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Public Health and Managed Care In the past decade, there has been substantial growth in organized health care delivery systems in most parts of the United States. Managed care organizations, the most common form of these systems, can be defined as "any system that is under the management of a single entity that (1 ) insures members-either by itself or through an intermediary, (2) furnishes covered benefits through a defined network of participating providers, and (3) manages the health care practices of participating providers" (Rosenbaum and Richards, 1996~. Public health practice is sometimes thought of as separate from, or complementary to, the delivery of personal health services. A more helpful distinction is between personal health services and community interventions. Personal health services involve a one-to-one interaction between a provider and a patient (IOM, 1993~. Personal health services are delivered primarily by private- sector organizations, but in many communities, governmental health departments provide many of these services, especially for disadvantaged populations. Community interventions aim to alter the social or physical environment to change one or more health-related behaviors or to directly reduce the risk of causing a health problem. Community-based services are usually carried out by public health agencies, other government agencies, or community-based voluntary organizations. The provision of personal health services per se, even if they are delivered in the community rather than in health care settings, is not a community intervention. Outreach or community-based activities intended to improve access to personal health services or their utilization, however, are included. Public health agencies are often challenged to provide both types of services, but community organizations frequently help the public health agency 13

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14 HEALTHY COMMUNITIES achieve a public heal objective In a community (Box 1~. Private heal service organizations sometimes sponsor outreach activities such as mass screening arid heals fairs (at times win commercial Interests), with and without a public heals agency's involvement. BOX 1. Overcoming Barriers to Immunization: An Example for Public Health In 1992 the 16,000 members of the Florida District of Kiwanis International formed a partnership with the Department of Health and Rehabilitative Services' (HRS's) State Health Office Immunization Program to help increase immunization levels in the preschool population. As part of their "Young Children: Priority One" major initiative, the Florida District Kiwanis made an eight-year commitment to be lead volunteer agency assisting in implementing Florida's Immunization Action Plan. This flare provides objectives to raise the immunization rates of Florida's two-year-olds to 90% by the year 2000. At the time of the formation of the partnership, only 63% of Florida's two-year- olds were up to date with their immunizations. Since the HRS-Kiwar~is partnership was formed four years ago, the immunization levels have increased by 27%. The Kiwanis have donated many thousands of volunteer hours in immunization clinics and have organized coalitions, recruited other community groups, and purchased computer equipment, vans, and educational materials. With the Kiwanis's help, Florida's 67 county public health units have increased their clinic hours, opened new clinic sites, extended service times and added locations, arranged transportation services for low- income clients, and coordinated services with other agencies to reach more children. Because of this partnership, more of Florida's young children are protected against vaccine-preventable diseases now than at any other time in the state's history. The 1995 Survey of Immunization Levels in the two-year-old population indicated that an unprecedented 80% of Florida's two-year-olds are immunized. Much of the increase can be attributed to the Kiwanis's leadership in volunteer efforts. This partnership has helped reduce the dangers that exist when society fails to immunize its children. For example, the number of measles cases in Florida had nearly doubled, from 322 cases in 1989 to 603 cases in 1990. Two of the cases occurred among unvaccinated preschool children. In 1995, there were 14 confirmed measles cases in Florida. Through this partnership, the Kiwanis, the county public health units, and the immunization program office have set an example that demonstrates the positive benefits that result when a community-based partnership works together to donate time, energy, and resources to improve the health of Florida's children. SOURCE: Based on information provided by Charles Mahan, Dean of the University of South Florida College of Public Health (former director, Florida State Department of Health and Rehabilitative Services), 1996.

