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EXQCU1IVQ Summery Rising numbers of uninsured Americans, an increasingly price-driven health care marketplace, and rapid growth in enrollment of Medicaid beneficiaries in managed care plans may have critical implications for the future viability of America's health care safety net that serves a large portion of low-income and uninsured Americans. Of particular concern is the future of "core" safety net providers, institutions and physicians with a high level of demonstrated commitment to caring for uninsured and underserved patients. A failure to support and maintain these core pro- viders could cause the entire safety net to collapse. Despite the nation's vast riches and enormous resources, certain popu- lations (referred to as "vulnerable populations" throughout this report) continue to fall outside the medical and economic mainstream and have little or no access to stable health care coverage. These populations include the 44 million Americans who are uninsured, low-income underinsured individuals, Medicaid beneficiaries, and patients with special health care needs who rely on safety net providers for their care. A large number of individuals who make up these groups are of minority and immigrant status and live in geographically or economically disadvantaged commu- nities. The relationship between health insurance and access to health care and medical outcomes has been well documented (American College of Physicians-American Society of Internal Medicine, 2000; Davis and Schoen, 1977~. Uninsured individuals are less likely to have a regular source of care, are more likely to report delay seeking care, and are more likely to report that they have not received needed care. Uninsured Ameri-

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2 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED cans may be up to three times more likely than privately insured indi- viduals to experience adverse health outcomes and four times as likely as insured patients to require both avoidable hospitalizations and emergency hospital care (American College of Physicians-American Society of Inter- nal Medicine, 2000~. In the absence of universal comprehensive coverage, the health care safety net has served as the default system for caring for many of the nation's uninsured and vulnerable populations. Until the nation addresses the underlying problems that make the health care safety net system necessary, it is essential that national, state, and local policy makers pro- tect and perhaps enhance the ability of these institutions and providers to carry out their missions. In many communities these providers uniquely offer care that addresses the clinical and social needs of vulnerable patients who remain outside the economic and medical mainstream. Failure to support these essential providers could have a devastating impact not only on the populations who depend on them for care but also on other providers that rely on the safety net to care for patients whom they are unable or unwilling to serve. To gain a better understanding of the potential impact of the current transformations in health care delivery, financing, and public policies on safety net providers, the U.S. Department of Health and Human Services' Health Resources and Services Administration asked the Institute of Medi- cine (IOM) to appoint a committee that would examine the impact of Medicaid managed care and other changes in health care coverage on the future integrity and viability of safety net providers operating primarily in ambulatory and primary care settings. A committee of 14 experts was selected to conduct the study. The committee was carefully formulated to reflect a balance of expertise par- ticularly relevant to its charge. The committee met five times between December 1997 and February 1999, and its deliberations and fact-finding activities included expert hearings and testimony, commissioned papers and data analyses, structured interviews, and site visits. These activities are described in greater detail in Chapter 1 of this report. Although the committee understood that the study's sponsor was particularly interested in the ambulatory and primary care providers that fall under its funding authority, the committee and sponsor recognized that an accurate assessment of the role and future viability of these pro- viders would have to encompass other major inpatient and community- based ambulatory care providers with demonstrated commitment to serv- ing the poor and uninsured. In carrying out its charge, the committee was asked to focus on the current challenges facing historical providers of care to the poor and

