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The use of medicaid managed care: A case study of two states
CHILD HEALTH POLICY The Use of Medicaid Managed Care: A Case Study of Two States Stephanie L. Ferguson, PhD, RN H E T W O P R E V I O U S columns have discussed the history and current issues concerning health and welfare programs effecting children and their families. This column will address the use of Medicaid managed care, and opportunities and limitations with these programs. Lastly, the role that nurses should play will be addressed to ensure that children and families continue to receive adequate health care. In an effort to control the rising cost of Medicaid coverage, some states are implementing managed care health delivery systems. Managed care is a system of health care delivery that combines clinical decision making with resource use, and shifts the locus of clinical control from solely the health care providers to an organization that manages the care. Managed care is designed to make the delivery of health care a more affordable and rational process. Specifically, Medicaid managed care is a means for the public sector to control costs while insuring access to health care services for the poor and disenfranchised (Henger, 1995; Koppelman, 1995). One of the major topics of debate over the future of Medicaid and health care coverage for low-income, uninsured Americans centers around Section 1115 Medicaid demonstration waivers. Section 1115 of the Social Security Act allows the Health Care Financing Administration (HCFA) to waive Medicaid statutory requirements to assist states with demonstration projects (Henger, 1995). Specifically, these waivers allow states to take federal Medicaid funds and develop programs to cover uninsured individuals who are not eligible for Medicaid under the current federal guidelines. Since the inception of these waivers, the federal government has been criticized for its inflexibility in granting states Section 1115 demonstration waivers. However, in 1993 the Department of Health and Human Services ( D H H S )
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Journal of Pediatric Nursing, Vol 11, No 3 (June), 1996
and H C F A streamlined the waiver review process to serve states better. During 1993, D H H S approved major Medicaid waivers for Oregon, Hawaii, Rhode Island, Tennessee, Kentucky. Since 1993, other states that have applied for 1115 waivers include: Florida, Georgia, Kansas, Louisiana, Montana, New Jersey, New York, Texas, and Utah (Fisher, 1993; Henger, 1995; Koppelman, 1995). This section will present case studies on Arizona and Tennessee, which have implemented statewide Medicaid managed care health delivery systems. Arizona received its Section 1115 waiver in 1982, and Tennessee in 1994. Both states use the savings accrued from the expansion of Medicaid managed care to finance broadened income eligibility criteria for Medicaid.
ARIZONA In 1982, Arizona was granted the first statewide Medicaid Section 1115 waiver to implement The Arizona Health Care Cost Containment System (AHCCCS). Before seeking the waiver, Arizona had opted out of the federal Medicaid program. It was the only state in America that chose not to receive federal Medicaid funds. Arizona provided health care for the indigent through county-based state funds. However, Arizona state officials soon realized that they could use some financial assistance from the federal government, because providing health care for the indigent was becoming increasingly more costly. Because of rising costs in the delivery of health care to the poor and uninsured, Arizona officials applied for and received a Medicaid waiver to implement a From the Virginia Health Policy Center, The University of Virginia, Charlottesville, VA. Address reprint requests to Stephanie L Ferguson, PhD, RN, 3801 Chase Wellesley Court, No. 211, Richmond, VA 23233. Copyright 9 1996 by W.B. Saunders Company 0882-5963/96/1103-000853. 00/0 189
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statewide program that required the mandatory enrollment of all eligible Medicaid recipients and full capitation of most health care providers (Henger, 1995). Arizona's Medicaid managed care system has been very successful. At the initiation of the program, however, the administrative costs were high. Moreover, there was some controversy over the schedule and legal demands of managed-care firms, which kept doctors from volunteering at clinics that served uninsured patients not eligible for Medicaid (Miller, 1995). The only group that is exempt from participating in the program is Native Americans. Native Americans have the ability to choose the Indian Health Service as their Medicaid provider (Fisher, 1993). The Arizona Medicaid program is based on a primary care health promotion and disease prevention model. The program is very competitive in that managed care firms and health care providers have to compete for state contracts. Payment is based on a monthly per-person capitation fee. Participants in the program are guaranteed eligibility for Medicaid for 6 months once enrolled and are locked into a plan for at least i year (Fisher, 1993). With the tendency of participants to switch frequently from one managed care firm to another, this 1 year period helps to ensure