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PUBLIC HEALTH AND MANAGED CARE 15 An estimated 90 million insured Americans are enrolled in managed care plans, including more than 25% of Medicaid beneficiaries and 10% of Medicare beneficiaries (Rosenbaum and Richards, 19961. Most of the growth in enrollment has occurred in recent years. Between 1988 and 1993, the percentage of employees enrolled in a managed care plan increased from 29% to 51% (Gabel et al., 1994~. In the Medicaid program, the growth has been even more dramatic as states have requested waivers from the Health Care Financing Administration (HCFA) to shift their Medicaid populations into managed care arrangements. Between 1993 and 1994, the number of Medicaid beneficiaries in managed care increased by 63%, from 4.8 million to 7.8 million (Kaiser Commission, 1995~. The factors contributing to the growth in managed care are the rising costs of personal health care and an interest among employers to find ways to control providers and, therefore, to control costs (Rosenbaum and Richards, 1996~. States have also used managed care arrangements as a way of containing spiraling costs in the Medicaid program and of trying to improve access to care (Kaiser Commission, 1995~. STRENGTHS AND WEAKNESSES OF MANAGED CARE FOR PUBLIC HEALTH Managed care offers opportunities for public health (CDC and GHAA, n.d.; Baker et al., 1994; HRSA, n.d.) but it also poses challenges. In the discussions initiated by the Public Health Committee, proponents of managed care have argued that its goals and tools are consistent with public health. Many public health professionals, on the other hand, have also indicated concern about managed care organizations' motives and ability to deliver on Heir promises. The committee's view, as developed in this section, is that if the proper kinds of partnerships between managed care organizations and governmental public health departments are developed, managed care can indeed make an important contribution to improving the health of the public. Accountability, Responsibility, and Quality Because it is responsible for delivering care to a defined group of enrollees, managed care makes possible, for the first time, accountability in terms of quality of care for populations, including access to care and heals outcomes. This is possible because managed care organizations can monitor the health outcomes of enrollees and examine their use of services. However, this is not regularly done. Some managed care organizations, especially large staff-model managed care organizations, are using their data systems to track the health oftheir enrollees, but

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16 HEALTHY COMMUNITIES many managed care organizations do not collect the types of information needed for surveillance and epidemiologic studies. There have been a number of attempts to assess the quality of care offered by managed care organizations. The National Committee for Quality Assurance (NCQA), which accredits managed care organizations, has developed the Health Plan Employer Data and Information Set (HEDIS), a set of performance measures for managed care organizations designed to meet employers' and government purchasers' needs for information about the value of services they purchase and to systematize the measurement process (NCQA, 19939. The data systems maintained by some managed care organizations are an important tool for improving performance and maintaining accountability, and simply by having performance monitoring systems, these organizations compare favorably with fee-for-service delivery systems or indemnity insurance companies that typically have no data with which to monitor performance. The committee heard of instances in which a managed care organization's performance in terms of provision of preventive services, for example was criticized based on the organization's own data, with the implicit assumption that other providers do better. Such assumptions may well be incorrect and are unfair because they cannot be checked unless the other providers have appropriate data systems. Experience suggests that performance monitoring as a basis for punishing those who are not producing as expected is not an effective way to alter behavior and improve outcomes. Rather, performance monitoring should be used to encourage productive action and broad collaboration (Berwick, 1989; IOM, in press). Population Orientation and Prevention Managed care's responsibility for a defined population gives it an interest in promoting health and preventing disease in that population, which is the mission of public health. Both managed care organizations and governmental public health agencies have a philosophical emphasis on promoting health and preventing disease. Both address prevention and health promotion in a defined population. However, in actual practice, some managed care organizations seem more concerned about efficiency and controlling short-run costs than about prevention or the health status of their members. Governmental public health agencies have a geographic perspective and are accountable to the people within their jurisdiction while many managed care organizations focus on their current enrollees, an ever- changing group, who may only be a subset of the population. Committee discussions suggested that in the long term, it is important for managed care organizations to think more broadly and to promote health in the whole community because anyone may be their enrollee in the future (Box 2~. In a

