Lessons from HealthPASS and Oxford Health Plans

David Snow, Jr.

Managed care is a subject for which I have a tremendous passion and I apologize up front for any biases I may bring to the table, because I truly believe that managed health care is an outstanding vehicle for the delivery of care to vulnerable populations if the health plans are set up properly.

Although the topic tonight is managed care and all vulnerable populations, I am going to focus specifically on Medicaid recipients as a type of vulnerable population. I think the things we talk about here can also be applied to Medicare, but since I have a 15-minute time restriction, I will limit my comments to Medicaid and I will try to give you an overview. I hope that through the question and answer session later, we can go into greater detail.

I have organized my presentation into three key components. First, I am going to talk a little bit about my experiences operating a Medicaid managed care program in two urban settings, Philadelphia and New York City. Again, take my comments for what they are worth. They are oriented toward urban settings. Ask someone else about the application of Medicaid managed care programs in rural settings. That is not where my experience lies.

Next, I will outline for you some of the lessons I have learned from my Medicaid managed care experience over the past six years.



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Preparing for a Changing Healthcare Marketplace: Lessons from the Field Lessons from HealthPASS and Oxford Health Plans David Snow, Jr. Managed care is a subject for which I have a tremendous passion and I apologize up front for any biases I may bring to the table, because I truly believe that managed health care is an outstanding vehicle for the delivery of care to vulnerable populations if the health plans are set up properly. Although the topic tonight is managed care and all vulnerable populations, I am going to focus specifically on Medicaid recipients as a type of vulnerable population. I think the things we talk about here can also be applied to Medicare, but since I have a 15-minute time restriction, I will limit my comments to Medicaid and I will try to give you an overview. I hope that through the question and answer session later, we can go into greater detail. I have organized my presentation into three key components. First, I am going to talk a little bit about my experiences operating a Medicaid managed care program in two urban settings, Philadelphia and New York City. Again, take my comments for what they are worth. They are oriented toward urban settings. Ask someone else about the application of Medicaid managed care programs in rural settings. That is not where my experience lies. Next, I will outline for you some of the lessons I have learned from my Medicaid managed care experience over the past six years.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field Then, in closing, I will describe some of my concerns about health care reform as it is envisioned under Clinton's proposal. While the reform plan does not specifically deal with vulnerable populations at this time, there are important issues on the table for public policymakers as they grapple with alternative approaches. It is my hope that through such discussion we can avoid some serious pitfalls that could reverse the improvements to date in how we deliver health care to vulnerable populations. The Philadelphia HealthPASS Program, for those of you who are not aware of it, is an 82,000-member health insuring organization that is exempt through grandfather clause from the federal 75/25 rule. * HealthPASS serves Medicaid recipients only. HealthPASS has had a controversial history, mostly because it was one of the pioneers in the early eighties, taking aggressive action to move Medicaid recipients out of the traditional fee-for-service Medicaid system into a managed care environment. Many political and operational mistakes were made in the early eighties. However, today I consider the HealthPASS Program to be one of this nation's state-of-the-art programs. HealthPASS is a mandatory Medicaid managed care program in south and west Philadelphia. Traditional fee-for-service does not exist for Medicaid patients in the HealthPASS demonstration area. There are approximately 110,000 Medicaid recipients in the demonstration area, and there are three health plan options that a Medicaid recipient can choose: two commercial HMOs and the HealthPASS Program, which is a state-owned program managed by a private contractor. The HealthPASS Program is also the default HMO, meaning that if a Medicaid recipient does not voluntarily choose one of the two HMOs, they are automatically placed into the HealthPASS Program. The private contractor for the HealthPASS Program (which was Healthcare Management Alternatives or HMA when I was there) is at full risk. For those of you who have a preconceived notion that managed care is only successful if it skims the healthy population for membership, I should tell you that HealthPASS, because it was the default HMO, could not skim membership. By the way, I do not believe that HMOs * The 75/25 rule is a federal statute that states that any federally qualified HMO serving Medicaid patients must have at least a 25 percent private pay enrollment.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field skim the population either, but by definition, HealthPASS took all comers. HMA's Medicaid membership composition was 53 percent AFDC recipients, 8 percent SSI/aged, 14 percent SSI/disabled-blind, and 25 percent general assistance. As most of you know, when you enroll beyond the AFDC population, which is the healthiest of the four categories, you are enrolling sicker, far more vulnerable individuals. For example, within the general assistance population, HMA had 5,000 homeless individuals under their care. In New York City, my experience is a little different. I currently work for a company called Oxford Health Plans. Oxford is a commercial HMO with Medicare and Medicaid lines of business that were added within the past two years. Oxford currently has 255,000 members, of which 20,000 are Medicaid. Oxford has set up its Medicaid line of business as a totally separate and distinct cost center. That is extremely important if one is really going to make a difference when serving Medicaid recipients and if one is really going to be accountable. In New York, Oxford currently markets to Medicaid recipients in Brooklyn in two distinct program environments. Certain zip codes in Brooklyn are included in a state- and city-sponsored mandatory enrollment demonstration program. The remaining zip codes in Brooklyn are voluntary enrollment zones, where Oxford must hire sales representatives and aggressively go out and market. One spends a lot more money in a voluntary marketing environment. I personally think the mandatory approach is much more sensible; however, politically it is a very difficult thing to get approved by the Health Care Financing Administration (HCFA) at this point in time, what with the waivers and other requirements. Again, Oxford in New York is at full risk for serving the enrolled Medicaid population. In Philadelphia, HMA was paid 86 percent of fee-for-service to operate the program. That is because it was a mature program and had been operating for more than eight years. Both New York and Philadelphia implemented Medicaid managed care programs for five specific reasons: Rapidly increasing health care costs, Limited and decreasing access to services, Incentives for inefficiency, No focus on preventive care, and

