Capitated Medicaid Managed Care in a Rural Area: The Impact of Minnesota''s PMAP Program

CONTEXT: Although states have had difficulty extending Medicaid managed care (MMC) to rural areas, rural models of capitated MMC are expected to grow in response to new federal regulations and the serious budget problems facing nearly all states. As such, understanding the effects of capitated MMC in rural settings is important for policy considerations. PURPOSE: To evaluate the effects of capitated MMC on beneficiary access and use in rural Minnesota. METHODS: We took advantage of delays in the timing of the introduction of MMC across rural counties in Minnesota to estimate the effects of managed care on adults and children under Medicaid using a difference-in-differences framework. FINDINGS: We found that Minnesota's shift from fee-for-service Medicaid to MMC in its rural counties had little effect on access to health care for either adults or children. CONCLUSIONS: Because Minnesota reports that Medicaid costs under MMC are below expected costs under FFS Medicaid, it appears that the primary accomplishment of Minnesota's rural MMC initiative is one of cost savings: MMC provides the same access to care as FFS Medicaid, but at lower cost. With steep budget deficits in nearly all states, other states may want to consider Minnesota's rural MMC model as a mechanism for reducing their Medicaid costs.     

Does managed care affect the diffusion of psychotropic medications?

Newer technologies to treat many mental illnesses have shown substantial heterogeneity in diffusion rates across states. In this paper, I investigate whether variation in the level of managed care penetration is associated with changes in state-level diffusion of three newer classes of psychotropic medications in fee-for-service Medicaid programs from 1991 to 2005. Three different types of managed care programs are examined: capitated managed care, any type of managed care and behavioral health carve-outs. A fourth-order polynomial fixed effect regression model is used to model the diffusion path of newer antidepressant and antipsychotic medications controlling for time-varying state characteristics. Substantial differences are found in the diffusion paths by the degree of managed care use in each state Medicaid program. The largest effect is seen through spillover effects of capitated managed care programs; states with greater capitated managed care have greater initial shares of newer psychotropic medications. The influence of carve-outs and of all types of managed care combined on the diffusion path was modest.     

Effects of Medicaid managed care programs on health services access and use

OBJECTIVE: To estimate the effects of Medicaid managed care (MMC) programs on Medicaid enrollees' access to and use of health care services at the national level. DATA SOURCES/STUDY SETTING: 1991-1995 National Health Interview Surveys (NHIS) and a 1998 Urban Institute survey on state Medicaid managed care programs. STUDY DESIGN: Using multivariate regression models, we estimated the effect of living in a county with an MMC program on several access and use measures for nonelderly women who receive Medicaid through AFDC and child Medicaid recipients. We focus on mandatory programs and estimate separate effects for primary care case management (PCCM) programs, health maintenance organization (HMO) programs, and mixed PCCM/HMO programs, relative to fee-for-service (FFS) Medicaid. We control for individual and county characteristics, and state and year effects. DATA COLLECTION/EXTRACTION METHOD: This study uses pooled individual-level data from up to five years of the NHIS (1991-1995), linked to information on Medicaid managed care characteristics at the county level from the 1998 MMC survey. PRINCIPAL FINDINGS: We find virtually no effects of mandatory PCCM programs. For women, mandatory HMO programs reduce some types of non-emergency room (ER) use, and increase reported unmet need for medical care. The PCCM/HMO programs increase access, but had no effects on use. For children, mandatory HMO programs reduce ER visits, and increase the use of specialists. The PCCM/HMO programs reduce ER visits, while increasing other types of use and access. CONCLUSIONS: Mandatory PCCM/HMO programs improved access and utilization relative to traditional FFS Medicaid, primarily for children. Mandatory HMO programs caused some access problems for women.     

Quality oversight in medicaid primary care case management programs

As health maintenance organizations (HMOs) have curtailed participation in Medicaid, enrollment in primary care case management (PCCM) programs has grown. To examine state Medicaid agencies' monitoring of PCCM and HMO programs, we surveyed Medicaid agency directors of forty-six states and the District of Columbia. Agencies were less likely to collect performance data in PCCM programs than in HMO programs. Few PCCM programs reported performance results for the public or providers. Reporting states tended to emphasize utilization results over quality-measure results. Despite growing enrollment, PCCM programs appear less likely to use the quality-oversight strategies employed by Medicaid health plans.     

Medicaid's role in financing graduate medical education

Medicaid is the second-largest explicit payer of graduate medical education (GME). All but five states pay for GME ($2.4 billion in 1998). As states rapidly move their Medicaid populations to managed care, Medicaid support for GME is subject to change. Just sixteen states and the District of Columbia carve out Medicaid GME payments from capitated rates to managed care plans and rechannel them to teaching programs. Concurrently, managed care has motivated several states to distribute Medicaid GME funds in ways more explicitly accountable to the public. Ten states require that GME payments be directly linked to state policy goals intended to vary the distribution of or limit the health care workforce.     

