Quality-Focused Managed Care Purchasing Agreements

Managed Care Purchasing

A number of states have used Medicaid managed care contracting as an opportunity to require care coordination, care planning, or special services for CYSHCN. A few have implemented specialized managed care plans to serve CYSHCN.

Financial Incentives to Care for CYSHCN

Children and youth with special health care needs, by definition, use more health care services than other children, and thus are likely to incur greater health care expenditures. Under traditional managed care arrangements, health plans are paid an average amount per member, per month, and while this average payment is often adjusted for age, gender, and perhaps geographic location, it is not usually adjusted for dis­ability or special health needs. Medicaid programs have started to implement payment systems that are adjusted for health status, in part to acknowledge that plans that enroll a disproportionate number of CYSHCN will incur higher than average expenses.

At last count, ten states used health care utilization as a basis for risk-adjusted payments to their Medicaid managed care plans.  States use this strategy in an effort to pay plans appropriately for differences in health status that exist among the populations they serve (such as CYSHCN) without overpaying some and underpaying others.  Seven of these states use the Chronic Illness and Disability Payment System (CDPS); the other two use Ambulatory Care Groups (ACGs) to develop risk-adjusted payment rates, and one state (Minnesota) uses both, as shown in the table below. 

States Using Health-Based Payment Systems to Provide Risk-Adjusted Payments to Medicaid Managed Care Plans

States using the Chronic Illness and Disability Payment System (CDPS) or Ambulatory Care Groups (ACGs):

In addition, Massachusetts has developed special rates for medically complex foster children, and Arizona has implemented a different claims-based diagnostic risk adjustment system.

Another strategy to reduce financial risk for health plans that enroll high-cost individuals is re-insurance or risk pools. Pennsylvania’s Medicaid Program operates a risk pool for people with high-cost but low-incidence conditions, such as hemophilia, in the state’s managed care plans. The high-risk pool is financed with money withheld from health plan premium payments redistributed later to plans with enrollees whose costs exceed $75,000 annually.

Contractual Requirements

Some states use managed care contracting to establish new standards of care or new services for CYSHCN. New Mexico was the first state to incorporate a set of special­ized purchasing specifications for CYSHCN into their Medicaid managed care contracts. In 2001, the state began using a set of specifications drafted by George Washington University for the federal Maternal and Child Health Bureau and the Centers for Medicare and Medicaid. The specifica­tions include requirements to identify CYSHCN, conduct a health needs assessment for each child identified, and provide care coordination services.

Colorado has adopted similar requirements, including:

• Screening for special needs;

• Involving families in the development of individual treatment plans;

• Providing care coordination during care transitions;

• Continuing fee-for-service care for 60 days after health plan enrollment;

• Assuring out-of-network services if the health plan network does not have sufficient pediatric care capacity;

• Timely delivery of durable medical equipment.

Other states, including Oregon, Ohio, Pennsylvania, and Texas, have also incorporated some of these requirements into their Medicaid managed care contracts.

Virginia Medicaid requires it’s Managed Care Organizations (MCOs) to report if a newly enrolled CYSHCN sees his or her primary care physician within 90 days of enrollment.  If not, the MCO will communicate to the child/family, advising that the child is due for a visit.  The MCO provides a quarterly report to Medicaid identifying those children who have not been screened.  The MCO is responsible for establishing procedures to facilitate provider contact with medical management staff to explore alternative resources and services for enrollees with special health care needs.  Case managers serving children with special health care needs assist these enrollees in scheduling appointments, providing referrals to medical providers, identifying resources and other treatment options, and making contact with the enrollee or his family on a regular basis.