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EXECUTIVE SUMMARY 3 uninsured in terms of their future financial viability and survival. In dis- cussing its mandate, the committee was fully aware that this particular focus and perspective necessarily would exclude a broader exploration of alternative frameworks for providing the nation's poor and uninsured access to health care. In an environment of choice and competition, cer- tain subgroups of traditionally safety net-dependent patients may have new and perhaps better care options. Some analysts argue that the future viability of safety net providers should be of concern only to the extent that these providers specifically and measurably improve access to quality health care for individuals in need of their services. Additionally, although traditional safety net providers serve a disproportionate number of poor and uninsured patients, in the aggregate they provide only a portion of the uncompensated care provided in most communities (Cunningham and Tu, 1997; Lefkowitz and Todd, 1999~. This perspective could argue for a more global assessment of safety net services and their relative ade- quacy in a given community. Still others argue that policy and program efforts directed to poor and uninsured populations primarily should be targeted at broadening access to affordable insurance rather than subsi- dizing a designated class of providers. Although the committee sees some merit in all of these perspectives, its charge was to assess the health care safety net system as it exists today and to focus its deliberations on these major providers of care to poor and uninsured populations. In addition, over the course of its deliberation the committee read and heard convincing evidence that even within the con- text of insurance reform segments of America's most disadvantaged popu- lations will continue to rely on traditional safety net providers for their health care services, not only because these may be the only providers available and accessible, but also because many of these providers are uniquely organized and oriented to the special needs of low-income and uninsured populations. Although no commonly accepted definition of the safety net exists, for the purposes of this study, the IOM committee defines the "health care safety net" as follows: Those providers that organize and deliver a significant level of health care and other related services to uninsured, Medicaid, and other vul- nerable patients. In most communities there is a subset of the safety net that the com- mittee describes as "core safety net providers:" These providers have two distinguishing characteristics: (1) either by legal mandate or explicitly adopted mission they maintain an "open door," offering access to services for patients regardless of their ability

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4 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED to pay; and (2) a substantial share of their patient mix is uninsured, Medicaid, and other vulnerable patients. Core safety net providers typically include public hospital systems; federal, state, and locally supported community health centers (CHCs) or clinics (of which federally qualified health centers [FQHCs] are an impor- tant subset); and local health departments. In most communities several smaller special service providers (e.g., family planning clinics, school- based health programs, and Ryan White AIDS programs) also are consid- ered a part of the core safety net. In some communities teaching and community hospitals, private physicians, and ambulatory care sites with demonstrated commitment to serving the poor and uninsured fulfill the role of core safety net providers. The nation's health care safety net is not comprehensive, nor is it well integrated (Baxter and Mechanic, 1997~. Rather, it is a patchwork of insti- tutions, financing, and programs that vary dramatically across the country as a result of a broad range of economic, political, and structural factors. These factors include the strength and configuration of the local economy, the numbers and concentration of poor and uninsured individuals, the structure of the local tax base, the depth and breadth of a state's Medicaid eligibility and benefits, and the community's historic commitment to care for the uninsured and other vulnerable populations. Although it is difficult to generalize about the overall state of the nation's health care safety net given its local nature and attributes, in carrying out its charge the committee was particularly concerned about the state of the core safety net and its ability to continue to provide needed access to this nation's most disadvantaged and underserved populations. In many underserved inner-city and rural communities, core safety net providers may be the only available source of primary health care ser- vices for the vulnerable populations residing in these areas. Rising numbers of uninsured patients, coupled with changes in Medic- aid policies and cutbacks in public and other subsidies, are beginning to place America's health care safety net in a state of serious jeopardy. The loss of safety net providers could harm not only the uninsured and people with low incomes but also the community at large. For example, in many regions, large public teaching hospitals are often the only source of trauma care, burn units, and other specialized services that are vital but that tend to be unprofitable. THE THREAT TO CORE SAFETY NET PROVIDERS Core safety net providers serve a disproportionate share of low- income and uninsured patients. In 1997, public hospitals provided 28

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EXECUTIVE SUMMARY 5 percent of their services to uninsured patients, and an additional 33 per- cent were to Medicaid patients (National Association of Public Hospitals and Health Systems, 1999~. Similarly, more than 40 percent of patients who receive care from FQHCs are uninsured, whereas an additional 30 to 40 percent are Medicaid beneficiaries (Bureau of Primary Health Care, 1998). Over the years, Medicaid (and to a lesser extent Medicare) has become the financial underpinning of the safety net. Historically, Medicaid has provided the majority of insured patients for most safety net providers and has subsidized a substantial portion of care for the uninsured through such programs as disproportionate share hospital (DSH) payments and cost-based reimbursement for FQHCs. State and local government grants also represent an important but variable source of revenues for most safety net providers. A major cause for concern is the committee's finding that Medicaid as well as other revenues and subsidies that in the past have helped support care for uninsured and other vulnerable populations are becoming more restricted at the same time that the demand on the safety net is rising. The pressures on the safety net in many communities are the result of both intended and unintended consequences of the new health care market- place and recently adopted public policies. Although the full impact of these dynamics is still unfolding, the committee has identified several troubling trends. The number of uninsured people is growing. More than 44 million people, or 18 percent of the total nonelderly population, lack health care coverage, an increase of 11 million over the past decade. New studies forecast that, absent major reform, the ranks of the uninsured will continue to grow substantially over the foreseeable future (Custer and Ketsche, 1999~. Rising insurance costs relative to fam- ily income, the impact of welfare reform, and other factors have contrib- uted to these trends. As a result, both public hospitals and CHCs are seeing an increased number of uninsured patients. The direct and indirect subsidies that have helped finance un- compensated care are eroding. The Balanced Budget Act of 1997 (BBA) reduced some of the major direct public subsidies that have helped finance health care for indigent populations, including significant cuts in Medicaid DSH payments and the phaseout over 5 years of cost-based reimbursement for FQHCs. The recently passed Balanced Budget Refinement Act of 1999 places a 2-year moratorium on the scheduled repeal and extends the phaseout from 2003 to 2005. The 1999 Act also calls for a study to determine how CHCs

