficiency and
accountability for health care outcomes. The state uses both Medicare and Medicaid
i
waivers in an attempt to align Medicare contracts with Medicaid contracts to achieve both
a seamless care system and administrative system.
Access
I Access to an adequate level of health care is assumed to be the objective of any
t
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health care program. In order to achieve this goal, in light of inexperienced and often
unwilling providers, this requires states to minimize financial, geographic, and cultural
barriers to care through access standards and regulations. The questions used to evaluate
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102
state programs on the basis of access included: (1) does the state ensure access to care and
availability of care by outlining strict requirements concerning physical access, compliance
with the Americans with Disabilities Act, and timeliness standards for appointments,
referrals and authorizations, (2) does the state or health plan allow provisions for
specialists to act as PCPs. Does the state require health plans to ensure access to
specialists using timely referrals and authorizations? What is the health plan’s referral and
utilization system?
Most of the states examined have stringent requirements concerning access. The
states include in their contracts comprehensive requirements disability access, compliance
with the Americans with Disabilities Act and providing for communicative disorders.
Oregon, Florida and New England provide stria requirements regarding accessibility to
buildings, examining tables, rest rooms and other facilities. In addition, these states
outlined regulations for accessing referral systems and out-of-network care. States set
forth provisions for cases when specific expertise is not available in the network and/or
where an enrollee is not able to receive linguistically appropriate services.
Quality
Maximization of desired health outcomes for individuals and populations,
consistency with current and emerging professional knowledge, and respectfully provided
services are the goal of high-quality health care programs. States examined in this thesis
were evaluated based upon four questions: (1) What are the requirements for a health
plan’s quality assurance system? Does it include provisions for consumer satisfaaion
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1
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surveys, annual quality goals, quality committees (and who can participate in the
committee), and external review? (2) Does the state require specifications concerning the
standard by which decisions to approve and deny care are made? Is the definition of
medically necessary or medically appropriate used in this process? (3) Does the contract
require the state to conduct monitoring and oversight activities in order to hold plans
accountable? Are there sanctions identified for noncompliance? Is there a requirement for
an internal quality assurance plan and what are its components? (4) What quality assurance
data are collected?
Most states examined in this thesis required the collection o f a wide array of data,
including information specific to target populations and subgroups. The New England
States Consortium, Oregon and Minnesota are developing or currently operating dual
eligible specific programs and therefore require Contractors to develop and implement
quality protections, indicators, and measures specifically to address persons with
disabilities and elderly issues. New England, Oregon and Minnesota go further than the
other two states examined in this thesis as they require either the collection and analysis of
dual eligible specific data or if they do not require specific data, they set forth such
comprehensive requirements that their Contractors are likely to collect and analyze
population-specific data to attempt to address the needs of these persons.
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1 Reimbursement
Reimbursements to health plans, defined as capitation, are the flat fee payments
made per patient to providers of services. Reimbursements should encourage the health
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care system to be efficient — this is, should achieve desired outcomes with the least
expenditure, thereby providing good value for the money spent (Priester, 1992). States
examined in this thesis were analyzed and evaluated based upon how they calculate or
planned to calculate the capitation rates paid to providers. States that used multiple risk
adjusters and other state’s experiences with capitation rates were considered innovators.
Similarly, states which outlined calculation methods explicitly in their contracts were also
regarded as operating sound programs. Several states provided no guidance whatsoever
concerning capitation payments.
| Minnesota and the New England States used their contracts to outline protections
I
| against low capitation rates. Although both programs are in the early stages of
development and the New England States’ program is not currently operational, their
plans for calculating capitation rates take into account the risk adjustments academicians
i
\ and advocates report are necessary when trying to effectively serve this population.
i
i
| j Arizona has an elaborate system for developing bids. It sets an actuarial range within
I
1 which bids are acceptable. The individual bid is developed by each plan using Arizona
1
| Health Care Cost Containment System (AHCCCS) software that guides bidders step by
j
step through their detailed assumptions about such things as the mix of services and size
of each cost center. If a bid is too high or low, the AHCCCS program encourages the plan
rT
to negotiate and rebid. Both bids are weighted and used in the final award.
t
*
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W I J
105
Condusion
In condusion, the fundamental issue facing the development of dual eligible
Medicaid managed care programs, policymakers and providers is the fact that many older
persons and persons with disabilities have both acute and long-term care needs. How to
meet the needs o f the “whole” person is something we do not understand very well, but
with the rising number of persons with disabilities and the aging of the population, sodety
will have to learn.
Findings of this thesis suggest that based on contracting requirements or financing
; issues concerning dual eligible individuals enrolled in managed care, Minnesota and the
I New England States Consortium are programs that can be considered exemplary. No
I
single program examined stands alone as the premier program regarding contracting
specifications, but these two states include in their contracts, RFPs or planning documents
strong requirements concerning integration, access, quality or reimbursement. The New
England States Consortium uses the explicit contracting specifications of access, quality
and reimbursement developed by HCFA, its own planning committee with assistance from
the Center on Vulnerable Populations at NASHP. The Minnesota Senior Health Options
program integrates both the care and financing of dual eligible beneficiaries by combining
the funding of Medicare and Medicaid.
The New England States Consortium multi-state program, however, cannot be
considered a “best-practice” model of providing health and long-term care to dual eligible
beneficiaries. The program is still under development and there are too many unanswered
questions: how many dual eligibles will be enrolled, will financing be integrated, will the
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i
>
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106
states continue to collaborate and learn from one another? Similarly, the Minnesota
Senior Health Options program is still in the early stages of operation and to date, no
external evaluations have been conducted to measure the consumer protection issues
examined in this thesis. While the two programs identified above can be considered the
most successful at meeting the criteria for protecting consumers of the five programs
examined, this should not cast doubt on the other three states (Arizona, Florida and
Oregon). The documents examined for these states may reveal they protect dual eligible
consumers to some degree, but not to the extent that the Minnesota and the New England
t
£
I States Consortium programs plan to protect dual eligible beneficiaries. Similarly, their
p
i
\ documents may be inconclusive and may not tell the whole story where these particular
| consumer issues are concerned.