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P UBLIC HEAL TH AND At4NA GED CARE 17 capitated system with limited turnover, some prevention activities might result In larger filture profit margins. Unlike public heals agencies, managed care organizations are primarily accountable to purchasers, subscribing employers, large groups of payers, and ultimately weir stockholders or trustees. As managed care organizations respond to public demands for accountability, more should find ways to measure the quality of services Hey provide. A focus on heal outcomes and prevention objectives, as some organizations which have adopted HEDIS and other performance measures have done, would help. BOX 2. Group Health Cooperative of Puget Sound Group Health Cooperative of Puget Sound is a large, nonprofit health maintenance organization (HMO) that was established in 1947. It has approximately 540,000 enrollees, of whom about 80,00090,000 are enrolled in the Medicare and Medicaid Basic Health Plan. The cooperative has been involved in community-based health for more than 50 years. Its public health focus grew out of 10 years of involvement with public health in community issues and priorities such as AIDS prevention. In 1992, Group Health adopted a vision statement that calls for delivery of quality health care to the whole community, not just its enrolled population. They also adopted a set of community service principles to recognize the work that Group Health had been doing in the community in the area of health promotion and disease prevention. They currently focus their attention on four areas: (1) childhood immunization, (2) the reduction of infant mortality, (3) health care for homeless families, and (4) the reduction and prevention of interpersonal violence. In their community-based programs, Group Health has gone beyond just providing immunization and preventive clinical services to issues that deal with changing social norms, such as violence and alcohol abuse. Group Health is also working with the State of Washington on surveillance issues to improve their performance measurements and develop more integrated information systems. Group Health considered several factors in implementing its community programs. Improving community health in general is expected to lead to improved health for the members of Group Health as well. Involvement in community-based programs also helps Group Health compete for contracts with large employer groups and with Medicaid and Medicare populations. In addition, community service programs help to encourage innovative approaches to providing services to the patient population. SOURCE: Based on a presentation by William Berry, director, Center for Health Promotion, Group Health Cooperative of Puget Sound, at the February 22, 1996, meeting of the Public Health Committee.

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18 HEALTHY COMMUNITIES Personal Health Services for Vulnerable Populations As managed care organizations enroll increasing numbers of people from disadvantaged groups, the biggest challenge for public health agencies is in the area of providing personal health services for poor and vulnerable populations. Public health agencies, primarily at the local level, have played an important role in providing health care services to both Medicaid-eligible and uninsured and underinsured population groups. For example, they provide maternal and child health services, sexually transmitted disease (STD) services, and tuberculosis services. For certain services, issues of expertise or confidentiality would suggest that public health agencies are the appropriate entities to continue to provide these services (Frieden et al., 1995; IOM 1996), so local public health agencies must maintain this capacity. As more states shift their Medicaid enrollees into managed care, public health agencies have the option of trying to obtain contracts with managed care organizations, but many are ill-equipped to compete for and negotiate with health plans (Lipson and Naierman, 1996~. Many issues of language, culture, tradition, class, race, and ethnicity need to be taken into account when providing services to especially vulnerable populations. Perhaps the most serious aspect of this problem is providing services to those who are covered by neither insurance nor Medicaid and who are especially vulnerable. As many cities and counties move to privatize public hospitals, which have traditionally served vulnerable populations, they will have to consider whether and how managed care organizations fill this role and how the delivery of care to the underinsured and uninsured will continue. Individuals who are eligible for Medicaid but unfamiliar with managed care organizations may not understand how to access needed services. A strategy of partnering with both governmental public health agencies and community-based organizations, which have the skills and experience needed to work effectively with these vulnerable populations, could strengthen the entire health system's response to the needs of these special populations. Many state Medicaid agencies do not have the management skills to monitor the performance of managed care organizations or to write appropriate contracts with these organizations (Box 3~. Competitive cost-cutting pressures coupled with vulnerable populations may result in opportunities for health care plans or providers to take advantage of poor patients. The problem of turnover of patient population as enrollees lose and regain their eligibility for Medicaid also contributes to serious problems of continuity of care.