Patient assessments of care and utilization in Medicaid managed care: PCCMs vs. PSOs

States are experimenting with different forms of delivery and financing to make Medicaid expenditures more predictable. Florida Medicaid is experimenting with a relatively new form of managed care, the provider-sponsored organization (PSO). Using the Donabedian structure-process-outcome (SPO) model, patient experiences and utilization in Florida PSOs and primary care case management (PCCM) were compared. The study analyzed Consumer Assessments of Healthcare Providers and Systems (CAHPS) data for 1,257 Medicaid beneficiaries in Florida in 2005. Results showed that beneficiaries in the PSOs had similar ratings and reports of care to those in the PCCM. However, PSOs had lower physician visits compared to the PCCM, indicating potential access barriers to primary care. The PSO's impact on emergency department (ED) utilization and specialist utilization was similar to that of the PCCM. The PSOs may lower costs, but the savings may be due to lower physician utilization rather than better case management. This is important since states that are experimenting with PSOs in their Medicaid programs are looking to these organizations to improve beneficiary care while lowering costs.     

Medicaid Managed Behavioral Health in Rural Areas

As of 2000, 21 states had implemented Medicaid managed behavioral health (MMBH) programs for a significant portion of their rural population. It is not clear how MMBH programs may work in rural areas since they are primarily designed to control mental health utilization. In rural areas the challenge is often to enhance service delivery, not to reduce it. MMBH programs may also affect important features of rural delivery systems, including access to care and coordination of primary care and specialty mental health providers. This article describes the implementation of MMBH programs in rural areas based on an inventory of states implementing MMBH programs in rural counties conducted between June 1999 and June 2000. The experience of MMBH programs in rural areas is also described based on case studies conducted in six states. All 21 states included the general Medicaid population (Temporary Assistance for Needy Families); 17 states included special Medicaid populations (adults with serious and persistent mental illness and children with serious emotional disturbances). Slightly less than half the states integrated (carved-in) behavioral health with physical health services in serving the general Medicaid population; only one state integrated these services for the special Medicaid population. Access to mental health care in rural areas had generally not been restricted. MMBH had little impact on the linkage between primary care and mental health. Local Managed Behavioral Health Organizations, formed by public sector entities and providers, played an increasingly important role in the evolution of MMBH.     

Medicaid Managed Care and Health Care for Children

Objective. Many states expanded their Medicaid managed care programs during the 1990s, causing concern about impacts on health care for affected populations. We investigate the relationship between Medicaid managed care enrollment and health care for children.
Data Sources and Measures. Repeated cross-sections of Medicaid-covered children under 18 years of age from the 1996/1997 and 1998/1999 Community Tracking Study Household Surveys ( n =2,602) matched to state-year CMS Medicaid managed care enrollment data. For each individual, we constructed measures of health care utilization (provider and emergency department visits, hospitalizations, surgeries); health care access (usual source of care, unmet medical needs, put-off needed care); and satisfaction (satisfaction overall, with doctor choice, and with last visit).
Study Design. Regression analysis of the relationship between within-state changes in Medicaid managed care enrollment rates and changes in mean utilization, access, and satisfaction measures for children covered by Medicaid, controlling for a range of potentially confounding factors.
Principal Findings. Increases in Medicaid health maintenance organization (HMO) enrollment are associated with less emergency room use, more outpatient visits, fewer hospitalizations, higher rates of reporting having put off care, and lower satisfaction with the most recent visit. Medicaid primary care case management (PCCM) plans are associated with increases in outpatient visits, but also with higher rates of reporting unmet medical needs, putting off care, and having no usual source of care.
Conclusions. Both Medicaid HMO and PCCM plans can have important impacts on health care utilization, access, and satisfaction. Some impacts may be positive (e.g., less ED use and more outpatient provider use), although concern about increasing challenges in access to care and satisfaction is also warranted.     

Effect of different types of Medicaid managed care on childhood immunization rates

Medicaid managed care can improve access to prevention services, such as immunization, for low-income children. The authors studied immunization rates for 7,356 children on Medicaid in three managed care programs: primary care case management (PCCM; n = 4,605), a voluntary HMO program (n = 851), and a mandatory HMO program (n = 1,900). Immunization rates (3:3:1 series) in PCCM (78%) exceeded rates in the voluntary HMO program (71%), which in turn exceeded those in the mandatory HMO program (67%). Adjusting for race, urban residence, and gender, compared to children in PCCM, children in the voluntary HMO program were less likely to complete the 3:3:1 series (OR = 0.75, CI = 0.63, 0.90), and children in the mandatory HMO program were even less likely to complete the series (OR = 0.59, CI = 0.51, 0.68). Results differed by individual HMOs. Monitoring of outcomes for all types of managed care by Medicaid agencies is imperative to assure better disease prevention for low-income children.     