continuity of care. One of the greatest successes of the program includes the mainstreaming of low-income patients into exiting health care delivery systems. Since 1989, the percentage of the Arizona Health Care Cost Containment System patients who received most of their care in emergency rooms dropped from 18% to 8%, while those seeing primary care physicians has jumped from 18% to 36% (Miller, 1995). Also, unlike some states' Medicaid managed care programs, Arizona also covers long-term care services, via the Arizona Long Term Care (Henger, 1995). Currently, Arizona is working on increasing the number of uninsured working poor individuals on its plan. Arizona will also be faced with the same federal budget cuts as other states with traditional Medicaid programs (Miller, 1995). TENNESSEE Tennessee is one of the most recent states to receive a Section 1115 Medicaid waiver. The program is entitled, TennCare and was approved November 1993 and commenced in
January 1, 1994. This program has received notoriety in America because of the unprecedented fashion in which Tennessee implemented a statewide, mandatory, fully capitated Medicaid managed care system with minimal public input (Henger, 1995). Similar to Arizona, the TennCare program has received recognition for providing health care services to Medicaid recipients and to more than 400,000 workingpoor, uninsured individuals and their families (Henger, 1995; Miller, 1995). TennCare has also been successful in mainstreaming lowincome patients into existing health care delivery systems. However, as reported by Miller (1995), some unscrupulous firms have rushed to sign up patients, and patients continue to complain that important procedures are not covered in the program. In addition, doctors believed that reimbursement rates were too low. Some of the managed care groups were 4 or 5 months delinquent in reimbursement to doctors and other health care providers (Miller, 1995). Miller (1995) stated that "provider loyalty is tenuous" at this point (Miller, 1995, p. 35). From a child health perspective, one of the greatest successes of the TennCare program for children, those under 21, includes the expansion of the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services and dental care. This expansion in health care for poor women and children was a direct result of Tennessee combining Medicaid funds with block grant funds such as the Maternal and Child Health Block Grant and other Title X family planning program monies. The funds were combined to expand coverage and enhance access under TennCare and eventually eliminate the need for other public health programs that utilize Maternal and Child Health Block Grant funds and Title X family planning funds (Henger, 1995). Regardless of the eligibility expansion of health care for poor, uninsured individuals in Tennessee, the TennCare program is in jeopardy because of current dissatisfaction expressed by patients and health care providers. As noted by Henger (1995), the future of the TennCare initiative not only depends on the leadership of the now-Republican control of the governorship and the legislature, but also on the impact of federal budget cuts in the Medicaid program.
THE USE OF MEDICAIDMANAGEDCARE
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CONSEQUENCES OF STATEWIDE M E D I C A I D M A N A G E D CARE P R O G R A M S
H e n g e r (1995) stated that some of the adverse effects of the Medicaid Section 1115 waivers in Arizona, Tennessee and other waiver states include "denial of eligibility to some Medicaid eligibles, type of service coverage, access to current Medicaid providers, and quality care" (p. 8). Other issues that are of concern in Medicaid managed care programs include restriction in provider choice, gatekeeping, selective provider contracting, and provider incentives (Henger, 1995). Henger (1995) further noted that the Medicaid managed care waiver process includes identical concerns as managed care programs in general. Nurses, particularly advanced-practice nurses, may provide the bulk of care for the patients in the Medicaid waiver states. Advanced-practice nurses, however, in many states are not considered primary care health providers or the gatekeepers in these programs. In some states nurses are not eligible for reimbursement or provider
incentives to contain costs. This is an opportunity for nurses to play a unique role in the planning, implementation, and evaluation of statewide Medicaid managed care programs. According to the American Nurses Association (ANA) (1995), "Nurses may have greater opportunities to negotiate for state reimbursement for services, promote service coordination, increase program innovation, and target funding" (p. 7). On the other hand, the A N A (1995) cautioned that the Medicaid reimbursement currently received by some advance-practice nurses may be eliminated at the federal level. Federal Medicaid funds may be diminished, and minireal standards may not be defined to ensure that vulnerable populations continue to be covered. It is essential that health care professionals investigate the current status of Medicaid reform in their states. These cuts could not only adversely affect the health care status of poor women and children, but also serve as a barrier to the practice of advanced-practice nurses.
