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Safety NQt Populations with SPQCIO~ Health And OCCQSS NQQ~S This chapter reviews how changes in Medicaid policy, the growth in enrollment in managed care, and the changes in the marketplace are affect- ing those Americans with serious chronic illnesses or disabilities as well as those who have experienced social dislocation (e.g., homeless people). These populations (hereafter referred to as special-needs populations) have special health care and access needs and are often viewed as particu- larly medically and economically vulnerable. The committee wanted to take a closer look at this group because it provides a unique opportunity to understand how the changing health care environment might affect the safety net and the people it serves. Policies that negatively affect those individuals with special needs are likely to have adverse effects on many other patients. Similarly, policies that serve the needs of people with special health needs are likely to positively affect other patients. The fail- ures and successes of Medicaid policy changes, managed care, and the health care marketplace are likely to be more quickly apparent for those with special needs, such as people with serious mental illness or human immunodeficiency virus (HIV) infection/acquired immune deficiency syndrome (AIDS). Thus, the special-needs populations may provide early insights that can be generalized to all populations in the safety net system. Special-needs populations also receive attention in this report because they account for a disproportionate share of medical expenditures and they bring into greater focus a number of the challenges in the further expansion of Medicaid managed care. A closer look at this important subset of the safety net population helps illuminate issues related to con- 180

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POPULATIONS WITH SPECIAL HEALTH AND ACCESS NEEDS 181 tracting, financing mechanisms, adequate information systems, integra- tion and coordination of care, and the need to bundle health care and enabling services. This chapter examines two categories of special-needs populations: (1) nonelderly adults and children with chronic illnesses and disabilities who qualify for Supplemental Security Income (SSI) or who meet a state's medically needy standard for Medicaid and (2) adults and children who experience extraordinary access barriers because of social dislocation (e.g., homelessness, immigrant status, or language or cultural differences) and who require specially designed outreach programs to facilitate access to and utilization of basic health care services. The committee examined four special-needs populations to highlight some of the issues related to the changes in the health care marketplace: children with special needs, people with serious mental illnesses (SMIs), people living with HIV infection or AIDS, and homeless people. These groups illustrate some of the major challenges that the chronically ill and disabled populations in the safety net system bring to the policy debate. Similarly, the homeless illustrate problems of social dislocation, that is, difficult-to-reach populations, who traditionally are cared for by safety net providers. This chapter also brings into bold relief the fact that people with special needs are often served by specialty providers in the safety net, providers who are not well linked to the primary care providers in the system. Special-needs populations in the safety net require complex health care services and enabling or social services. Funding for the care of people with special needs is fragmented and is dependent on the annual appro- priations process, contributing to a service system that has traditionally been plagued with problems of coordination and a lack of continuity between primary care and specialty care services. To successfully care for these populations, policies must ensure access to necessary and appropri- ate specialty medical and enabling services for this population while also bridging the gap between the primary and specialty safety net systems. PEOPLE WITH SPECIAL NEEDS People with Chronic Illnesses and Disabilities Approximately 14.5 percent of the U.S. population has a disability covered by the Americans with Disabilities Act (ADA), including 6.1 per- cent of children under the age of 18 (Wenger et al., 1997~. Any number of conditions may cause a person to be disabled, but disability is less about disease or diagnosis and more about functional capacity. Functional limi- tations include those things that negatively influence participation in

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182 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED work, school, leisure, family, and community life. People with disabilities use a wide spectrum of health and enabling services including primary care, acute care, rehabilitation, mental health, addiction, respite care, and long-term-care services. The service requirements are as diverse as the individuals who need them and may vary among those with the same conditions. There are no simple formulas for predicting service utiliza- tion, but clearly, care for the disabled population is more costly than care for the general population. People with disabilities are broadly defined as those with limitations in human actions or life activities due to physical or mental impairments (Americans with Disabilities Act [ADA; P.L. 101-336~) (LaPlante, 1991~. There is no single, up-to-date source of disability rates by diagnosis or special population, nor is there a single, comprehensive, up-to-date com- pilation of expenditures by diagnosis group. People with disabilities are much more likely than their nondisabled counterparts to have publicly funded health care coverage. Half of all medical expenditures for people with disabilities are covered by public programs, including 30 percent by Medicare, 10 percent by Medicaid, and 10 percent by other public programs. This compares to a rate of publicly funded health care of only 20 percent for the nondisabled population. In addition, although it is likely that people with disabilities have some type of public insurance, many others are nevertheless uninsured. Almost 10 percent of children who need help with activities of daily living are unin- sured, as are 12 to 13 percent of disabled adults (LaPlante et al., 1993; Trupin et al., 1995~. The pace of movement of people with disabilities into managed care has been dramatically slower than that of low-income women and chil- dren. Although the Balanced Budget Act of 1997 allowed states to man- date enrollment of most Medicaid beneficiaries in qualified managed care plans, children with special needs and individuals with dual eligibility (adults who qualify for both Medicaid and Medicare) were exempted. To enroll such individuals in managed care plans, states still must seek a federal Medicaid waiver from the Health Care Financing Administration. Most states did not rush to put their disabled populations into managed care plans, hoping first to learn lessons in implementing managed care for women and children before enrolling higher-risk beneficiaries. Nonethe- less, all but 15 states now enroll at least some of their disabled beneficia- ries in managed care plans (Figure 6.1), and several are considering doing so in the near future (Regenstein and Schroer, 1998~. In addition, all but four states have developed behavioral managed care programs that cover some combination of primary and specialty mental health services (Substance Abuse and Mental Health Services Administration Managed Care Tracking System, 1998~. Early indicators