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PUBLIC HEALTHAND MANAGED CARE 19 BOX 3. Medicaid Managed Care The move toward managed care for Medicaid patients offers promise for improving health outcomes arid solving potential problems. The promise is due to the shift inherent in managed care toward interest in the health of defined populations. This facilitates the use of public health assessment tools (e.g., epidemiology), strategic thinking about efficient ways to improve the health of populations, and opportunities to undertake activities focused on disease prevention. Problems that may occur during this transition to Medicaid managed care include (1) personal health services traditionally carried out by public health departments (i.e., prenatal care, immunization services, family planning arid sexually transmitted disease [STD] clinics, and Early and Periodic Screening, Diagnosis, arid Treatment [EPSDT]) will not be completely transferred to a managed care organization; (2) poor people who are eligible for Medicaid but are unfamiliar with managed care organizations may not understand how to access needed service; (3) marry state Medicaid agencies do not have the management skills to monitor the performance of managed care organizations or to write appropriate contracts with them; and (4) competitive cost-cutting pressures coupled with vulnerable populations and weak oversight may result in some unscrupulous health care providers talking advantage of poor patients. There is a growing realization that managed care organizations need the expertise and authority of public health agencies to undertake community-based interventions arid perform outreach services that are necessary for maintaining the health of the populations for which they are responsible. Public health services are also necessary in cases in which confidentiality is art issue, such as at STD or family planning clinics. Many public health professionals now provide personal health services, often in community-based categorical public health clinics. Such services are the type that managed care organizations should be able to handle, and therefore, once they are trasfemed, there will be less of a need for health professionals with the same skills in public health departments. There will be art increased need in both public health departments and managed care organizations for people with public health assessment skills arid health care management skills. SOURCE: Presentations to the Institute of Medicine (IOM) Board on Health Promotion arid Disease Prevention alla the National Research Council/IOM Board on Children arid Families in joint session on June 15, 1995. DEFINING ROLES AND RESPONSIBILITIES Given the challenges involved in the transition to managed care, it will be important for each community to define the roles and responsibilities of governmental public health agencies and managed care organizations in improving health. Depending on local conditions, public health agencies can play a variety of roles, from serving in an advisory or regulatory capacity to obtaining contracts to

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20 HEALTHY COMMUNITIES provide services. Managed care organizations can play a role In heal promotion and disease prevention, disease surveillance, and promoting quality. The IOM report The Hidden Epidemic: Confronting Sexually Transmitted Diseases (~1996~), illustrates He opportunities and problems In He relationship between heals department and managed care organizations in one area (Box 4~. Two recent reports (CDC and GHAA, n.d.; Joint Council, 1996) identify a varietal of approaches to collaboration. More generally, a new joint initiative of He American Medical Association and the American Public Heals Association is exploring new ways Hat medicine and public health can collaborate to Improve health and heals care In the United States (Reiser, 1996~. BOX 4. IOM Committee on the Prevention and Control of Sexually Transmitted Diseases (STDs) The Institute of Medicine (IOM) Committee on the Prevention and Control of STDs held a workshop on November 8, 1995, to examine the role of managed care in STD prevention and control. The national movement toward managed care coupled with limited public funds for health programs will have a significant impact on the delivery of services provided by public health agencies, especially those that involve many providers and intervention points such as STD prevention and control. There are many opportunities and challenges for managed care to address STD issues effectively. Strengths of managed care organizations that are particularly appropriate for this role include (1) a population-based focus (i.e., group and staff models track disease and health trends for a population), (2) the ability to coordinate and integrate STD services into primary care, and (3) accountability to purchasers of health services. Increasingly, managed care organizations are enrolling Medicaid populations whose health care used to be provided by local public health departments. In some states, Medicaid revenues have been a major source of funding for public health clinical services. The absence of the revenues becomes a problem for local health departments as well as for community-based health clinics that have been providing services. Nevertheless, local health departments report that many persons with health insurance continue to use public health clinics, local health department STD clinics, or other clinics outside of their health plan for STD-related services. ! OURCE: Presentation by Richard Brown, member of He IOM Committee on the Prevention and Control of STDs, at the February 22, 1996, meeting of the Public Health Committee; IOM (1996).

