Way back in the eighties when I was Human Services Commissioner in New Jersey, I established something called the Garden State Health Plan (GSHP). It was the first — and I think the only — federally qualified state-run HMO for Medicaid beneficiaries. One goal of the GSHP was to reallocate the Medicaid dollar, giving more to primary care physicians who at the time were paid $9 for a general office visit, and a little less for ER visits and specialty care. At this it worked pretty well, about tripling reimbursements for primary care. The other goal was to manage care and produce better health outcomes and real savings to the Medicaid program. At this the plan failed. For the most part there were no mechanisms in place to actually manage care, and too many of the provider groups who showed up to accept the now increased payments were Medicaid mills that did not fit anyone’s description of ideal primary care case managers.
The GSHP was one of many attempts in the early days of Medicaid managed care to do primary care case management, all with slightly different structural and financial arrangements. Just before going to state government, I had helped establish some of the earliest models of Medicaid managed care through the Program for Prepaid Managed Health Care at the Robert Wood Johnson Foundation, which funded and evaluated 16 demonstration sites across the country and was cosponsored by the Health Care Financing Administration (HCFA) — now the Centers for Medicare and Medicaid Services(CMS) — and the National Governors Association. Medicaid managed care arrangements of the day varied widely; some involved for-profit providers, some major teaching centers, some (my favorites) knitted together community clinics in a variety of capitated and non-capitated arrangements. These efforts had some success in linking individuals to a usual source of care, but challenges in coordinating care and assuring quality of care remained.
Over time, Medicaid managed care continued to evolve as states expanded the role of managed care in their Medicaid programs. Today, a majority of families on Medicaid receive their health coverage through private managed care organizations. Through managed care and primary care case management arrangements, states have tried to secure better access to primary care and restrain costs, and many states are using managed care and pay-for-performance programs as vehicles for improving the quality of care.
Cut to present day. Just recently, our Medicaid Commission released a policy brief on Community Care of North Carolina (CCNC), an “enhanced medical home model” for Medicaid beneficiaries in North Carolina. As a veteran of Medicaid managed care efforts in an earlier era, it is tempting to see all this as just a new label for the same old thing. But it isn’t. The program in North Carolina is fundamentally different from the first generation Medicaid managed care programs in several key respects. Most importantly, CCNC has the capacity to actually manage care across both health and social service providers, and it focuses on the highest cost, highest need patients who account for a substantial share of spending. It relies on a community team approach to care that is structured around local networks of physicians and hospitals, as well as social service agencies and local health departments. Each patient has a primary physician who is responsible for coordinating his or her care and is on call 24/7. The program provides case managers — often a social worker or nurse — to manage and monitor care and comprehensive disease management programs for beneficiaries with chronic conditions such as asthma, diabetes, or congestive heart disease. Case managers and physicians utilize the latest best-practice guidelines, provide patient education, and coordinate services across providers. And, a broad range of data are collected through chart reviews and the analysis of claims data and fed back to health professionals to help assess performance and guide continuing program improvements. In short, the ability to actually manage care and do it for those who need it most is a jump to light speed beyond the earliest Medicaid managed care models.
Findings available to date suggest that these efforts have paid off in North Carolina. An evaluation of CCNC found that the state achieved savings relative to its prior arrangements estimated at $150 to $170 million for 2006, and a second evaluation documented savings for asthma and diabetes patients through reduced hospitalizations and ER visits. How well other states could replicate North Carolina’s efforts and whether they would achieve the same successes is not known, although some 31 states currently are trying out similar models in one form or other.
There are a few big messages to take away from this experience. One is the evidence that basic delivery changes have the potential to make a difference and produce savings. This is not cutting edge or controversial comparative effectiveness research or complex payment reform; it’s basic, sensible care management with the delivery system and data system changes necessary to make it happen. I suspect a number of variations on this approach could be effective depending on local circumstances. The key is providing a usual source of care and truly managing care for those who need it most, whether that is called “primary care case management” as it was 25 years ago, or an ”enhanced medical home” as it is in North Carolina. A second message is that Medicaid, often characterized in public debate like other public programs as lagging behind the private sector in its ability to innovate, can be a leader in demonstrating how to improve care and lower costs through delivery system changes. A third message is about the importance of focusing efforts on the sickest, highest cost patients, because they have the greatest health care needs and account for such a substantial share of health care spending. A small percentage of the U.S. population (5%) accounts for nearly half of health care spending. If we want to get a handle on increases in spending in Medicare and Medicaid, we will need to do more to reach out to and more effectively manage care for these high cost groups.
The North Carolina experience and the growing interest in similar initiatives in other states suggests that much more can be done both to improve the care of the sickest, highest cost patients and potentially drive down health care spending in public programs and for the nation overall. In a world where success stories in controlling health care costs (without sacrificing coverage or access) have been hard to find, this is important news.