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POPULATIONS WITH SPECIAL HEALTH AND ACCESS NEEDS 183 ~ . at 0 ~ n Percent of PWD in Managed Care (states) 68 to 100 (6) ~ 34 to 67 (10) 1 to 33 (20*) ~ 0 (1 5) FIGURE 6.1 Percentage of nonelderly persons with disabilities (PWD) in Medic- aid managed care, 1998. Includes District of Columbia. SOURCE: Regenstein and Schroer (1998~. Reprinted with permission of the Henry l. Kaiser Family Foundation of Menlo Park, California. The Kaiser Family Foundation is an inde- pendent health care philanthropy and is not associated with Kaiser Permanente or Kaiser Industries. suggest that it is feasible to move disabled populations into managed care with some degree of success, although the risk of failure is high because of the potential interruption of essential services to a highly vulnerable population and the potential of the unraveling of the safety net for the special-needs population. Safety net providers for this population are especially skilled in blend- ing financial resources from multiple funding sources (federal, state, and local) to support the provision of services for the special-needs popula- tion, but Medicaid continues to be the bedrock of health care and related services for this group and provides the infrastructure of services for the

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184 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED special-needs population. Because disabled special-needs populations make up only 16 percent of the total Medicaid population but account for 37 percent of Medicaid (Regenstein and Schroer, 1998), states are moving in the direction of managed care for this group (Figure 6.2~. Several factors have contributed to states' interest in managed care for this population: In comparison with Medicaid beneficiaries who also receive Aid to Families with Dependent Children, who are now covered under Tempo- rary Assistance to Needy Families, average spending per beneficiary is higher for those with disabilities ($1,304 versus $8,168) (Bishop and Skwara, 1997~. Medicaid spending for persons with disabilities grew at an annual average rate of 14 percent from 1990 to 1994, with growth slowing from a high of 19 percent in 1990-1991 to 9.5 percent in 1993-1994 (Bishop and Skwara, 1997~. States vary widely in conditions of eligibility and coverage and cost per beneficiary. For example, in 1996 the annual cost per SSI benefi- ciary ranged from $2,846 in Tennessee to $13,320 in Connecticut (Bishop and Skwara, 1997~. Coo - 80 - C' ~ 40- 60 - 20 - O- 51.5 22.3 9.9 16.2 ., _ _ , ,Y, , \ _ 9.7 15.6 10.9 27.1 33.6 Enrollees Expenditures* Total = 41.3 million Total = $155.4 billion people DSH Payments** Children Adults Elderly [I Disabled FIGURE 6.2 Medicaid enrollees and expenditures by enrollment group, 1996. Total expenditures exclude administrative expenses. POSH, disproportionate share hospital payments. SOURCE: The Kaiser Commission on Medicaid and the Uninsured (1999~. Reprinted with permission of The Kaiser Commission on Med- icaid and the Uninsured.