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6 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED should be paid in subsequent years (National Association of Community Health Centers, 1999~. The committee also read and heard evidence that in a number of states, state and local funds are also being cut or frozen, despite growing needs (Holahan et al., 1998; Norton and Lipson, 1998~. With the decline and planned phaseout of federal subsidies, local rev- enues become increasingly important to the future viability of safety net providers. In some communities a substantial proportion of care for the uninsured is delivered by private physicians and institutions that do not fall within the committee's definition of core safety net providers (Cunningham et al., 1999; Mann et al., 1997~. Although these patients may represent only a small part of these providers' total practice or business, in aggregate these providers deliver a significant amount of charity care. Historically, these providers have been able to cover most of their uncompensated care costs by shifting the costs to other payers. Recent data indicate that physicians who derive a major share of their practice revenues from managed care are less willing or able to provide charity care (Bindman et al., 1998; Cunningham et al., 1999~. This is placing even more pressure on an already strained safety net system. The rapid growth of Medicaid managed care is having many adverse effects. A number of core safety net providers operating in mandatory Medic- aid managed care environments are experiencing a decline in Medicaid revenues because of a reduction in the absolute numbers of Medicaid beneficiaries, the diversion of some Medicaid beneficiaries to other pro- viders, and lower payments by Medicaid managed care plans (Lefkowitz and Todd, 1999~. Competition for market share and downward pressure on prices by private payers have made Medicaid patients relatively more desirable to providers that in the past have not been willing to serve this population, shifting some Medicaid patients away from traditional pro- viders. The committee heard extensive evidence that these factors are challenging the continuing ability of some safety net providers to balance the need to maintain a financial margin and pursue their mission of pro- viding care to the uninsured. In the past, safety net providers have served two major groups of poor patients: the uninsured and those on Medicaid. Over the years these two groups have become inexorably linked both because of the transient nature of Medicaid eligibility and because other providers could not or would not serve them. Although they were not originally intended to subsidize care for the uninsured, Medicaid revenues have helped core safety net providers defray some of the overhead and infrastructure costs,

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EXECUTIVE SUMMARY freeing limited grant funds and other revenues to be directed more to supporting care for the uninsured. Under the traditional Medicaid program, beneficiaries were respon- sible for finding a willing provider to care for them. In many communi- ties, Medicaid-participating providers were few and far between and safety net providers were the only source of care for the poor. Today, many states are offering Medicaid beneficiaries the opportunity to enroll in private managed care plans with the promise of more choice of providers and facilities. Enhanced choice of quality providers is desirable as a matter of equity and can create incentives for all providers to improve their performance. At the same time, however, the shift of Medicaid patients away from safety net providers combined with the growing number of uninsured people may have the effect of destabilizing an already fragile safety net. The categorical and episodic nature of Medicaid eligibility means that individuals tend to cycle on and off insurance, often with long spells of no insurance. Under the traditional Medicaid program, low-income indi- viduals and families who lost Medicaid coverage would continue to see safety net providers without much interruption. Private managed care organizations have no legal responsibility or mission to continue to sup- port the care of patients when they become uninsured. The committee is concerned that these new trends not only undermine the financial viability of core safety net providers but also impair the continuity of care for these patients. Although managed care has been shown to improve access to pri- mary care in some communities, Medicaid managed care appears to have major differences from commercial managed care. Compared with pri- vately insured persons, Medicaid beneficiaries tend to be far more vulner- able, their needs more diverse, and their experience with and capacity for exercising choice more limited. They may also lack the resources to go "out of plan" if they are dissatisfied with their care. In addition, non- medical services of special importance to vulnerable populations (e.g., enabling services such as translation services, transportation to clinic visits, and the provision of child care services, and outreach) may not be part of a managed care contract or amenable to a managed care infra- structure. Procedures that facilitate ease of beneficiary enrollment and the exercise of choice, together with adequate oversight of plan performance, take on special importance for this population. Unfortunately, many of these efforts are in a fledgling stage and vary widely from state to state. During the course of its deliberations, the committee was struck by the complexity and variations of local safety net systems, their various dynamics and financial circumstances, and the lack of sufficient and com-