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field Worsening health status of recipients. As regards lack of access, New York City Medicaid recipients could not get care from private practitioners anywhere because fee schedules had deteriorated so badly that an office visit was reimbursed at $12 and yet it cost the physicians more than $12 to collect the fee. As a result, recipients had to go to Medicaid mills, hospital emergency rooms, or hospital clinics, if they could go anyplace at all. Lack of access to preventive care drives costs upward owing to increased need for acute interventions later in the disease process. Tremendous incentives for inefficiency do exist in the fee-for-service Medicaid programs in most big cities. There is absolutely no focus on preventive care and, despite increasing expenditures in the Medicaid program, the health status of the population has been deteriorating in the fee-for-service programs. Tuberculosis is getting worse. AIDS is on the rise. Infant mortality is increasing, not decreasing. Pennsylvania and New York City felt it was very important, not only for cost efficiency but also for reasons of quality and access, to give Medicaid managed health care a chance. It is my personal opinion that all of the Medicaid managed care models out there today are better alternatives than the traditional fee-for-service system, across the board. States throughout the country are implementing various models of Medicaid managed care with outstanding results. In contrast to the fee-for-service system, with managed care one is able to: Foster more cost-efficient health care delivery, Increase access to appropriate services and ensure access to care, Foster continuity of care, Better control the costs of care without reducing benefits to Medicaid recipients, and Better assure that high-quality care is provided.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field FIGURE 1 The continuum of Medicaid managed care solutions. Having said that, I wish to point out that certain managed care models are better than others. There is really a continuum of managed care models. Let's look at Figure 1. As we travel out on the horizontal line, we see various types of managed care programs, starting from fee-for-service programs, which in this graph are the least cost-effective, moving to direct contracting, or the primary care case management model (e.g., KenPAC), continuing out to commercial HMOs, which manage the Medicaid population within the framework of their commercial population. Then farthest out on the line of effective managed care models is the specialized comprehensive program, whether it be a Medicaid-only managed care program or a commercial HMO that has isolated the Medicaid line of business and whose employees focus on the unique needs of the Medicaid population, giving them as much attention as others give their commercial population. I have consulted with a number of HMOs that merge Medicaid and commercial populations together in the same model, thinking that the needs of both populations are the same. Typically, the results have been disastrous. At best, they have been far less effective than health plans that tailor their programs to the unique needs of vulnerable populations.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field The best practices, the ones that are furthest out on that line, tailor their programs to meet the needs of Medicaid recipients. First of all, they are sensitive to the fact that there are all sorts of barriers, beyond the financial, that prevent Medicaid recipients from accessing care. Language is a big barrier that most fee-for-service programs do not deal with. Twenty-four hour, seven-day-a week translation service and multilingual staff for big-volume populations is critical. Materials printed in the appropriate language are absolutely essential. In addition, education levels are a barrier. Commercial HMOs that do not know the literacy levels of Medicaid recipients often hand out the commercial population literature to their Medicaid recipients, not recognizing or acknowledging that the material should be written at a third or fourth grade reading level if the material is to hit home. We have convened many focus groups on this and we learned that you completely miss your audience if you do not recognize their reading levels and cultural issues. One must recognize that, for generations, Medicaid recipients have used emergency rooms to access care. Basically, they have been persona non grata in the private health care system. We must make specific efforts to prove private care is available by performing outreach, pulling individuals into the system, so that they know they are welcome in