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POPULATIONS WITH SPECIAL HEALTH AND ACCESS NEEDS 185 Liska (1997) concludes that the goal of reduced expenditures in Medic- aid cannot be reached without enrolling special-needs groups in man- aged care since they account for such a large proportion of total program expenditures. Whereas managed care has largely been piloted by the commercial insurance industry, important legal, structural, operational, and historic differences between Medicaid managed care and commercial managed care are highlighted by the care provided for disabled populations. Tradi- tional insurance plans and managed care organizations do not typically provide coverage for the essential nonmedical enabling services (e.g., social and vocational rehabilitation services, transportation, and case man- agement) that special-needs populations require and that are often provided by safety net providers. Such services, although required under Medicaid, might not be provided by Medicaid managed care plans unless the provi- sion of such services is explicitly spelled out in the contract and is monitored through specific quality-improvement standards (Rosenbaum et al., 1998~. Somers and Brodsky (1997) noted that there are few tested models of the provision of Medicaid managed care to populations with complex health care needs because of uncertainty on the part of purchasers and plans about how to design benefits and delivery systems and coordinate with related funding streams and services for them. Their study also found inadequate rate-setting and risk-adjustment capacities and warned that a Revolution of purchasing, administration, and oversight responsi- bilities to county governments could result in inconsistent purchasing practices and policies. Safety net prov~crers tor spec~a~-neecrs populations are at potentially greater risk in a Medicaid managed care environment for several reasons. Although some of these providers can offer a comprehensive array of medical and enabling services, more often a provider of care for a special- needs population has developed a niche in highly specialized medical or enabling services funded through a combination of Medicaid and special programs such as state block grants for mental health and substance abuse services or Title V Maternal and Child Health Bureau (MCHB) block grants for children with special needs. These providers may thus be unable to provide the full range of services required to participate as a primary care provider. The packaging and financing of their services will depend on rate-setting and risk-adjustment policies that consider the spe- cial medical and enabling needs of their populations. . . Children with Special Needs Children with special needs present challenges for managed care plans with regard to rate setting and projections of service utilization

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186 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED because of problems with defining, and thus counting, the population. Moreover, since they represent a group more integrated into the core safety net than other special-needs groups, their primary and specialty services illustrate the potential for integrated managed care models of primary and specialty care services. Safety net providers for special-needs children include community health centers, public hospitals, children's hospitals, school-based health clinics, public health departments, and a number of private not-for-profit specialty service agencies. Safety net funding sources include Medicaid, Title V MCHB grants combined with matching funds from the states, the State Child Health Insurance Program, Individuals with Disabilities Edu- cation Act funds, and Head Start funds (Institute of Medicine, 1996~. The two principal sources of funding for special-needs children in the safety net are Medicaid and Title V MCHB grants. Special-needs children are more likely to be covered by Medicaid than by private insurance because of the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program included in the benefits package. The EPSDT program provides broader coverage for expanded services (e.g., for nonmedical services or access to other health professionals like nurse practitioners or nutritionists). Nationally, the average annual cost of EPSDT program ben- efits for healthy children is about $1,000 to $1,500, whereas it is $5,000 to $6,000 for special-needs children (Institute of Medicine, 1998~. The average cost of caring for special-needs children varies greatly by state, region, and market, as does the average cost per diagnosis or service need (Alli- ance for Health Reform, 1997~. Title V MCHB funds are used to provide services not covered by Medicaid programs for both disabled and nondisabled children, includ- ing programs offered by local health departments and community and migrant health centers and for HIV infection prevention and treatment. Title V MCHB funds are also typically used to strengthen linkages among variously funded programs to support community-based care for chil- dren. This is especially important for special-needs children, whose care would otherwise be fragmented (Institute of Medicine, 1998~. Because children with special needs have the same need for regular developmentally appropriate primary care and immunization visits as nondisabled children, they will more likely receive care from a pediatri- cian, family practitioner, or some other primary caregiver (Neff and Anderson, 1995~. In fact, pediatric primary care providers have been encouraged to play active roles in caring for children with chronic health conditions by acting as the coordinator of medical and related services, providing referrals to specialists when necessary, and helping families manage on a day-to-day basis (Blancquaert et al., 1992; Ireys et al., 1996; Liptak and Revell, 1989; Young and Schork, 1994~. The integration of

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POPULATIONS WITH SPECIAL HEALTH AND ACCESS NEEDS 187 primary and specialty care is prompted by the ongoing need for regular primary care services as well as the special developmental needs of chil- dren (Kuhlthau et al., 1998~. However, in some parts of the country, pediatric subspecialties are located in regional medical centers, making integration more difficult (Institute of Medicine, 1996; Schlesinger and Mechanic, 1993~. The fact that special-needs children suffer from more than 200 condi- tions, all with a relatively low prevalence, poses special challenges in defining the population and setting appropriate parameters for the deliv- ery and financing of care through managed care arrangements. The prob- lems of definition are so vexing that the MCHB Division of Services for Children with Special Health Needs established a national consensus panel, which concluded that this population is best defined by its service needs rather than by diagnosis or disability per se (McPherson et al., 1998~. Medical expenditures for special-needs children account for 70 to 80 percent of all medical expenditures for children, and expenses for spe- cial needs children are, on average, five to six times higher than those for healthy children (Institute of Medicine, 1998; Neff and Anderson, 1995; Newacheck and Taylor, 1992~. By 1998, 38 states had mandated managed care arrangements for at least some children with special needs (Kaye et al., 1999~. Early imple- mentation data from programs in California and Massachusetts provide useful insights (National Governors' Association, 1996~. Like most other states, California has exempted special-needs chil- dren from the state's mandatory Medicaid managed care programs to allow time to demonstrate the feasibility and cost-effectiveness of incor- porating them into the program. Pilot projects that explore different pro- vider reimbursement models include full-risk, partial-risk, and fee-for- service case management with a variety of payment mechanisms: capitation payments to primary care providers, under which pro- viders are capitated for the full scope of services or are capitated for a specific range of services; capitation to all providers; and staff model health maintenance organizations with a variety of physician payment mechanisms. Alameda County, California, is testing a "special-needs risk factor scale" to identify Medicaid-eligible children who require additional ser- vices. The scale ranks a child in three areas: family risks, presence of medical problems, and involvement with multiple community agencies. The model seems to differentiate practices with large volumes of special-