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8 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED parable data that can be used to reach with confidence empirical conclu- sions in certain areas in this period of ongoing evolution. These observa- tions were reinforced by a number of articles, evaluations, and research papers that highlighted the promise and problems of Medicaid managed care in a more competitive, performance-based environment. In most cases, these studies concluded that the promise has not yet been fully realized and that the problems, although worrisome, have not yet reached . . . crisis proportions. In summary, the committee finds that core safety net providers in most communities are experiencing the adverse effects of many forces. The safety net has historically functioned in a precarious environment, surviving through many shifts in the economy, in policy, and in funding. Today, however, the convergence of new and powerful dynamics the growth of mandated Medicaid managed care, the retrenchment or elimi- nation of key direct and indirect subsidies that help finance charity care, and the growth in the number of uninsured Americans is beginning to place unprecedented strain on the health care safety net in parts of the country. These dynamics and their potential impact on access to care for the nation's uninsured and most disadvantaged populations call for more concerted public policy attention and concrete action. In light of these considerations, the committee offers the following findings and recom- mendations (described in greater detail in Chapter 7 of this report): MAJOR FINDINGS Finding 1. The shift to Medicaid managed care can have adverse effects on core safety net providers and the uninsured and other vulnerable populations who rely on them for care. These dynam- ics demand greater attention and scrutiny by policy leaders and administrative agencies at the federal, state, and local levels. Finding 2. Managed care principles offer significant potential for improved health care for Medicaid patients, but implementation problems can undermine this potential. Finding 3. The financial viability of core safety net providers is even more at risk today than in the past because of the combined effects of three major dynamics: (1) the rising number of un- insured individuals; (2) the full impact of mandated Medicaid managed care in a more competitive health care marketplace; and (3) the erosion and uncertainty of major direct and indirect subsi- dies that have helped support safety net functions.

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EXECUTIVE SUMMARY Finding 4. The patchwork organization and the patchwork fund- ing of the safety net vary widely from community to community, and the availability of care for the uninsured and other vulner- able populations increasingly depends on where they live. Finding 5. The committee found that most safety net providers have thus far been able to adapt to the changing environment. Even for these providers, however, the stresses of these changes have made it increasingly difficult for them to maintain their mis- sions while protecting their financial margins. In addition, the full consequences of changing market forces, increases in the number of uninsured, and reduced levels of reimbursement have not yet been felt by these providers in some communities. The committee further observed that the current capacity for monitor- ing the status of safety net providers is inadequate for providing timely and systematic evidence about the effects of these forces. RECOMMENDATIONS Recommendation 1. Federal and state policy makers should explicitly take into account and address the full impact (both intended and unintended) of changes in Medicaid policies on the viability of safety net providers and the populations they serve. 9 In making this recommendation, the committee believes that the fol- lowing issues need heightened public policy attention: failure to take into consideration the impact on safety net providers of changes in Medicaid policy could have a significant negative effect on the ability of these providers to continue their mission to serve the un- insured population, particularly those who move back and forth between being eligible for Medicaid and being uninsured; the adequacy and fairness of Medicaid managed care rates; the erosion of the Medicaid patient base and the financial stability of core safety net providers that must continue to care for the uninsured population; the declining ability or willingness of non-core safety net providers to provide care for the uninsured population; and the current instability of the Medicaid managed care market includ- ing the rapid entry and exit of plans and the impact of this churning of program beneficiaries.