settings other than emergency rooms and Medicaid mills. We must eliminate Medicaid mills so they are not even an option. The whole educational process is absolutely key to eliminating barriers. One must invest money up front to change behavior and get people to be comfortable with the system. Infrastructure is always a problem in the inner cities. There are not enough practices where the largest densities of Medicaid recipients live. So, even though you increase fee schedules and you improve the environment for physicians to practice, you often do not have enough physicians to meet the total demand that occurs when all of the Medicaid recipients are moved into a private managed care system. The best practices go out and seed practices in areas of need. They invest money in infrastructure. They purchase practices. They do what they have to do in order to make care available in the communities in which Medicaid recipients live. And that does not happen unless the health plan achieves critical mass, meaning at least 20,000 to 30,000 Medicaid recipients within the program.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field Transportation is another barrier. One must pay for transportation if the health plan wants the recipient to treat preventive health care as a priority. Lack of a social service orientation can diminish a health plan's effectiveness and create barriers to care. Social service activities are absolutely mandatory to serve Medicaid populations. For a Medicaid population, health care is not the top priority. Often, concern about having a roof over one's head, heating one's house, or putting food on the table for one's kids are priorities that make vaccinations and checkups seem unimportant. The only way to elevate consciousness regarding health status is to deal with some of these other high-priority items. So, effective managed care programs that link with community agencies and fund programs that deal with these traditionally non-health-care issues are the ones that ultimately save health care dollars, and in addition successfully elevate the quality of life and the health status of the vulnerable population they are serving. Programs I have been involved with have been very aggressive in the area of community outreach and health education. We cannot just pay physicians more and make them accessible and expect Medicaid recipients to change their lifestyles and patterns of behavior. We must physically identify vulnerable populations within a Medicaid program and pull them into the system. Some of the best practices of Medicaid managed care are as follows: Eliminate barriers to access, including: language barriers, educational barriers, cultural barriers, habitual access patterns, infrastructure, and transportation problems. Provide a social service (non-health-care) component.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field Provide extensive, tailored health education and community outreach, including: an infant mortality initiative, a lay home visitors program, school-based health centers, an immunization initiative, and an asthma initiative. Provide specially trained member service representatives who will be available 24 hours a day. Tailor quality assurance programs. Tailor case management programs. Apply extensive fraud and abuse prevention technology. Act as a community catalyst. A focused initiative, for example, includes the whole area of infant mortality. All women who are pregnant are identified and programs that bring them to an obstetrician in the first trimester are developed. In Philadelphia, we funded what we called the Lay Home Visitors Program, which basically was similar to the barefoot doctor concept in China, where physicians and nurses trained lay people. These lay people were culturally part of the community, were trusted, and could overcome the many barriers listed earlier. They would identify pregnant individuals in the program, so that they could be counseled about nutrition and about the importance of prenatal care in the first trimester. The lay people could also identify high-risk lifestyles and high-risk medical problems that should be addressed immediately. If I were to go into many of the communities I serve, I would not be trusted. I would not be listened to. In many cases, I would not be understood. You must identify and train people who are trusted within the community. A Lay Home Visitors Program is very expensive. A health plan cannot do it when it has a base of only 5,000 members, but as Medicaid managed care programs get larger, it is amazing what creative activities are going on out there in the country. Also amazing is the willingness of the private sector to invest in the health care