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PUBLIC HEALTH AND MANAGED CARE Roles for Public Health Agencies 21 With their potentially extensive knowledge of the community and its depth and breadth of experience in fields such as epidemiology and injury prevention, governmental public health agencies can play an important role with managed care organizations. The Future of Public Healths analysis implies that public health departments should work with managed care organizations, in the public interest, as part of their assessment and assurance mandate. Their role can include everything from offering advice about data and information systems, to developing training and education programs, even to fostering an advocacy role (Box 5~. In particular, governmental public health agencies can: provide information about the health status, risks, and determinants of communities served by managed care organizations, which is vital for raising awareness and setting priorities even if the jurisdictions of the health agencies do not correspond exactly to the population covered by the managed care organizations; participate with managed care organizations in planning and policy development related to voluntary collaborative actions or regulatory policy development; provide services, such as case management and enabling services, to managed care clients; and assist managed care organizations with assurance and oversight when working with state agencies with regulatory responsibility. In carrying out the assessment function, governmental public health agencies have a responsibility to monitor the health status of managed care enrollees, just as for others in their communities. Similarly, governmental agencies must ensure that members of managed care plans have access to quality health care, and assessment results provide relevant information to carry out this function. In conjunction with managed care, these two functions are clearly interrelated and have undeniable costs. Managed care organizations can and should participate in data preparation and analysis, and their data systems can facilitate these activities. If there are to be independent checks on managed care plans' performance, these functions must, at some level, involve public health or other governmental agencies.

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22 HEALTHY COMMUNITIES BOX 5. Minnesota Department of Health Minnesota has a relatively mature managed care market and has been licensing health maintenance organizations (HMOs) since the early 1970s. Most of the employer- insured population is enrolled in an HMO, except in rural areas. In 1994, approximately 80% of the Twin Cities population of 2.6 million was enrolled in HMOs, Preferred Provider Organizations, and self-funded employer plans. The State of Minnesota is a large employer that began coordinating health services for its employees in 1989 and joined the Buyers' Health Care Action Group (BHCAG) in 1995. BHCAG is a coalition of 23 area employers that developed a plan to provide direct contracting with competing health systems to develop health care systems that offer a full continuum of services; shared financial risk with purchasers; clinical and fiscal accountability; competition on the basis of quality, cost, and service; and commitment to community-wide quality improvement. In addition, Minnesota is in the process of transferring its Medicaid enrollees and Aid to Families with Dependent Children recipients into HMOs. It plans in the event that Congress enacts legislation that creates a block grant system for Medicaid to take a portion of Medicaid funds and set it aside for the public health infrastructure. Minnesota requires all HMOs to file annual action and collaboration plans. Action plans provide information to consumers, purchasers, and the community, as a first step toward greater accountability of health plan companies. This is intended to encourage local discussions of the health needs of the community. The Minnesota Department of Health is responsible for ensuring that the action plans submitted by managed care organizations are available for review by local organizations. Collaboration plans describe the actions that managed care organizations intend to take to achieve public health goals for their service areas. Action plan are to be jointly developed in collaboration with community health boards, regional coordinating boards, and other community organizations providing health services within the service area of the managed care organization. Managed care organizations are required to cover services out of network in the area of STDs, AIDS, tuberculosis, and family planning. Minnesota has a Community Health Services Act that provides the framework for state and local partnerships in that the state delegates most core public health functions to the local level. Community health boards submit a plan every year based upon the community's assessment of its needs. Funds are provided from the state to the community, based upon its needs assessment. Federal preventive health block grants are used to hold capacity-building conferences in specific areas such as immunization, STDs, alcohol and tobacco use, prenatal care, and violence. These conferences bring together representatives from local public health agencies, community health providers, managed care organizations, and other health service providers to analyze the community's needs assessment data. | OURCES: Based on a presentation by Anne Barry, commissioner of health of| Minnesota, at the February 22, 1996 meeting of the Public Health Committee; National Health Policy Forum, 1995; Minnesota Department of Health, 1 995a,b.