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AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED Recommendation 2. All federal programs and policies targeted to support the safety net and the populations it serves should be reviewed for their effectiveness in meeting the needs of the uninsured. Major new forces have altered the financing and delivery of health care services, including the move to managed care by both private and public payers, the separation of care for Medicaid patients from care for uninsured individuals, the erosion and retrenchment of direct and indi- rect subsidies that have helped provide care for those without coverage, and the increasing concentration of care for the uninsured population among fewer providers. These dynamics call for a careful review of pro- grams and policies that were designed to improve access to care for vul- nerable populations and support the providers that serve them to make sure that that these programs are still effectively targeted to meet their original objectives. The committee believes that such an analysis is espe- cially important given the growing number of uninsured Americans and the declining ability to meet their health care needs. Federal health care programs that provide direct or indirect support for safety net providers and for services for vulnerable populations should be reviewed and modi- fied to ensure that any funding allocation formula specifies explicit crite- ria for the delivery of services to the uninsured population as a basis for support. Eligibility for Medicaid and Medicare DSH funds should also be reexamined to include a greater focus on the level and share of services for the uninsured. Although the committee believes strongly that no funds should be diverted from the core safety net, any funds that become avail- able as a result of this reexamination should be distributed in a manner that ensures that providers of both ambulatory and inpatient care are eligible to receive support. Recommendation 3. The committee recommends that concerted efforts be directed to improving this nation's capacity and abil- ity to monitor the changing structure, capacity, and financial stability of the safety net to meet the health care needs of the uninsured and other vulnerable populations. The committee believes that the fragility of local safety nets has the potential to become a national crisis, and therefore, it calls for stronger federal tracking, direction, and targeted direct support. At this time, no single entity in the federal government has the responsibility for monitor- ing and tracking the status of America's health care safety net and its ability to meet the needs of those who rely on its services. Various agen- cies have responsibility for programs and policies that affect one part of

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EXECUTIVE SUMMARY 11 the safety net delivery system (e.g., the Health Resources and Services Administration, the Centers for Disease Control and Prevention, the Sub- stance Abuse and Mental Health Services Administration, the Health Care Financing Administration, the Head Start program, the Indian Health Service, and the Departments of Veterans Affairs, Defense, Agriculture, and Housing and Urban Development), but no comprehensive, coordi- nated tracking and reporting capability exists. Although it acknowledges the appropriate roles and responsibilities of the various agencies and the benefits of state and local innovations, the committee believes that such a tracking capability could promote public accountability, as well as a more coordinated approach to data collection, technical assistance, and the application and dissemination of best practices. A number of organizational settings could be considered for the place- ment of an enhanced safety net tracking and monitoring activity, includ- ing an existing agency, department, or program, or a newly established entity. Although the committee elected not to come to a final decision on where such an entity could be placed, it did discuss and identify the major organizational attributes that would be needed to enable a safety net oversight entity to successfully carry out its mission. The committee strongly believes that such an entity should be independent; organized as an ongoing activity with dedicated staff; nonpartisan in its membership; and include a range of expertise required to carry out its charge. Such an oversight body would affect a number of state and local entities and would cut across several federal agencies. In identifying these attributes the committee viewed with favor an organization like the Medical Pay- ment Advisory Commission (MedPAC) with its mandate to report directly to Congress. Alternatively, the oversight body could reside in the execu- tive branch at a Departmental level. As an example of the executive branch model, the committee was impressed with the work and impact of the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry. However, the Quality Commission had a limited term, consistent with its mandate to produce recommendations for action and implementation by other parts of the federal government and the private sector. The committee's proposed tracking and monitor- ing activity would require an ongoing term of operation, since its major function would be to assess, monitor, and report on the status of America's health care safety net over time. The committee in its deliberations referred to the monitoring and oversight entity as the Safety Net Organizations and Patient Advisory Commission (SNOPAC). To carry out its mission, the committee recommends that the initial activities of a safety net oversight entity include the following: monitor the major safety net funding programs (e.g., Medicaid, the