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field infrastructure of poor communities. These things are not feasible in the fee-for-service system. Another example of outreach initiatives we funded was the development of school-based health centers. In a middle school in Philadelphia 80 percent of the students were members of the HealthPASS Program. We saw tremendously high levels of teen pregnancy, substance abuse, and learning deficits as a result of violence in the community, unstable family structures, and other problems that made it very difficult for students to learn. This investment in school-based health will bring tremendous positive results to the west Philadelphia community. Figure 2 shows savings under Maxicare's management and HMA's management of the HealthPASS Program. These are savings to the state and federal government only. The sources of savings came from the following areas: Earlier intervention, Reduced emergency room utilization, Reduced pharmaceutical fraud and abuse, Use of appropriate alternative settings, and Reduced inpatient days.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field FIGURE 2 HealthPASS Savings

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field Table 1. Fee-for-Service Versus Managed Care, Observed Patient Days per Thousand Payer Category Fee-for-Service Managed Care Commercial Medicaid 495 360 AFDC 1,020 580 Medically Needy 6,200 3,400 SSI 5,400 2,800 HealthPASS 2,600 1,500 Table 1 shows that patient days per thousand are cut by half under a managed care structure. This is not so because care is being denied. It is so because we are actively intervening early in the health care process (preventively), so that those acute, expensive beds are not needed later in the disease process. A few final comments on President Clinton's reform plan and its impact on vulnerable populations are important. We all know that one of the thoughts is to integrate Medicaid recipients into health alliances. It is a great idea in that the Medicaid stigma will be removed across the country and physician payments would be improved across the country. Also this plan would eliminate many of the problems related to loss of Medicaid eligibility. However, I want to put several concerns on the table. If you cannot identify a Medicaid recipient, if you do not know out of the thousands of people in your system who is poor, it is very hard to tailor a program to meet the unique needs of vulnerable populations. We have already seen that Medicaid recipient health outcomes are not optimized when the recipients are treated as commercial enrollees. I am concerned that the best practices outlined earlier in this talk will be impossible to implement in a massive health alliance environment. Another concern is whether these massive health alliances will be able to determine who is serving vulnerable populations well and whether they will be able to measure performance in this area. If you do not know who a Medicaid recipient is, it is going to be hard to hold plans accountable for the populations they serve.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field patients in an HMO than in a fee-for-service program and yet you are offering services for a high-risk population at 86 percent of the fee-for-service rate. Help me understand how that happens. Ms. Wattman, I don't understand how you can take care of the kind of population for whom you need language translation services and the like in an IPA setting. And how do you know whether the individual provider in an IPA gives that 10 percent of patients the same kind of care that he or she gives the other 90 percent. And Dr. Delbanco, what is wrong with expanding your market to Lexington, to the affluent suburbs? If it expands the base of individuals who are relatively low risk and increases the patient population that is cared for and doesn't cost so much, doesn't that provide an environment in which there is a higher probability, rather than a lower probability, that your hospital will be able to take care of poor people? SNOW: In reference to the announcement that HCFA was not confident that managed care contained costs for Medicare, I do not believe that those comments accurately reflect either HCFA's opinion or the facts. I do know that when you move a population from one system to another, you are more likely, when you give people an option, to attract those people who are not currently ill because they are more willing to accept change. If I am currently ill and I am going to a certain doctor in a certain hospital, I am not going to go join somebody else and have my current care interrupted. So, it is true, in the early implementation of any program, you are likely to get a healthy population. Does that mean those other alternatives are not working? The answer is no, because clearly you give that health plan some time, and the population they attracted who were healthy when they enrolled will ultimately start looking like the overall population. It is a timing issue. A snapshot in time taken early in the evolution of Medicare managed care might give a skewed view of managed care's effectiveness. The conclusion one draws from this immature data is not necessarily “let's stop enrolling people into managed care.” My answer—and, again, I am biased—is move everybody over. Then skimming can't happen and I guarantee we will save money. I guarantee we will have an efficient system. WATTMAN: How can we deliver these services through an IPA model of close to 5,000 physicians? It is a challenge. We view our responsibility as a health plan as trying to remove the barriers so that