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PUBLIC HEALTH AND Al4NAGED CARE Roles for Managed Care Organizations 23 Managed care organizations can also take a more active role in improving the public's health. They can strengthen their health promotion and disease prevention activities by integrating public health programs and services with their primary health care activities and collaborating with public health agencies. With public health agencies and others, managed care organizations can advocate for measures to improve the public's health in the community. Managed care organizations can also develop their data systems to be useful for surveillance and epidemiologic research. Furthermore, they can continue to pave the way for improving the quality of health care (Box 6~. Showstack and colleagues (1996) have argued that managed care organizations have a social responsibility to "broaden their missions from the care of enrolled populations to include contributions to the health of the communities in which they serve." To guide managed care organizations and judge whether they are responsible, accountable, and responsive contributors to the community's health, Showstack and colleagues offer the following eight attributes of a socially responsible managed care system: enrolls a representative segment of the general population living in the system's geographic service area; 2. identifies and acts on opportunities for community health improvement; 3. participates in community-wide data networking and sharing; 4. publishes information regarding its financial performance and contribu- tions to its community; 5. includes the community, broadly defined, in the governance and advisory structures of the managed care system; 6. participates actively in health professions education programs; 7. collaborates meaningfully with academic health centers, health depart- ments, and other components ofthe public health infrastructure; and 8. advocates publicly for community health promotion and disease prevent . . . Ion pot .lcles. Local health deparDnents can organize as managed care providers and compete with private care plans for payer contracts or they can contract with managed care plans to provide specific services. Public health agencies can also assert their assurance function. They can play a strong regulatory role by setting standards, through licensing, and by monitoring the quality of services (Box 7~. These roles, while important, will take time, skill, and initiative to develop. Furthermore, some challenges will arise. For example, there is a potential conflict of interest if public health departments have managed care contracts and are also

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24 HEALTHY COMMUNITIES BOX 6. U.S. Healthcare U.S. Healthcare is a large, for-profit company that operates in the northeastern, middle Atlantic, and southeastern United States. It was founded 22 years ago in Pennsylvania and uses an independent physician association model, which means that each physician has a private practice and agrees by contract to accept U.S. Healthcare members. U.S. Healthcare has approximately 2.5 million members, of which 130,000 are Medicare members, 87,000 are Medicaid members, and 10,000 are covered under an uninsured children's program. Each year about 26% of the Medicaid population disenrolls. Only 3.6% of the Medicare population disenrolls, which makes it the most stable group. U.S. Healthcare's responsibility for public health cuts across many of its programs. These programs include women's health, domestic violence, primary care, and a program that incorporates nutritional screening and interventions into medical practice. Health educators at U.S. Healthcare developed off~ce-based programs to assist physicians working with patients who are enrolled in programs such as smoking cessation. For patient outreach, there are preventive care and immunization programs. Other public health programs include (1) Challenge 1996 to immunize the Medicare population against pneumococcal pneumonia; (2) cancer screening; (3) Medicaid's Early and Periodic Screening, Diagnosis, and Treatment; (4) an uninsured children's program; and (5) health education programs such as Healthy Breathing for smoking cessation, Healthy Lifestyles to decrease stress, Healthy Eating to assist in establishing healthy eating patterns, as well as avoiding obesity, and a fitness program. Case management is also a part of their health care plan. Teams of nurse case managers and social work case managers are formed depending upon the patient population. Health plan accountability is a major issue for the company, because its management believes it is important to make available performance measurement information that assesses the health plan's effectiveness in providing services and to identify areas for improvement. U.S. Healthcare has been involved in developing the Heath Plan Employer Data and Information Set (HEDIS) and has a representative serving on the Medicaid HEDIS committee and the Medicare HEDIS subcommittee. The Medicare Quality report card was developed by U.S. Healthcare in collaboration with its division, U.S. Quality Algorithms, because the Medicare HEDIS was still being developed at the time and there were no measurements that they could use for their Medicare beneficiary patient population. SOURCE: Based on a presentation by Sandy Harmon-Weiss, senior vice president and medical director, U.S. Healthcare, at the February 22, 1996, meeting of the Public Health Committee.