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12 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED State Children's Health Insurance Program [SCHIP], Title V, FQHCs, and the various government DSH payment plans) to document and analyze the effects of changes in these programs on the safety net and the health of vulnerable populations; track the impact of the BBA of 1997 and other forces on the capacity of other key providers in the safety net system to continue their sunnort- ive roles in the core safety net system; --r r monitor existing data sets to assess the status of the safety net and health outcomes for vulnerable populations; wherever possible, link and integrate the existing data systems to enhance their current ability and to track changes in the status of the safety net and health outcomes for vulnerable populations; support the development of new data systems where existing data are insufficient or inadequate; establish an early-warning system to identify impending failures of safety net systems and providers; provide accurate and timely information to federal, state, and local policy makers on the factors that led to the failures and the projected consequences of such failures; help monitor the transition of the population receiving Supple- mental Security Income into Medicaid managed care including careful review of the degree to which safety net-based health plans have the capacity (e.g., case management and management information system infrastructure) to provide quality managed care services to this popula- tion and the degree to which these plans may be overburdened by adverse selection; and identify and disseminate best practices for more effective applica- tion of the lessons that have been learned. Recommendation 4. Given the growing number of uninsured people, the adverse effects of Medicaid managed care on safety net provider revenues, and the absence of concerted public poli- cies directed at increasing the rate of insurance coverage, the committee believes that a new targeted federal initiative should be established to help support core safety net providers that care for a disproportionate number of uninsured and other vul- nerable people. Funding would be in the form of competitive three-year grants. Grants will vary in size, based on the scope of the project. Sources of financing could include funds available from the federal budget surplus and unspent funds from SCHIP and other insurance expansion programs. Although the committee projects such a new initiative may require a minimum of

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EXECUTIVE SUMMARY 13 $2.5 billion ranging over five years, the specific size and scope of this program should be determined by the administration and the U.S. Con- gress and should be modified based on an assessment of the parameters of the problem by the safety net oversight entity. These assessments should be an ongoing responsibility of the safety net oversight entity. The following principles should govern the distribution of these funds: Because the committee recognizes the challenges of delivering co- ordinated, seamless care for the poor uninsured and other vulnerable individuals at a time when the number of such people is increasing, the new initiative should concentrate on both the infrastructure for such care and subsidies of the care itself. Multiple models could be funded under this initiative, mirroring the multiple models of safety net arrangements in the various states and local communities. For example, in some areas a large safety net hospital could take the lead and join with other providers, including community-based clinics. A state or local government could stimulate cooperative efforts in other areas, participating with its own service-delivery capacity. In still others, coalitions of ambulatory care pro- viders, such as CHCs allied with local private physicians, could form and undertake the initiative. Funds could be used for infrastructure improvements (e.g., for equipment, rehabilitation of unattractive and inefficient buildings, and management information systems) or to help defray costs or support items and activities such as legal and other costs related to establishment of the network (in ways to avoid charges of antitrust and fraud and abuse), improvements in quality of care (e.g., patient tracking systems, re- engineering, and programs targeted to high-risk patients), and, where needed, the health care itself. Funds would be available to communities that demonstrate the potential capacity to deliver comprehensive services, to track patients and their outcomes as they move through the system, and to provide appro- priate outreach and marketing efforts to reach patients with special needs. The allocations would specifically reward initiatives with demonstrated commitment and capacity to improve access and health outcomes for poor uninsured individuals in the community. Continuation of funding would be based upon ongoing satisfactory performance and accountability. Eligibility for funding would include a maintenance of effort requirement with documentation that the new funding would supple- ment and not replace state or local funding already directed to this effort. During the time the committee was completing its study, the U.S. Department of Health and Human Services (DHHS), as part of its FY 2000