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188 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED needs children from practices with small volumes. The former receive increased capitation payments (National Governors' Association, 1996~. Massachusetts enrolls children with special needs in the state's Medic- aid managed care program, MassHealth. Through a grant from MCHB the state has established the Managed Care Enhancement Project, a coop- erative effort between the state's Title V staff and Medicaid programs to improve the health status of special-needs children. The level of reim- bursement is intended to be commensurate with the increased level of effort required to serve special-needs children (National Governors' Asso- ciation, 1996~. A "special care coordinator" is assigned either to one large physician practice or to two or more smaller practices to assist with additional case management functions related to the care of special-needs children. The grant also helped fund the development of a manual for the families of special-needs children (National Governors' Association, 1996~. People with Serious Mental Illnesses People with SMIs represent a group that is treated in a publicly financed safety net system that runs parallel to the general health care safety net. Only 20 percent of people with a mental health problem seek care through a primary care provider, and these tend to be people with relatively minor or treatable disorders (Institute of Medicine, 1997~. Those with more serious mental health problems are cared for in the specialty mental health system and highlight the need for coordination of services as well as the difficulties associated with a fragmented service system. The most serious and disabling mental disorders (schizophrenia, major depression, and bipolar illness or manic-depressive disorder) affect about 2 percent of the population annually (Institute of Medicine, 1997~. Schizophrenia affects more than 2 million Americans over the course of their lifetimes and accounts for approximately 49 percent of all psychiat- ric hospitalizations. Overall, the public sector bears about two-thirds of the costs of pro- viding care for people with mental health problems, in particular, for those with the most serious disorders. The costs of treating mental illness exceed the costs of treating many other diseases and are comparable to the costs of treating cancer and cardiovascular disease (Institute of Medi- cine, 1997~. Roughly 25 percent (about 2.6 million) of the population that qualifies for SSI is eligible because of a serious mental disorder other than mental retardation (Alliance for Health Reform, 1998~. Payments from Medicaid account for an estimated 14 percent of all national spending on mental illness and addiction services, whereas payments for these ser- vices account for roughly 9.6 to 12.6 percent of Medicaid spending.

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POPULATIONS WITH SPECIAL HEALTH AND ACCESS NEEDS 189 Those with SMIs represent high-need, moderate-cost users for whom recent advances in pharmacological treatment have been made, for whom a number of community-based rehabilitation interventions have been refined and the efficacies of which have been established, and who have an established need for an extensive network of enabling and case- management services to maintain or improve community-based func- tioning. In general, the public mental health system has encouraged the coor- dination of medical and enabling services to integrate people with SMIs into the community. However, the single greatest flaw of the mental health safety net is its nearly total disconnection from the core safety net addressed in this study. Managed care holds the potential to achieve better coordination between the two systems, if not integration of the two systems. A wide array of safety net providers serve those with SMI, including community mental health centers, state and county psychiatric hospitals, family and social service agencies, transitional living and social programs, housing and vocational rehabilitation programs, and a number of consumer- driven self-help programs. The public mental health system, like the public general health system, has a patchwork of funding streams: fed- eral, state, and local sources including Medicaid, Medicare, federal block grants to the states, and a myriad of state and local funds targeted to various community-based not-for-profit programs. For example, commu- nity mental health centers serve clients of all income levels regardless of ability to pay, but the majority of these individuals are uninsured or are receiving coverage through some public benefit program. More than 70 percent of community mental health center revenues are from public sources, including 16 percent from Medicaid (Butler, 1993~. A distinguish- ing feature of the public mental health safety net is that it serves as the early default system for people whose private insurance benefits run out in the course of a serious mental illness, a frequent occurrence (Institute of Medicine, 1997~. The service system largely comprises publicly funded agencies whose primary missions are delivery of psychiatric services and coordination of enabling and other services. This system is supplemented by a community- based network of private not-for-profit agencies that provide many of the special enabling services that people with SMIs require: child care, trans- portation, domestic violence counseling and shelter for those affected by domestic violence, housing, employment and skills training, and educa- tion. The mental health community has come to embrace these services as being equal in importance to more traditional medical services such as medication and therapy (Institute of Medicine, 1997~. These services are