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PUBLIC HEALTH AND MANAGED CARE 25 BOX 7. San Diego and Los Angeles Counties' Experience with Public Health and Managed Care SAN DIEGO COUNTY DEPARTMENT OF HEALTH SERVICES The San Diego County Health Department established a Medi-Cal (California's Medicaid program) managed care system that integrates public health functions and services of a local health department with private-sector health plans. The Medi-Cal managed care contract stipulates that health plans will provide services to the Medicaid population and that the health department will administer the Medi-Cal program. The San Diego County Health Department will be responsible for oversight and enrollment of the program. The State Health Department will be responsible for setting local standards and requirements in the Medi-Cal managed care contracts with managed care organizations. The San Diego County Health Department will certify physicians who provide public health services for selected communicable diseases and early intervention for children and pregnant women. It will also determine eligibility, will inform patients of their rights and responsibilities in using health care resources, and will enroll people into health plans. The County Health Department will also select performance standards and provide oversight for quality improvement. Local monitoring of health indicators calculated from reports on all health care encounters will be performed for the Medi-Cal population. The County Health Department is also involved with providing public health services (immunizations, home visitation, and teaching responsible parenting) to a new child abuse center (administered by the Social Services Agency). The County Health Department has created partnerships with representatives of San Diego community organizations (e.g., the San Diego Chamber of Commerce, the San Diego Taxpayers Association, the Medical Society, the Hospital Council, the Welfare Rights Organization, and the Legal Aid Society). Representatives of these organizations meet with the health department staff about public health policies and programs for the community. In this way, the community is involved in the planning process of all new public health programs. LOS ANGELES COUNTY DEPARTMENT OF HEALTH SERVICES The Los Angeles County Department of Health Services is also in the process of implementing California's Medi-Cal managed care program. The department developed a memoranda of understanding (MOW) between the Public Health Programs and Services (PHPS) and the Personal Health Services (PHS) branches of the department regarding provision of clinical preventive services and other services provided by PHS that have or could have public health significance. The department also developed MOUs as a basis of negotiation between PHPS and the health maintenance organizations in Los Angeles County intending to participate in the state's Medi-Cal managed care program. The Continued

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26 BOX 7. Continued HEALTHY COMMUNITIES MOUs cover both administrative issues and program areas detailing specific tasks and responsibilities. The program areas included in the MOUs are family planning services, sexually transmitted diseases, HIV counseling and testing services, immunizations, children with special health care needs, prenatal care, child health and disability prevention programs, arid tuberculosis. SOURCES: Based on a presentation by Paul Simms, deputy director, Department of Health Services, Sari Diego County, at the February 22, 1996, meeting of the Public Health Committee; and on a presentation by James Haughton, senior health services policy advisor, County of Los Angeles Department of Health Services, at the October 27, 1995. meeting of the Public Health Committee. playing a regulatory role with managed care organizations. Despite these challenges, many state and local public health departments have moved forward to develop their abilities in the managed care marketplace. CONCLUSIONS There has been substantial growth in organized health care delivery systems (which include managed care organizations) in recent years, and these developments have important implications for the health of the public. In the discussions initiated by the Committee on Public Health, proponents of managed care have argued that its goals and tools are consistent with public health. Many public health professionals, on the other hand, have also indicated concerns about managed care organizations' motives and ability to deliver on their promises. The committee's view, as developed in this section, is that if the proper kinds of partnerships between managed care organizations and governmental public health depar~nents are developed, managed care can indeed make an important contribution to improving the health of the public. The proliferation of organized health care delivery systems, which continue to provide care for an increasing number of Americans, has made it possible in some locales for governmental public health agencies to assure the provision of personal health services entirely within the private sector. How many elements of public health services private organizations can or should subsume remains unclear, but they can be considerable. Providing care for the uninsured, however, remains a challenge; governmental public health departments will be ill prepared and inadequately funded to do so if no other personal services are being provided.

