Connecticut Health Policy Project - PCCM - An alternative for Medicaid in Connecticut

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PRIMARY CARE CASE MANAGEMENT:

AN ALTERNATIVE FOR MEDICAID IN CONNECTICUT

INTRODUCTION

Approximately fifteen percent of the health care spending in the United States is associated with Medicaid (Levit, 2000). In 1998, Medicaid spending totaled $170.6 billion, an increase of 6.6 percent from the previous year, and up from $75.4 billion from 1990 (Levit, 2000). The General Accounting office reports five main reasons for the high growth rate. These include: an increase in disproportionate share hospital payments; an increase in the average cost per enrollee related to medical price inflation; declining reimbursement levels; and increasingly stringent quality assurance standards; and finally the overall growth in the number of enrollees (GAO, 1997).

As a result, many states have implemented managed care models to contain cost. All states except Wyoming now have some form of managed care for their Medicaid population. There are two primary mechanisms for implementing managed care in Medicaid, primary care case management (PCCM) and full-risk capitation. "Under fully capitated arrangements, a managed care organization assumes full financial risk for a defined set of services in exchange for a fixed payment per enrollee per month. Under primary care case management arrangements, the state pays a small [commonly $3] monthly fee per enrollee to "gatekeeper" physicians who are not at financial risk, but who control access to specialist care or hospital services" (Schneider, 1997).

The state of Connecticut initiated a full-risk capitation plan in 1995 with mixed results. During the initial phase of the reform, Connecticut's Medicaid spending increased, followed by a period of savings. Recently, however, this cost saving trend has reversed and Connecticut's Medicaid spending is now exceeding the traditional fee-for-service model costs. The state has also struggled to maintain health plans from which beneficiaries can chose. Only four of the original eleven plans are available today.

Nationally, the outlook is similar. The Congressional Budget Office projects that federal Medicaid spending on fully capitated managed care organizations will grow, on average, by fifteen percent annually for the next five years (as cited in Schneider, 1997). Current trends also suggest that while Medicaid managed care enrollment has continued to grow, recent analysis has shown that the number of commercial plans entering the Medicaid market has begun to slow, and the number leaving has increased (Kaiser, 1999).

A review of Medicaid managed care literature by Rowland, Rosenbaum, Simon, and Chait highlight the diversity of managed care arrangements state by state, but note some important common themes. Most studies indicate a decline in the use of emergency and specialty services since the advent of Medicaid managed care, but do not find a clear picture on the use of physician visits, inpatient care, or preventative services. Studies about cost effectiveness are also inconsistent ranging from tremendous savings to higher expenses under managed care.

In light of these obstacles and the persistent problem of reducing Medicaid cost while maintaining quality, choice, and access Connecticut is now considering the primary care case management model as an adjunct to the full-risk capitation model.

The federal Health Care Financing Association (HCFA) gives states the option of offering Medicaid beneficiaries the choice of enrolling in managed care, including the PCCM model, as an alternative to fee-for-service. The first PCCM program was started by the state of Massachusetts in 1979. Between 1992 and 1994, nineteen states initiated PCCM programs (Horvath, 1996). By mid-1995, thirty-five states had PCCM in place accounting for 31% of all Medicaid recipients in managed care programs (HCFA, 1995). Currently, thirteen states use PCCM exclusively as the mechanism to deliver services to their Medicaid population, however many of these are in largely rural states (Schneider, 1997).

States are able to offer PCCM through the Section 1915(b) waiver of the Social Security Act. According to Schneider, the 1915(b) is most commonly used by states to require Medicaid beneficiaries to enroll in a managed care organization, and was not greatly impacted by the Balanced Budget Act of 1997 for states offering beneficiaries the option of voluntary enrollment (1997). For states that want to require mandatory enrollment a new Section 1932 waiver was established. This permits states to require PCCM enrollment as long as the beneficiary has at least two physicians or case managers to choose from and may access services from any other provider in appropriate circumstances (Schneider, 1997).

In either case, if the state elects to offer PCCM services they must be provided under a contract with the state Medicaid agency. This contract is not the same as one in which the state would enter with an HMO, however Schneider reveals there is substantial overlap in the areas of accessibility, adequate capacity, emergency services, discrimination on the basis of health status, and marketing practices (1997).

Although the primary care case manager has less financial incentive to deny medically necessary care, and therefore may improve quality of care, Schneider cautions that the model is not subject to the new requirements on other managed care organizations to establish an internal grievance procedure and external quality reviews. As a result the state's or a beneficiary's ability to determine if they are receiving quality care may be greatly reduced. Medicaid has many challenges. Most of its beneficiaries are "economically disadvantaged, frequently reside in medically underserved areas, and often have more complex health and social needs than do higher-income Americans" (Kaiser, 1999). It operates under tight budget constraints that threaten to compromise access and quality of care. The Balanced Budget Act of 1997 has established basic federal standards to assure plan capacity and enforce consumer protections, however each state is developing its own standards to meet the needs of its own Medicaid population. The Kaiser Commission on Medicaid and the Uninsured notes that "assuring access and quality of care in a managed care environment will require fiscally solvent plans, established provider networks, education of providers and beneficiaries about managed care, and awareness of the unique needs of the Medicaid population" (1999). The purpose of this report is to review the experience of PCCM in other states, present an analysis of the findings relative to the current Connecticut Medicaid Managed Care environment, and propose the potential benefits and shortfalls of PCCM to consider before implementing such a program in the state.

The first section of the report is a description of the study's methodology, the second is the experience of PCCM by state, and the final sections are devoted to results and recommendations. Appendices include a table of comparison, a resource list, and references.