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field when the medical assistance patient presents at the physician's office or at the hospital, that patient presents as any other patient. So, that means we have arranged the transportation with a multilingual staff. We have arranged for the interpretative services. We are working on how we arrange for daycare. We are going to be hiring social workers on our staff so that our physicians can, in fact, access those social workers to deal with the multiplicity of needs that are presented when that individual comes into the office. So, we try to replicate at the plan level the kinds of services that are necessary. The question of how to guarantee that, in fact, all of our physicians are providing the kind of service or attention that is necessary to deal with those issues, I think, is at the heart of where we go with our network. We don't know what to do right now. We are seriously considering downsizing our network and working with those providers who want to serve the population. There is a real danger in doing that. When you start to lose the kind of access that has been part and parcel of our proposal, you start to develop the kind of two-tiered system that we are trying to move away from. But if, in fact, someone presents themselves at a point of service and they are not welcome, that is not exactly what we want to be doing in health care reform. So, how do we balance the issue of access, ensuring that everyone has a societal responsibility to care for all populations, with making sure that when someone interacts with the system there is somebody who can meet their needs? DELBANCO: I will tell you what is the problem with going to Lexington. I happen to live in Lexington, less than a mile away from our new facility. In fact, it is a sign of my basic masochistic tendencies that I don't practice there, because I drove into the hospital today in 6 degrees on the ice before I came down here. That was 17 miles, and I could have driven less than a mile. Many of my neighbors are now going to our Lexington practice. They love it. For some, it means they get a third opinion, instead of a second opinion, on trivial ills. For many, it means that instead of driving half an hour to get to Beth Israel, they are going right next door. We spent $7 million on a new building in the center of Lexington. You know what $7 million for a new center in Roxbury would have meant to people who have no access to care now? A heck of a lot!

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field QUESTION: Oliver Fein from Columbia University in New York and a Robert Wood Johnson Health Policy Fellow this year here in Washington. I was disturbed when David was talking. On the one hand, I saw myself as a young idealistic individual presenting a program and presenting it in its really pure, pristine form. I hope none of you here go away with the illusion that all managed care for Medicaid is, in fact, run the way David has described it. I just talked to my wife, a pediatrician who works in New York City in a Health and Hospitals neighborhood family care center in Brooklyn. In the last week she had three patients who were enrolled almost without their knowledge in some managed care outfit in Brooklyn, thereby severing their relationship to her and at the same time being unable to get any form of service during this period of time. They had been brought into a program with absolutely no understanding of what they were getting into. So, the whole process of enrollment in HMOs is an enormously complex thing. And some say that, indeed, it is not the plan's problem to market, as Lois said, but rather is handled by the welfare authorities, which I am sure is what occurs in New York City. I am not saying this is a fault of your program, but one should recognize that that is a major problem. John Eisenberg, now head of medicine at Georgetown University Medical School, used to always say to me that when he was in HealthPASS there were addicts whom he would see once a year, and it was delightful because he would get all the capitation payment for that patient and, yet the cost for that patient was extremely low. So, vulnerable populations have this paradox about them, that if one, in fact, delivers good service to them, they do cost more, but, indeed, frequently if you look at their use pattern, which sometimes is the best predictor actually of the cost of services from a risk assessment point of view, you will find that they underuse services and the result is that they are the low-cost group. This becomes very interesting in terms of the paradoxes and the problems that arise. To make the comparison to fee-for-service, it seems to me, is also a major problem. Tom knows this. To some degree, those of us in a fee-for-service environment at the Columbia Presbyterian Medical Center, I think, have in fact replicated and perhaps done just as well, if not better, than you have, David, in your managed care environment, in delivering services to a population, a vulnerable