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19O AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED not routinely provided by traditional managed care plans and must be carefully delineated in behavioral health managed care contracts. A recent tracking study prepared for the Substance Abuse and Mental Health Services Administration Managed Care Tracking System (1998) by The Lewin Group reports that as of fuly 1998,46 states (the exceptions are Maine, Mississippi, Nevada, and Wyoming) have implemented some type of behavioral health managed care, up from 27 states in 1996. The study indicates that safety net providers have retained a significant role in the care of people with SMIs in managed care plans. Specialty long-term care for people with SMIs is generally provided in stand-alone, carve-out, or partial carve-out plans. More than half the programs are managed by public-sector agencies or private-public partnerships. More than one-third of the mental health programs cover residential, crisis, rehabilitation, and support services. Medicaid acts as the lead agency for more than half the programs, and more than half the programs target SSI beneficiaries who qualify by virtue of their mental illness. However, the study also suggests that in states that opt to integrate services (27 states), safety net providers may have a decreased presence. Furthermore, integrated managed care organizations often use a secondary carve-out contract with a behavioral health managed care organization or safety net provider to shift the finan- cial risk. Whether or not safety net providers participate in risk contracts, this approach may increase the downward pressure on rates, threatening their future viability. A study from the George Washington University (Rosenbaum et al., 1998) of Medicaid managed care contracts for behavioral health care found that contracts show enormous variations in the definition of terms like outpatient care, urgent care, or emergency care, leaving much room for differ- ences in actual scope of coverage among organizations with seemingly similar contracts. In general, state agencies give contractors broad lati- tude in terms of coverage determination and prior authorization proce- dures. Many general and managed behavioral care agreements permit disenrollment of persons who are disruptive; some states specify that this Stand-alone programs refer to managed behavioral health programs independent of any other program (i.e., they are not carved out of a physical health program). Carve-out models completely separate behavioral health services or populations from physical health man- aged care programs. Partial carve-out models use a combined integrated approach for some behavioral health services but place other expanded services or populations under a sepa- rate managed care program. The intent is to provide a basic set of behavioral health benefits under a comprehensive physical health plan but to supplement them under a separate program for special populations whose needs go beyond those covered by the basic plan (Substance Abuse and Mental Health Services Administration Managed Care Tracking Sys- tem, 1998, p. I-20.

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194 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED infected children, states are interested in managed care to provide quality care to a high-risk population and contain costs (The Kaiser Commission on the Future of Medicaid, 1996~. By tune 1996, 35 states reported enroll- ing people with HIV infection or AIDS in Medicaid managed care pro- grams (Rawlings-Sekunda and Kaye, 1998~. Several recent reports pro- vide in-depth case studies of states that have approached managed care for this population in very different ways, depending on the concentra- tion of people with HIV infection or AIDS in the area, geography, the availability of HIV and AIDS specialists, and the availability of cost infor- mation (Bartlett, 1998; Rawlings-Sekunda and Kaye, 1998; Health Re- sources and Services Administration, 1997~. Two states illustrate the dif- ferent challenges facing rural areas (Tennessee) with low concentrations both of people with HIV infection or AIDS and of specialists in this area of care and urban areas (Maryland) with high concentrations of both. Tennessee's AIDS Centers of Excellence model, which is part of its TennCare program that serves all Medicaid beneficiaries, builds on the experiences of a few physicians with expertise in HIV infection and AIDS. Centers are established on the basis of expertise and experience in the treatment of HIV infection and AIDS and are fee-for-service subcontrac- tors for all plans on a voluntary basis. There is broad participation of stakeholders in the establishment and implementation of the authority of the Centers, with special attention paid to linking medical and enabling services. Prior authorization procedures are waived for prescriptions and other treatments, and patients can elect to have the Centers act as their primary care providers (Rawlings-Sekunda and Kaye, 1998~. TennCare uses risk pools to protect plans against adverse risk selec- tion. Each quarter the state calculates the difference between the total cost of paying for enrollees with specific conditions on the basis of Medicaid fee-for-service payments and the total amount paid to each plan for pro- viding services to those enrollees. Each plan is reimbursed the difference unless the total costs exceed the budget, in which case the money is di- vided in proportion to each plan's share of the costs (Rawlings-Sekunda and Kaye, 1998~. Although the Centers of Excellence model shows promise for rural and underserved areas, its consensus building and voluntary infrastruc- ture could disintegrate in the face of uncontrolled or escalating costs asso- ciated with the treatment of HIV infection and AIDS, a risk which will be closely monitored by stakeholders. In fuly 1997, Maryland initiated a Medicaid Section 1115 waiver with mandatory enrollment of all Medicaid beneficiaries with HIV infection or AIDS. The state uses a risk-adjusted Ambulatory Care Group (ACG) reimbursement mechanism with a special capitation mechanism for people with AIDS but no special rate for those in earlier stages of HIV