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PUBLIC HEALTHAND MANAGED CARE 27 To ensure that partnerships between governmental public health agencies and managed care organizations work effectively toward improving the health of the public, the committee reiterates The Future of Public Health recommendation that the function of local public health agencies should include "assurance that high-quality services, including personal health services, needed for the protection of public health in the community are available and accessible to all persons...." This assurance function can be carried out "by encouraging other entities (private or public sector), by requiring such actions through regulation, or by providing services directly." Public health agencies can only exercise this responsibility if they are adequately staffed, equipped, and funded for this complex and demanding task and have appropriate relationships with health service providers. These activities should not be undertaken at the expense of existing essential public health services. Particular concerns arise when health departments have a dual role: direct provision of personal health services to some people and regulating private entities providing similar services to others. To improve the efficiency of all health systems, health agencies and organized health delivery systems, in conjunction with other community stakeholders, must reach agreement on their proper roles and responsibilities, which will vary by locale. Successful models of the integration of public health and managed care and of joint approaches to policy development do exist and need to be studied and tested more broadly. Most public health agencies do not currently have the full statutory and regulatory authority to ensure the accountability of the organized health delivery systems to the public. In the current regulatory structure, health care delivery systems are open regulated by insurance commissions that focus on fiscal integrity rather than health. State Medicaid agencies, usually separate from public health departments, also typically focus on fiscal rather than medical accountability dimensions. Recognizing the clear need for financial oversight, governmental public health agencies should increase their ability to oversee health care providers, with the goal of becoming coequal partners with insurance regulators and state Medicaid agencies, to ensure that the public's health is addressed in the regulation of public and private health care delivery systems (see Box 8~. In many states, additional legislative authority will be needed before public health agencies can take on this role. This approach requires population- based health outcome and performance standards that can be monitored, and public health agencies should participate in the development and monitoring of these standards. The functions described in this report cannot be undertaken without properly trained professionals available to all communities. Thus, public health professionals and students enrolled in schools of public health should be trained to work with health services organizations to ensure quality personal

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28 HEALTHY COMMUNITIES health services in a community, as an essential element in providing for the health of the public. In addition, public health agencies should actively participate with organizations such as state health professions boards, medical schools, accrediting bodies in planning and policy development. BOX 8. Maryland's Alliance Between the Health Department and the Insurance Commissioner: An Example for Public Health Health care reform is not a new concept for the State of Maryland. Maryland's "all- payor system" ensures equity among financing mechanism and has not only held down hospital rates to far less than the national average, but has also maintained the high quality of Maryland's privatized hospital delivery system. For more than 20 years, Maryland's rate increases consistently have been less than the national average. In 1993, HB 1359 created a special insurance program for small businesses that presaged the current Kennedy-Kassebaum bill recently signed into law by President Clinton. Furthermore, Maryland's experience with managed care is vast, with penetration rates being third highest in the nation. With pride in its health care policy formulations, Maryland recognized the importance of creating a working relationship among the critical agencies that affect the statewide system. With statutory relationships defined in the general HMO statute (between the insurance commissioner and the secretary of the Department of Health and Mental Hygiene) early in 1995, a Memorandum of Agreement was signed by the insurance commissioner, the secretary, and the governor-appointed chairmen of the three major commissions responsible for health care regulations (Planning, Hospital Rate Review, and Ambulatory Care Rate and Information System). This memorandum designed a working relationship and led to the development of the Maryland Health Care Principles to which each of the organizations subscribe: Ensure every Marylander financial and clinical access to health care. Provide services at a reasonable cost. Maintain the high quality of Maryland's health care system. Improve the health status of individuals, families, and communities through an emphasis on prevention and early intervention services. Ensure public accountability through use of reporting criteria, such as health status outcomes and financial reports. Promote the sharing of public responsibility costs equitably. Ensure long-term financial viability. Promote equity among purchasers. In addition, during the 1996 legislative session, the relationship between the insurance commissioner and the health secretary was further strengthened by def~ninginterdependent roles for oversight of the Managed Care Organizations (MCOs) that will be responsible for providing care under the Medicaid waiver reform program.

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PUBLIC HEALTH AND MANAGED CARE 29 Applications prepared by the MCOs will be jointly reviewed. The Department of Health will assist the insurance commissioner in reviewing solvency claims for the new organizations and the commissioner will review the secretary's capitation rates for payment. A mechanism for joint review of complaints has also been established and a separate Memorandum of Understanding was signed in July 1996 to ensure a continuing relationship between the two organizations. It is precisely because Maryland understands the evolving health care system that this strategic alliance between public health and the insurance administration has been created. The need for common oversight to assure the organizational integrity from both the fiscal and quality of health services delivery perspective is necessary to assure optimal health care services delivery while maintaining the quality of the evolving health care enterprises for Maryland's employers and taxpayers. SOURCE: Based on information provided by Martin Wasserman, Secretary of the Maryland Department of Health and Mental Hygiene, 1996.

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