Medicaid managed care and infant health

This paper provides estimates of the effects of Medicaid managed care on prenatal care adequacy and infant birthweights, using a census of 1994 Medicaid births in Wisconsin, where some Medicaid recipients were enrolled in fully capitated health maintenance organizations (HMOs) while others remained in traditional fee-for-service (FFS) systems. The results indicate that while Medicaid patients enrolled in managed care programs may be more likely to receive adequate prenatal care, birth outcomes under managed care are not significantly different from those under FFS financing systems. We conclude that cost savings generated by Wisconsin Medicaid managed care are not coming at the expense of maternity patients' or infants' welfare.     

Outsourcing administrative functions: service organization demonstrations and Florida Medicaid PCCM program costs

This study examines the cost implications of outsourcing Medicaid functions to the private sector. We examine the expenditures for enrollees in three Medicaid primary care case management (PCCM) demonstration projects compared to Florida's PCCM program from February 2002-February 2003. The RAND two-part model was used to analyze the medica expenditures for enrollees in each program. After adjusting for sociodemographic factors and the probability of service use, we found that all three demonstration projects reduced expenditures compared to the PCCM program. The implications from the study are that Medicaid programs may want to consider outsourcing PCCM functions after further studies examine the utilization experience for enrollees in these programs.     

An Examination of State Medicaid Financing Arrangements for Early Childhood Development Services

Objective: To determine the extent to which Medicaid finances early childhood development services, either on a capitated or fee-for-service basis, and to gauge future interest in financing such services. Methods: We analyzed state Medicaid managed care contracts in effect in April 1998 in 45 states using capitated arrangements for children at the end of 1997 to ascertain whether state Medicaid agencies financed any of six types of early childhood development services, including parent counseling, home visiting, comprehensive assessments, telephone advice lines, parent education classes, and case management. We also conducted structured telephone surveys with the same 45 states' Medicaid managed care directors. Results: Overall, state Medicaid agencies finance few early childhood development services on a capitated or fee-for-service basis. Case management was the most popular service to be paid for fee-for-service. Parent education was the most popular service required in managed care contracts. Parent counseling and telephone advice lines for information on child development or parenting issues were the services least likely to be reimbursed through either Medicaid financing mechanism. Conclusion: To date, Medicaid agencies generally have not required managed care plans to cover early childhood development services, nor have they paid for such services on a fee-for-service basis. However, 17 states expressed an interest in expanding early childhood development services, particularly home visiting, parent education, and telephone advice lines. Nonetheless, several challenges exist in expanding Medicaid financing, including the need for more evidence on cost-effectiveness and greater political support for promoting early childhood development.     

The Effect of Medicaid Managed Care on Rural Public Health Departments

Medicaid managed care programs are now operating in more than half of all rural counties in the United States. This study examines how rural health departments that have historically provided clinical services have responded to and been affected by the implementation of Medicaid managed care. To the extent that rural health departments have changed, the effect of this change on the health department and the rural populations that these providers serve is assessed. Site visits were made to four rural public health departments in each of five study states, for a total of 20 case studies. At each site, in-person interviews of county public health department directors were conducted using semistructured interview protocols. In recent years, the majority of health departments decreased or discontinued provision of well-child services, causing many to lose Medicaid revenue. None of the health departments appeared to be in danger of closing, but most lost income security. Medicaid managed care appeared to have increased the number of children with medical homes in the private sector, but adequacy and continuity of care remains an issue. Privatizing Medicaid managed care has not decreased fragmentation, as public health functions such as tracking and screening represent an important facet of comprehensive health services for poor rural populations.     

Readiness for Medicaid Managed Care Reform Initiatives: A Profile of Rural Family Physicians

Medicaid managed care is now an important factor in the financing of rural health care delivery. The participation of rural family physicians in Medicaid managed care is vital for the rural poor to access health services. This study examined 855 family physicians practicing in nonmetropolitan counties across the United States to determine their readiness to participate in Medicaid managed care. Physicians were asked about their experience with prepaid programs and the factors that would influence their participation in such a program. A shortage of health care providers and low reimbursement rates were most frequently cited as barriers to successful implementation. Physicians who had participated in prepaid programs in the past but were no longer participating had the most negative opinions about the potential for Medicaid managed care programs to enhance care for the poor in their communities. Overall, physicians reported potential for the program to improve access and quality of care, but they also expressed reservations about the financial and administrative effects on their practices. These results reveal that negative attitudes were associated with prepaid programs that failed to meet expectations, but physicians also expressed an optimism about the potential to serve the poor within a managed care model.     