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POPULATIONS WITH SPECIAL HEALTH AND ACCESS NEEDS 195 infection. The ACG mechanism assigns rates to non-AIDS patients, includ- ing those with HIV infection, on the basis of their recent levels of health care utilization. The rates for people with disabilities range from $95 to $1,102 per member per month. New enrollees for whom there is no utili- zation history are assigned rates based on gender, age, and place of resi- dence (Health Resources and Services Administration, 1997~. Johns Hopkins University's experience with the ACG rates for HIV- infected patients was that the average cost of care for these patients is $1,000 per patient per month, whereas the average reimbursement rate was only $500 per patient per month (Bartlett, 1998; Johns Hopkins Uni- versity, 1997~. Care for HIV infection is delivered through a mixed model, with expertise in HIV infection and AIDS care available in mainstream plans and centers of excellence in which enrollees may see HIV and AIDS specialists for both primary and specialty care (Health Resources and Services Administration, 1997~. Special capitation rates are applied to patients who meet the Centers for Disease Control and Prevention's 1993 definition of AIDS and are based on historic fee-for-service costs trended forward. The costs of protease inhibitors, specialty mental health care, viral load testing, and newly approved HIV-related drugs are carved out and paid on a fee-for-service basis. In 1998, rates were set at $2,161 for people living in Baltimore and $1,812 for people living elsewhere in Mary- land (Health Resources and Services Administration, 1997~. The Johns Hopkins HIV Care Program, like most urban health care centers, treats large numbers of people with HIV infection or AIDS who have multiple comorbidities and complicated health care and enabling needs. They have had time to examine the process of transition to man- aged care and have concluded that the learning curve is steep, especially for academic health centers; that planning and implementing managed care takes time and requires a dedicated project director; and that although cost reduction is a clear goal, the kev to success is Drover risk adjustment and rate setting (Bartlett, 1998~. Tennessee's model differs from Maryland's in a few important ways. Tennessee relies on risk pools instead of risk adjustment, plans partici- pate voluntarily both in subcontracting and in following treatment proto- cols, and plans use a coordinator to link medical and enabling services rather than carving out these services. Homeless People Homeless people provide an example of a socially dislocated popula- tion with extraordinary health care access barriers that require special outreach programs. Because of their extreme poverty, homeless people undoubtedly qualify for public benefit programs but frequently have dif-

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196 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED ficulty applying for and accessing such programs (Burt, 1992; Rossi,1989~. Homeless people illustrate the convergence of several important factors including stigma, extreme poverty, the presence of complex medical and social needs, and a population that is difficult to track. The homeless use costly hospital and emergency services for care and can present a public health risk. According to the U.S. Department of Housing and Urban Develop- ment, as many as 7 million Americans, 15 percent of whom are children, experienced being homeless at least once in the late 1980s, and in 1994, as many as 600,000 people in the U.S. were homeless on a given night. The population may have grown since the enactment of welfare reforms in 1996, which have limited access to public assistance (State Health Notes, 1998~. On any given night one-third to one-half of the estimated 600,000 homeless people will be adults with serious mental illness and/or sub- stance abuse, and others will have HIV infection or AIDS and resurgent tuberculosis problems (Burt and Cohen, 1989; U.S. Department of Health and Human Services, 1992; U.S. Department of Housing and Urban Devel- opment, 1994~. Such illnesses carry a real public health threat, which only compounds the stigma already associated with such disorders and with homelessness itself. Studies have shown that homeless people (in particu- lar, those with SMIs and women) are more likely to be criminally victim- ized and that such victimization leads to a cycle of homelessness and repeated victimization, as well as episodic admissions to hospital emer- gency and acute care units (Caton et al., 1995; Lam and Rosenheck, 1998; U.S. Department of Housing and Urban Development, 1994~. Compared with nonhomeless people, homeless people (1) have a greater need for psychiatric emergency and inpatient services (Dickey et al., 1996; Rosenheck and Seibyl, 1998; Wuerker and Keenan,1997~; (2) have more hospital emergency department and inpatient admissions and longer lengths of stay attributable to substance abuse, mental illness, trauma, and respiratory, skin, and infectious disorders (Salit et al., 1998~; and (3) use more high-cost services. In nearly all cases, inpatient admissions could have been prevented by earlier intervention and ongoing health maintenance activities. Like other special-needs populations, homeless people attract cat- egorical funding streams from both the private and public sectors. Local independent not-for-profit organizations and the faith community took the early lead in providing emergency services, including temporary shel- ter, food, and health services. Most states have relied on these efforts and modest state funding (only 27 states reported any special assistance [less than $5 million each] in 1991) for targeted services to the homeless popu- lation. The federal government started to fill the gap in the early 1980s