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field population in Washington Heights, a group that is very sick that now does have 24-hour access to a physician. Our plan does provide continuity of care. There is nothing intrinsic to the fee-for-service system that necessarily says that you can't do that. It is just that you are correct, if you are going to compare managed care to Medicaid mills, managed care, I hope, will do better, although I am not sure in every instance. Finally, I would like to ask a few questions. David, I was wondering: in your outcome studies, did you control in any way for severity of illness, to make the argument that managed care, in fact, does all of the things that you described, particularly influence mortality? Did you control for, in fact, whether those two groups were equally at risk in terms of their health status? I suspect you didn't. Secondly, Lois, I was really interested in how we get managed care organizations to deal with the vulnerable populations if they are not paid more? You said that 10 percent of the population was enrolled in managed care, but they are 12 percent of your budget. So that already they are, indeed, costing more and I think there is a real dilemma if we go into health care reform and everything costs the same. Finally, for Tom, is it possible that one could think of risk adjusting along a parameter called socioeconomic status? Not necessarily health status, which of course would give us a much finer predictor, but if we risk adjusted by socioeconomic status, could we, in fact, make your administrators a little bit more interested in serving that population? SNOW: A couple of comments. I will answer your question, too, but one interesting point is that Columbia Presbyterian Medical Center in New York, as well as Columbia University, have enrolled all of their employees in Oxford. We have about 8,000 Columbia Presbyterian and University employees within our system. I think we have a very good relationship and we are currently in the process of discussing expansion into Harlem, working hand in hand with Columbia Presbyterian to do exactly the things we talked about. I am familiar with the implementation problems that were referred to in Brooklyn. There is a specific HMO that had its hand slapped by the City of New York because they enrolled without fully educating members, which may be an argument for the government controlling the enrollment process to make sure people are adequately informed of their choices.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field I will admit that in a voluntary enrollment situation, the incentives are a little bit dangerous. I prefer a mandatory situation. We make sure in our plan everyone is fully informed, but you cannot control that. Just as hospitals are different in how they handle opportunities to educate recipients, I think HMOs are different. You cannot lump them all in the same basket. As it relates to the study in Philadelphia, I think I mentioned that an independent third party did the study. This third parry was hired by HCFA and the Department of Public Welfare for the State of Pennsylvania as part of the ongoing quality audit of the HealthPASS program. The populations compared were identical. They lived in the three districts of Philadelphia not part of the mandatory demonstration program with environments identical to south and west Philadelphia. So, the acuity levels within those populations and the eligibility categories were compared apples to apples. And the results, although not scientific, can lead one to believe that over time, as people get used to a managed care system, they are better off. I think more should be done to study better the outcomes from care delivered through managed care entities, especially to vulnerable populations. No truly scientific studies have been done up to this point in time. Some of what we talk about is from gut reaction and some is from superficial fact. However, the report that I talked about was a fairly extensive study and I would be happy to show that to you if you would like. WATTMAN: I would just echo the comments on the marketing issue in the mandatory versus voluntary system. When the demonstration project was created in Minnesota in the mid-eighties, it was a voluntary program with a third of the population and we had a nightmare in terms of enrollment and selection issues. People were assigned to plans and did not know to which plan they had been assigned. Now, a mandatory situation controlled by the county is a much more reasonable approach. Everyone is much better informed. I have to say, though, that, back to the study, remember, about the refrigerator, this is how naive we were as a health plan. We were sending out all of our packets of materials. How many people here read their health care contracts? I am a lawyer. I write the health care contracts. And I don't read the health care contracts. If you get a contract an inch thick from your