Rural-Urban Differences in Health Risks, Resource Use and Expenditures Within Three State Medicaid Programs: Implications for Medicaid Managed Care

This study uses Medicaid claims data for income-eligible enrollees in California, Georgia and Mississippi to compare expenditures, resource usage and health risks between residents of rural and urban areas of the states. Resource use is measured using the Resource Based Relative Value Scale (RBRVS) system for professional services, hospital days and outpatient facility visits; it also is valued at private insurance reimbursement rates for the states. Health risks are measured using the diagnosis-based Adjusted Clinical Group system. Resource use is compared on a risk-adjusted basis with the use of urban Medicaid enrollees as the benchmark. We find that actual expenditures for rural care users are lower than for urban care users. However, because the proportion of Medicaid enrollees who use care is higher in rural than in urban areas in all three states, expenditures per rural enrollee are not consistently lower. Case mix is more resource intensive for rural compared to urban residents in all three states. Although resource usage is not systematically lower overall for rural enrollees, on a risk-adjusted basis they tend to use less hospital resources than urban enrollees. Capitation rates based on historical per enrollee expenditures would not appear to under-reimburse managed care organizations for the care of rural as opposed to urban residents in the study states.     

Medicaid managed care for mental health services in a rural state

State governments throughout the country increasingly have turned to managed care for their Medicaid programs, including mental health services. We used ethnographic methods and a review of legal documents and state monitoring data to examine the impact of Medicaid reform on mental health services in New Mexico, a rural state. New Mexico implemented Medicaid managed care for both physical and mental health services in 1997. The reform led to administrative burdens, payment problems, and stress and high turnover among providers. Restrictions on inpatient and residential treatment exacerbated access problems for Medicaid recipients. These facts indicate that in rural, medically underserved states, the advantages of managed care for cost control, access, and quality assurance may be diminished. Responding to the crisis in mental health services, the federal government terminated New Mexico's program but later reversed its decision after political changes at the national level. This contradictory response suggests that the federal government's oversight role warrants careful scrutiny by advocacy groups at the local and state levels.     

A Cost Analysis of the Iowa Medicaid Primary Care Case Management Program

Objective. To determine the cost savings attributable to the implementation and expansion of a primary care case management (PCCM) program on Medicaid costs per member in Iowa from 1989 to 1997.
Data Sources. Medicaid administrative data from Iowa aggregated at the county level.
Study Design. Longitudinal analysis of costs per member per month, analyzed by category of medical expense using weighted least squares. We compared the actual costs with the expected costs (in the absence of the PCCM program) to estimate cost savings attributable to the PCCM program.
Principal Findings. We estimated that the PCCM program was associated with a savings of $66 million to the state of Iowa over the study period. Medicaid expenses were 3.8 percent less than what they would have been in the absence of the PCCM program. Effects of the PCCM program appeared to grow stronger over time. Use of the PCCM program was associated with increases in outpatient care and pharmaceutical expenses, but a decrease in hospital and physician expenses.
Conclusions. Use of a Medicaid PCCM program was associated with substantial aggregate cost savings over an 8-year period, and this effect became stronger over time. Cost reductions appear to have been mediated by substituting outpatient care for inpatient care.     

Medicaid managed care policies affecting children with disabilities: 1995 and 1996

The authors present findings from a study of State Medicaid managed care enrollment and benefit policies in 1995 and 1996 for children with disabilities. During this time the number of States serving children through fully capitated plans grew by more than one-third, and enrollment of children receiving Supplemental Security Income (SSI) payments and children in subsidized foster care increased. Most States required plans to provide all mandatory and most optional Medicaid services. Although States have begun to make noticeable improvements in their contract language concerning medical necessity and the early and periodic screening, diagnosis, and treatment (EPSDT) benefit, overall State guidance in these areas remains weak.     

Children's service use during the transition to PCCM in two states

This study examines whether use of primary, preventive, or emergency care changed as primary care case management (PCCM) programs for children were implemented in Alabama and Georgia. Using claims data we track the same children over time, and control for geographic availability of Medicaid providers, which also changed over this period. A decline in use of all three types of care was found to be associated with PCCM implementation, with use of primary and preventive care falling below national averages and recommended use rates. Family difficulties in shifting to exclusive use of unfamiliar providers is the primary reason for the decline in use rates.