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POPULATIONS WITH SPECIAL HEALTH AND ACCESS NEEDS 197 with appropriations for the Emergency Food and Shelter Program, designed to combine federal funds with state and local not-for-profit organization resources to provide emergency assistance to the homeless population, and the Temporary Emergency Food Assistance Program. Other assistance came from the Emergency Assistance Program of the U.S. Department of Health and Human Services, and the Community Development Block Grant Program for which emergency services and shelters were eligible (U.S. Department of Housing and Urban Develop- ment, 1994~. The passage of the 1987 Stewart B. McKinney Homeless Assistance Act increased the federal government's role in addressing homelessness. More than 20 McKinney Act grant assistance programs fund the provi- sion of emergency food and shelter, surplus goods, transitional housing, supportive housing, primary health care services, mental health care, alcohol and drug abuse treatment, education, and job training (U.S. Department of Housing and Urban Development, 1994~. Public hospitals, community health centers, and facilities for veterans have been the traditional safety net providers for the homeless popula- tion, but the categorical funding streams noted above have broadened the safety net considerably to include a wide range of private not-for-profit agencies in churches and other nontraditional settings. Successful programs have integrated primary care services (medical, dental, and behavioral health care services) combined with case manage- ment, enabling services (such as transportation), and street and shelter outreach and have effectively created teams of registered nurses, nurse practitioners, primary care physicians, psychiatrists, dentists, case man- agers, outreach workers (for enrollment as well as engagement and reten- tion), and social workers. The Wasatch Homeless Health Care in Salt Lake City, Utah, is located across from a park where homeless people congregate and sees about 6,500 homeless individuals each year for a total of about 22,000 "office" visits. On-site services include primary care and pediatrics, dermatology, podiatry, eye care, dental care, and physical therapy. In addition to its staff of 17, the clinic relies on about 30 physician volunteers, AmeriCorps members, and medical students who run a Saturday clinic. The Providence Health Care for the Homeless project in Rhode Island also relies on a combination of paid and volunteer staff from a wide range of disciplines. It sees about 1,850 homeless people annually, for a total of approximately 4,500 encounters. A mobile medical van staffed by rota- tions of more than 100 physicians, nurses, and medical students is the main outreach vehicle. It makes rounds to area shelters and soup kitchens in the evening. In addition, the program operates a multiservice center for clients who need enabling services, a Saturday walk-in clinic staffed by

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198 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED volunteer physicians, a women's program staffed 1 day a week by nurse practitioners under an agreement with a local nursing college, and a dental clinic staffed with volunteer dentists. The project relies on two local hos- pitals to donate laboratory services for diagnostic work and has an agree- ment with a community mental health center for outreach and referrals (State Health Notes, 1998~. LESSONS LEARNED It appears that special-needs populations are more alike than differ- ent. These populations present common challenges to managed care pro- grams challenges that must be systematically evaluated in the context of geography, resources, demographics, and the availability and accessibility of special-needs providers before a managed care plan can be designed and implemented. Although there is no single solution for people with special needs, some common areas must be addressed by every state, preferably before moving this group into managed care plans. Special- needs populations in the safety net are vulnerable, first, by virtue of their poverty and, second, by virtue of the chronic illness, disability, or social circumstances that place them at increased risk of falling through the safety net. Early experience has suggested that slow and cautious movement toward managed care is the wisest approach to special-needs populations and that moving too quickly with insufficient planning can compromise the safety net for special-needs populations and can place consumers at risk. The lessons that have been learned from this analysis fall into four areas: (1) problems of definition and data, (2) the service requirements of special-needs populations, (3) issues of costs and financing, and (4) the unique role of the consumer advocacy community. Definitions and Data Rates of disability vary from state to state, as do definitions of special needs. These variations lead to meaningful differences in treatment standards and the inclusion or exclusion of covered services in managed care contracts; they make it particularly difficult to track special-needs populations. Special longitudinal studies that are national in scope could provide a baseline from which states, managed care organizations, and providers could tailor their own data elements and studies to better plan, implement, and evaluate the services that they provide to special-needs populations. State consensus panels that involve all stakeholders might be convened to address the issue of definitions to better predict service need, utilization patterns, and costs.