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field health plan and you don't speak English, what do you do with it? You throw it out. So, at least we have progressed to the point where we have multiple languages on the envelope that says here is how you call for an interpreter. Let us know. But, to answer the second comment and then response to your question on plan participation. There is no accountability in a fee-for-service system because a fee-for-service system is not a system of care delivery. That is the fundamental difference between a managed care option and fee for service. Who is accountable in a fee-for-service system when the immunization rate is not achieved? The public? The public health infrastructure? Society? I know who is accountable in my plan. Our plan is held accountable when our immunization rates for the medical assistance population are not what they are supposed to be. The key difference between what we have today and a reformed system is that we are talking about systematized delivery of care, where there is accountability not only for costs, but for outcomes associated with delivering that care. In response to the question on how do we get other plans to all take their fair share: We have a statutory requirement in Minnesota that says all plans that take care of state employees, that participate in worker's compensation, that deal with the risk pool for the uninsurable—you name it—all plans that are hooked into the state have to provide health care coverage under the medical assistance program. We have not implemented it yet. So, our largest carrier in Minnesota—Blue Cross and Blue Shield—does not participate in medical assistance. Our staff model health plan—Group Health—which has about 580,000 enrollees, has 2,000 medical assistance enrollees. We are challenging our sister plans to say come on in. It is an interesting experience. We are saying there is a societal responsibility that we have as managed care organizations to care for this population, and if we believe in managed care, then managed care doesn't just work for the self-insured companies and the healthy populations. The tools of managed care can be used effectively to meet the needs of the vulnerable population. DELBANCO: I have to say, Lois, that, while I have written lots about the problems of fee-for-service populations and practices, in my practice, which is fee for service, we have high immunization rates and we clobber each other with regularity when we are not giving high

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field quality of care. So, I think there can be accountability in a fee-for-service system. A quick response to Dr. Fein about adjusting for socioeconomic mix: Yes, that is a possibility. In England, Brian Jarman, who was the first professor of primary care there, developed the “Jarman Index. ” He counted how many people live in an apartment, for example, as one measure of socioeconomic mix. Some of the capitation in England is based on that. There are many ways of doing it. We just have to get better at it, and we are still in the early stages. COMMENT: I am Joel Alpert, pediatrician, and I have spent most of my career in the inner city, the last 21 years at Boston City Hospital. What I am taking away from the passion of this evening, and I am going to put myself under that umbrella—it is a passionate debate—is that I wish we had more data to support some of the things that we are saying. I am impressed, for example, that you have recognized and found in your programs the special, enriched efforts that it takes to care for at-risk populations. We have no magic bullet for violence and teenage pregnancy and drugs and the other issues we are struggling with, and so long as we have families who have to choose between heat and eat, none of us are going to succeed. I do not take from this discussion that managed care is the answer, but rather the recognition of the special needs of the populations that we are caring for. They might be disabled. They might be ventilator-dependent children. And they are going to take extraordinary efforts on all of our parts. This leads me to the one major point I want to make, which is a plea for us not to loose sight in Washington, D.C., of the single-payer option, which, after all, will render the financing side of this more or less moot, as far as I am concerned, and will let us all then conduct our various demonstrations. Another comment about the managed care option and at-risk populations: based on my considerable experience, I don't know whether the number is 75 percent, 80 percent, or 85 percent of families in the inner city are every bit as middle class, and have the same aspirations, as every one of us sitting in this room, and we must not lose sight of that as we talk about the at-risk nature and the special populations that we are talking about.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field One last comment. I promised my mother something today because she said to me that she didn't want me to make this trip because she is 92 and critically ill. I have learned that the way to make a point in Washington these days is to tell an anecdote. My mother has a malignancy and the malignancy has spread widely. And because she has a malignancy, she has gone into hospice, and because she has gone into hospice, her care is paid for under Medicare. And she looks at the wonderful Connecticut hospice and she asks, “Who is paying for this?” And I am able to say to her, “You are. Because my dad worked his whole life, because of Social Security, because you are entitled to it.” But if she didn't have cancer and she were 92 years of age and she had to go into a nursing home because she could no longer live independently she would probably have to use all her life savings and end up impoverished and on Medicaid. That is a choice that no one in this country should have to make, forced into poverty by the nature of their illness. Here I am straying into a geriatric problem as a pediatrician, but after all, it is my mother and I am entitled to do that. And besides I told her that I would tell everyone here tonight that she was a great lady and she would feel good about the fact that I came down. But just think about that. The fact that she has a malignancy means that her dignity is preserved and she can be covered under Medicare, which comes closer to a single-payer system than anything else that we have in this country, only in this case only for those over 65. And I think we should keep that in consideration as we try and figure out in this country how we are to remove as many of the barriers to access as people need removed. QUESTION: My name is Janet O'Keefe. I am with the American Psychological Association. Most of what we have talked about tonight in terms of vulnerable populations has focused on the poor. There is another concern about managed care, a major concern for another type of vulnerable population. The previous speaker just alluded to them—they are people with disabilities. I am speaking not only of those people with mobility impairments, but also persons with low prevalence diseases about which general practitioners may not be as knowledgeable as specialists. There is a lot of concern among the disabled community about lack of access to specialists, lack of access to specialized services, very