REFERENCES
American Nurses Association (1995). Revamping the medicaid program: Block grants to states. Capital Update, 13(22), 6-7. Fisher, R. (1993). Medicaid managed care: The next generation? National Health Policy Forum, 63L 2-9. Henger, R. (1995). Section 1115 medicaid waivers: Demonstrations or strategy for incremental reform. National Health Policy Forum, 662, 2-10.
Koppelman, J. (1995). Exploring the impact of Medicaid block grants and spending caps. National Health Policy Forum, 672, 2-9. Miller, M. (1995). The budget deal could fall apart over medicaid- and no wonder. The G.O.P.'s plan has alarmed many patients, doctors, and even some republicans. Time, 146(25), 29-36.
T
Journal of Pediatric Nursing, Vol 11, No 3 (June), 1996
and H C F A streamlined the waiver review process to serve states better. During 1993, D H H S approved major Medicaid waivers for Oregon, Hawaii, Rhode Island, Tennessee, Kentucky. Since 1993, other states that have applied for 1115 waivers include: Florida, Georgia, Kansas, Louisiana, Montana, New Jersey, New York, Texas, and Utah (Fisher, 1993; Henger, 1995; Koppelman, 1995). This section will present case studies on Arizona and Tennessee, which have implemented statewide Medicaid managed care health delivery systems. Arizona received its Section 1115 waiver in 1982, and Tennessee in 1994. Both states use the savings accrued from the expansion of Medicaid managed care to finance broadened income eligibility criteria for Medicaid.
ARIZONA In 1982, Arizona was granted the first statewide Medicaid Section 1115 waiver to implement The Arizona Health Care Cost Containment System (AHCCCS). Before seeking the waiver, Arizona had opted out of the federal Medicaid program. It was the only state in America that chose not to receive federal Medicaid funds. Arizona provided health care for the indigent through county-based state funds. However, Arizona state officials soon realized that they could use some financial assistance from the federal government, because providing health care for the indigent was becoming increasingly more costly. Because of rising costs in the delivery of health care to the poor and uninsured, Arizona officials applied for and received a Medicaid waiver to implement a From the Virginia Health Policy Center, The University of Virginia, Charlottesville, VA. Address reprint requests to Stephanie L Ferguson, PhD, RN, 3801 Chase Wellesley Court, No. 211, Richmond, VA 23233. Copyright 9 1996 by W.B. Saunders Company 0882-5963/96/1103-000853. 00/0 189
190
STEPHANIE L. FERGUSON
statewide program that required the mandatory enrollment of all eligible Medicaid recipients and full capitation of most health care providers (Henger, 1995). Arizona's Medicaid managed care system has been very successful. At the initiation of the program, however, the administrative costs were high. Moreover, there was some controversy over the schedule and legal demands of managed-care firms, which kept doctors from volunteering at clinics that served uninsured patients not eligible for Medicaid (Miller, 1995). The only group that is exempt from participating in the program is Native Americans. Native Americans have the ability to choose the Indian Health Service as their Medicaid provider (Fisher, 1993). The Arizona Medicaid program is based on a primary care health promotion and disease prevention model. The program is very competitive in that managed care firms and health care providers have to compete for state contracts. Payment is based on a monthly per-person capitation fee. Participants in the program are guaranteed eligibility for Medicaid for 6 months once enrolled and are locked into a plan for at least i year (Fisher, 1993). With the tendency of participants to switch frequently from one managed care firm to another, this 1 year period helps to ensure continuity of care. One of the greatest successes of the program includes the mainstreaming of low-income patients into exiting health care delivery systems. Since 1989, the percentage of the Arizona Health Care Cost Containment System patients who received most of their care in emergency rooms dropped from 18% to 8%, while those seeing primary care physicians has jumped from 18% to 36% (Miller, 1995). Also, unlike some states' Medicaid managed care programs, Arizona also covers long-term care services, via the Arizona Long Term Care (Henger, 1995). Currently, Arizona is working on increasing the number of uninsured working poor individuals on its plan. Arizona will also be faced with the same federal budget cuts as other states with traditional Medicaid programs (Miller, 1995). TENNESSEE Tennessee is one of the most recent states to receive a Section 1115 Medicaid waiver. The program is entitled, TennCare and was approved November 1993 and commenced in