(
Currently, the role of managed care occupies center stage in the health care reform
debate. Managed care is viewed by many as a means to control costs while at the same
| time promoting good health. Policymakers at both the federal and state levels must
address the needs of the growing number of elderly and people with disabilities. Because
r .
*
of the diversity in health, social and long-term care needs of the dual eligible population,
health reform efforts must address their particular concerns. Any health reform effort
£
must include consumer participation and choice, equitable financing, appropriate access to
| services and benefits, including access to specialty services, strong quality assurance
■ measures and proven mechanisms to test consumer satisfaction.
It is clear from the results of this thesis that there is a need for future research
concerning managed care and dual eligible beneficiaries. An examination of contracts,
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t
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107
RFPs and other planning or operational documents is not enough to indicate how this
population fairs in managed care arrangements. State health care analysts and
policymakers, together with legislators, work within short time periods to develop
managed care programs for dual eligibles. They operate within state and federal
budgetary pressures, not to mention waiver constraints from HCFA. In an effort to design
sound programs for dual eligibles, states and the federal government should try to ensure
enough time to understand and implement dual eligible programs according to a well
thought-out plan, with extra time built in for testing untried approaches.
£
» _
| The single most important investment in a new managed care program is a good,
■ encounter-level data system to monitor and evaluate access, quality and utilization.
i
| Without such a system, serious quality and financial viability problems can get out of hand
before the state responds. States that collect and analyze utilization data can use this
information in program management. For example, Arizona has developed a prepaid
i
Medicaid managed care management information system. It took 12 years to develop but
|
j j other states can use Arizona’s experience to develop their own system much more quickly
| because many more systems are now available (Kaiser Family Foundation, 1995). For
future dual eligible programs, data must be collected regularly in order to evaluate and
f
continuously improve programs, with special attention on how reimbursement, data
I collection and care interact. Encounter-level data are essential but not sufficient. Other
information that is needed includes financial reports and quality surveys. Although self-
satisfaction surveys are not always scientifically sound, these may be helpful so providers
can address their own internal quality issues.
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External evaluations of dual eligible programs should be conducted over long
periods of time to assess access, quality and cost concerns specific to dual eligibles. These
types of evaluations have the ability to reveal if dual eligibles are in fact a population
appropriately served in managed health care systems. State Medicaid officials, consumers,
advocates and politicians must agree to develop and fund longitudinal studies of dual
eligibles in managed care. Particularly important to study are younger disability
populations. By studying the disability population as they age, a better understanding of
the social, medical and long-term care needs can be gained, especially as these concerns
£
* relate to increased age.
A
! As states develop managed care systems for specifically targeted subsets of the
|
| population, they must address the political pressures and barriers that exist in the health
| care reform debate. In addition to sound administrative leadership, states must surround
e
r themselves with good political guidance. By recognizing that the development of
I programs for specific subsets of the population embodies all the issues of health care
*
\ reform, states will understand that this is a major change for program financing and
* delivery. The development of political allies who support the planning and
i
implementation of new programs requires much time and effort, and crosses a broad range
of interests. Consistency, persistence and an understanding that these are long-term
p projects are needed on all sides.
|
In addition to skilled technical staff, Medicaid managed care requires senior
management who understand how the parts work together in the system. The managed
care staff in addition to the state Medicaid management should both understand the
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I
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109
medical concerns of dual eligibles and be knowledgeable about risk management.
Management must take on the role of educator they must educate lawmakers about
health, then about programmatic elements of proposed programs, hi this new era of term
limits, management will need to find a way to create a sense of “institutional memory” for
policymakers (Kaiser Family Foundation, 199S). Education of legislators must be
ongoing. High legislative turnover requires special efforts to familiarize new lawmakers
and their staff with special health care programs and the ways in which the Medicaid
population is different from the general population.
£
1 Currently, not enough is known about the dual eligible population and how they are
|
? served in managed care arrangements. The next steps to health care reform, therefore,
j
must include more development, implementation and research of this population’s
particular demographic characteristics and the constraints to serving their health and long-
■ term care needs under tightly controlled health care environments. The results o f more
i
- research, development and implementation might reveal that with experience, states have
" the ability to manage the care of populations considered to be most expensive and least
likely to succeed in managed care environments.
s
f
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REFERENCES
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Asset Metadata
Creator
Guthrie, Jennifer Lee
(author)
Core Title
Dual eligible beneficiaries and managed care: Ensuring consumer protection through state Medicaid contracts
School
Leonard Davis School of Gerontology
Degree
Master of Science
Degree Program
Public Administration
Publisher
University of Southern California
(original),
University of Southern California. Libraries
(digital)
Tag
Gerontology,health sciences, health care management,OAI-PMH Harvest,Political Science, public administration,sociology, public and social welfare
Language
English
Contributor
Digitized by ProQuest
(provenance)
Advisor
Wilber, Kathleen (
committee chair
), Greenwell, Lisa (
committee member
)
Permanent Link (DOI)
https://doi.org/10.25549/usctheses-c16-16073
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UC11337011
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1387820.pdf
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16073
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Guthrie, Jennifer Lee
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texts
Source
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(contributing entity),
University of Southern California Dissertations and Theses
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Tags
health sciences, health care management
sociology, public and social welfare