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field low benefits for things like rehabilitation, durable medical equipment, and the long-term services that these people need. They feel that managed care, by definition, will not meet those needs because of a lot of problems. One is just the low level of basic benefits for these services, as well as the incentives within the capitation model not to refer to specialists. I would like it if you would address those concerns. SNOW: I can speak from both my Philadelphia and New York experiences. The benefits offered in both cases were far more than the fee-for-service Medicaid systems that the enrollees originally were in. For example, in New York they have what they call utilization thresholds, which cap the number of encounters you may have with a provider each year. You are allowed 12 office visits per year. If you are a home-relief recipient, you cannot get any more care after that. They have these artificial thresholds for accessing the system. When you join the managed care program, you have unlimited access to care. At Oxford, when a person is diagnosed with a catastrophic or chronic illness that clearly requires specialist care, we do not make our member go to a primary care doctor every single time they need to access that specialist. We link that member to a specialist and that specialist keeps the primary physician informed because, should that member develop an unrelated illness, you want the primary physician in the loop. We recognize that a “gatekeeper” under certain circumstances can be a barrier to care, especially for those who have difficulty with transportation. As far as mental health and disabilities are concerned, I know that, especially in the mental health and substance abuse community, there is tremendous fear of managed care. Mental health and substance abuse providers are advocating a carve out for their specific diagnoses, so that if you have a mental illness or a substance abuse problem, you no longer are in the managed care plan. You come back out and you go back to the old fee-for-service system. I am very much against that because that encourages lack of continuity. That flies in the face of what we are trying to accomplish. I think what needs to happen and what we are trying to do is that we work with those specialty groups that have unique capabilities so that we can, in fact, develop systems that augment people's access when they need it. That, really, when you look at Medicaid, is the name of the game: making sure you have access early, at the onset, because the real

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field value in the system is when you can avoid the unnecessary use of the most expensive settings within our health care system. I think that the groups you have talked about have been so concerned about managed care that they haven't sat down and tried very hard to work with the managed care providers. It is starting to change now because they see reform and realize it is time to change. QUESTION: I am going to piggyback on the same issue. I am Alan Bergman with the United Cerebral Palsy Association. As we have looked at the research and the data—and perhaps we didn't have yours—most of the managed care programs in this country that have operated under Medicaid specifically have excluded SSI recipients because the managed care system didn't have the research base, didn't have the data, didn't want to get into the risk business to see how much more on the average these folks were going to cost. So, I think we have great trepidation about saying that in one wholesale sweep on January 1, 1996, the typical person with chronic conditions or severe disabilities is going to get thrown into a system that has historically rejected it for a variety of reasons. And, also, that system has no database (and we are hearing that confirmed here) to say whether it is a capitated rate or a capitation with an extension beyond it for chronic conditions. Again, I don't know Oxford, but I know in a lot of the places that we have contacted, if we do not have a pediatric cardiologist available, if we do not have an orthopedist who specializes in pediatric orthopedics, if we do not have the allied health professions, the occupational therapists, the physical therapists, the speech language folks available, then we are going to potentially expose our constituency to some real disasters. WATTMAN: One quick comment with respect to that: I think the reason that we don't have some of the populations covered by managed care is not because of the managed care plans' unwillingness to do so, but because of the political tough fight that we have just heard talked about in the last couple minutes with respect to populations who do not want to be included in managed care organizations because of the concerns that have been articulated. From the standpoint of a managed care organization, we believe that we have some unique resources that can be brought to the table. I do agree with you however, that a learning and adjustment time is needed

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field for managed care organizations to respond in the most effective, high-quality way to the needs of the populations we have just been talking about. You heard me describe the evolutionary process that we went through with some of the special needs populations that we serve. That is a sound way to proceed. GROSSMAN: Thank you all for a very informative discussion period.