January 1, 1994. This program has received notoriety in America because of the unprecedented fashion in which Tennessee implemented a statewide, mandatory, fully capitated Medicaid managed care system with minimal public input (Henger, 1995). Similar to Arizona, the TennCare program has received recognition for providing health care services to Medicaid recipients and to more than 400,000 workingpoor, uninsured individuals and their families (Henger, 1995; Miller, 1995). TennCare has also been successful in mainstreaming lowincome patients into existing health care delivery systems. However, as reported by Miller (1995), some unscrupulous firms have rushed to sign up patients, and patients continue to complain that important procedures are not covered in the program. In addition, doctors believed that reimbursement rates were too low. Some of the managed care groups were 4 or 5 months delinquent in reimbursement to doctors and other health care providers (Miller, 1995). Miller (1995) stated that "provider loyalty is tenuous" at this point (Miller, 1995, p. 35). From a child health perspective, one of the greatest successes of the TennCare program for children, those under 21, includes the expansion of the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services and dental care. This expansion in health care for poor women and children was a direct result of Tennessee combining Medicaid funds with block grant funds such as the Maternal and Child Health Block Grant and other Title X family planning program monies. The funds were combined to expand coverage and enhance access under TennCare and eventually eliminate the need for other public health programs that utilize Maternal and Child Health Block Grant funds and Title X family planning funds (Henger, 1995). Regardless of the eligibility expansion of health care for poor, uninsured individuals in Tennessee, the TennCare program is in jeopardy because of current dissatisfaction expressed by patients and health care providers. As noted by Henger (1995), the future of the TennCare initiative not only depends on the leadership of the now-Republican control of the governorship and the legislature, but also on the impact of federal budget cuts in the Medicaid program.
THE USE OF MEDICAIDMANAGEDCARE
191
CONSEQUENCES OF STATEWIDE M E D I C A I D M A N A G E D CARE P R O G R A M S
H e n g e r (1995) stated that some of the adverse effects of the Medicaid Section 1115 waivers in Arizona, Tennessee and other waiver states include "denial of eligibility to some Medicaid eligibles, type of service coverage, access to current Medicaid providers, and quality care" (p. 8). Other issues that are of concern in Medicaid managed care programs include restriction in provider choice, gatekeeping, selective provider contracting, and provider incentives (Henger, 1995). Henger (1995) further noted that the Medicaid managed care waiver process includes identical concerns as managed care programs in general. Nurses, particularly advanced-practice nurses, may provide the bulk of care for the patients in the Medicaid waiver states. Advanced-practice nurses, however, in many states are not considered primary care health providers or the gatekeepers in these programs. In some states nurses are not eligible for reimbursement or provider
incentives to contain costs. This is an opportunity for nurses to play a unique role in the planning, implementation, and evaluation of statewide Medicaid managed care programs. According to the American Nurses Association (ANA) (1995), "Nurses may have greater opportunities to negotiate for state reimbursement for services, promote service coordination, increase program innovation, and target funding" (p. 7). On the other hand, the A N A (1995) cautioned that the Medicaid reimbursement currently received by some advance-practice nurses may be eliminated at the federal level. Federal Medicaid funds may be diminished, and minireal standards may not be defined to ensure that vulnerable populations continue to be covered. It is essential that health care professionals investigate the current status of Medicaid reform in their states. These cuts could not only adversely affect the health care status of poor women and children, but also serve as a barrier to the practice of advanced-practice nurses.
REFERENCES
American Nurses Association (1995). Revamping the medicaid program: Block grants to states. Capital Update, 13(22), 6-7. Fisher, R. (1993). Medicaid managed care: The next generation? National Health Policy Forum, 63L 2-9. Henger, R. (1995). Section 1115 medicaid waivers: Demonstrations or strategy for incremental reform. National Health Policy Forum, 662, 2-10.
Koppelman, J. (1995). Exploring the impact of Medicaid block grants and spending caps. National Health Policy Forum, 672, 2-9. Miller, M. (1995). The budget deal could fall apart over medicaid- and no wonder. The G.O.P.'s plan has alarmed many patients, doctors, and even some republicans. Time, 146(25), 29-36.