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14 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED budget request, proposed a five year initiative designed to increase the capacity and effectiveness of the nation's health care safety net providers. To begin this effort, $25 million in the form of grant funding was appro- priated under the FY 2000 Appropriations Act. The committee believes this new national program, the Community Access Program, which will provide funding for approximately 20 communities in the coming year, represents a good first step. Recommendation 5. The committee recommends that technical assistance programs and policies targeted to improving the operations and competitive position of safety net providers be enhanced and better coordinated. Several federal agencies including the Health Resources and Services Administration, the Health Care Financing Administration, the Substance Abuse and Mental Health Services Administration, and the Centers for Disease Control and Prevention currently provide technical assistance to some safety net providers, but these funds are usually targeted exclu- sively to the programs and organizations funded by the respective agen- cies. The committee strongly believes that technical assistance funds should promote capacity building and the management and operating capabilities of all core safety net providers seeking to compete in a man- aged care environment. Technical assistance programs should promote rather than deter the development of partnerships and collaborations that can contribute to these objectives. The committee believes the following areas require specific attention: management of service delivery and implementation of changes, including improvements in management information systems, appoint- ment scheduling systems, patient telephone access, efforts to streamline operations, and reengineering of services so that they are more respon- sive to patients; development of new business skills such as negotiating managed care contracts and developing marketing techniques to maintain and expand the patient base of safety net providers; development and collection of reliable data on which to calibrate rates and assign appropriate risks to develop appropriate reimbursement systems; and nonmedical factors that affect utilization and health outcomes of low-income and other vulnerable patients using the health care delivery system (e.g., care-seeking behavior, cultural competence, and public health interventions).

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EXECUTIVE SUMMARY 15 CONCLUSIONS The committee concludes that the safety net system is a distinct deliv- ery system, however imperfect, that addresses the needs of the nation's most vulnerable populations. In the absence of universal insurance cover- age and while the new market paradigms are unfolding, it seems likely that the nation will continue to rely on safety net providers to care for its most vulnerable and disadvantaged populations. REFERENCES American College of Physicians-American Society of Internal Medicine. 2000. No Health Insurance? It's Enough to Make You Sick. Philadelphia, PA: American College of Physicians-American Society of Internal Medicine. Baxter, R., and Mechanic, R. E. 1997. The Status of Local Health Care Safety Nets. Health Affairs, 16~4), 7-23. Bindman, A., Grumbach, K., Vranizan, K., Jaffe, D., and Osmond, D. 1998. Selection and Exclusion of Primary Care Physicians by Managed Care Organizations. JAMA, 279~9), 675-679. Bureau of Primary Health Care. 1998. Uniform Data System. Bethesda, MD: Bureau of Primary Health Care/Health Resources and Services Administration, U.S. Department of Health and Human Services. Cunningham, P., and Tu, H. 1997. A Changing Picture of Uncompensated Care. Health Affairs, 16~4), 167-175. Cunningham, P., Grossman, J., St. Peter, R., and Lesser, C. 1999. Managed Care and Physi- cians' Provision of Charity Care. JAMA, 281~12), 1087-1092. Custer, W., and Ketsche, P. 1999. Health Insurance Coverage and the Uninsured: 1990-1998. Washington, DC: Health Insurance Association of America. Davis, K. and Schoen, C. 1977. Health and the War on Poverty: A Ten-Year Appraisal. Washing- ton, DC: The Brookings Institution. Holahan, J., Zuckerman, S., Evans, A., and Rangaraj an, S. 1998. Medicaid Managed Care in Thirteen States. Health Affairs, 17~3), 43-63. Lefkowitz, B., and Todd, J. 1999. An Overview: Health Centers at the Crossroads. Journal of Ambulatory Care Management, 22~4), 1-12. Mann, J., Melnick, G., Bamezai, A., and Zwanziger, J. 1997. A Profile of Uncompensated Hospital Care, 1983-1995. Health Affairs, 16~4), 223-232. National Association of Community Health Centers. 1999. Compromise Delays Phase-Out of Health Center Payment System Orders Congressional Report on Impact and Alternative Payment Mechanisms. [WWW document]. URL http: / /www.nachc.com/FSA/Federal/ Agenda/PPS/Compromise%20Announcement.htm (accessed February 1, 2000~. National Association of Public Hospitals and Health Systems. 1999. America's Safety Net Hospitals and Health Systems. Washington, DC: National Association of Public Hospi- tals and Health Systems. Norton, S., and Lipson, D. 1998. Portraits of the Safety Net: Public Policy, Market Forces, and the Viability of Safety Net Providers. Occasional Paper No. 13. Washington, DC: The Urban Institute.