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POPULATIONS WITH SPECIAL HEALTH AND ACCESS NEEDS Service Requirements of Special-Needs Populations 199 People with disabilities and chronic illnesses use a wide spectrum of health and enabling services, and service requirements can vary consider- ably among individuals and by diagnostic and disability group. Although many states have medical necessity laws that mandate the inclusion of such services, many managed care organizations interpret medical neces- sity more narrowly. For some groups, the provision of medical and enabling services is necessary but not sufficient. Those who are socially dislocated, such as homeless people or immigrants, require active, specially tailored outreach services. Thus, states should include specific language in con- tracts to protect consumer access to outreach as well as medical and enabling services. In most instances, such services have been and should continue to be provided by safety net providers. In addition, although special-needs consumers require access to both primary and specialty care providers, little evidence suggests that the primary and specialty care safety nets are well coordinated. Single-point accountability services, such as case management and care coordinators, provide the glue for an otherwise fragmented system of care, and such services must be factored into the costs of service delivery. Finally, plans need to be flexible in defining the primary care providers for these patients. Costs and Financing The states vary widely in coverage and payment mechanisms for special-needs populations; this variation is so wide that for some condi- tions, like HIV infection and AIDS, the best predictor of care and out- comes is the state in which one lives. Rapidly evolving treatment stan- dards for some special-needs populations render the use of retrospective cost methodologies ineffective for projecting future costs and payments. Carve-out and stand-alone models have dominated the market for the special-needs population, creating multiple tiers of coverage, responsibil- ity, and accountability, and require new incentives to ensure appropriate service delivery. Thus, financing (e.g., health-based and service-based rate adjustment and risk pools), contracting, and regulatory mechanisms are critical ingredients to successful managed care plans for the special-needs population. The Unique Role of Advocacy It was apparent during the committee's site visits that consumer advocates, in particular those who represent populations with special

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200 AMERICA'S HEALTH CARE SAFETY NET: INTACT BUT ENDANGERED needs, have begun to secure an important place in policy making related to managed care. Advocacy is an important factor in shaping health policy for special-needs populations. Each special-needs group reviewed in this chapter has a strong advocacy base that has been successful in marshaling scarce resources for their constituents' needs. They have won hard-fought legislative and regulatory battles that have improved access to and parity in care. In addition, they have contributed to the ongoing discourse about outcomes evaluation, quality, and effectiveness, with particular emphasis on measures more sensitive to special-needs populations, better consumer education on managed care, and better provider education on special needs. They have argued effectively that consumers and consumer needs must be represented in the managed care planning process and that contracts must include a comprehensive array of medically necessary services. Sometimes a narrow advocacy focus can result in overly detailed rules that become counterproductive to the implementation of care and a burden to safety net providers that wish to serve special-needs consum- ers. Although advocates might find it difficult to move beyond the nar- row boundaries of their particular special-needs constituency to the more inclusive boundaries of special needs in general, managed care will likely demand such a broadening of views. Advocates and consumers will be key players in the search for commonality among special-needs groups and in identifying meaningful differences that must be accommodated through variations in financing, contracting, or service delivery mecha- nisms and should be included as essential stakeholders at all stages of implementation of managed care plans. GENERALIZATIONS TO THE LARGER SAFETY NET SYSTEM Many of the lessons that have been learned and described in this chapter can and should be generalized to the entire safety net system. Although those with special needs served by the safety net system may be at higher risk and require the bundling of more services than others served by the safety net system, they provide a paradigm for the entire safety net population. For example, the need for comparable data systems that cross community and state lines is equally acute whether they are for people with HIV infection or AIDS or poor, uninsured, inner-city mothers. States must have meaningful data to maintain their authority and contractual obligations to the populations served by the safety net system. Similarly, the experiences with special-needs populations underscore the need for specific language in contract agreements as states undertake enrollment of safety net populations in managed care plans. The experiences with special needs populations certainly provide evidence that financing, con-

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POPULATIONS WITH SPECIAL HEALTH AND ACCESS NEEDS 201 tracting, and regulatory mechanisms are essential ingredients in any man- aged care plan involving safety net populations. Perhaps most important, this brief examination of special-needs populations emphasizes what many have long known: primary care and specialty care services in the safety net system remain fragmented and uncoordinated. As more of those served by the safety net system, particularly those who require coordinated or integrated services, are moved into managed care arrange- ments, the problems associated with fragmentation will become more acute and will demand solutions such as single-point accountability, point-of-service, care coordination, and case management. The committee believes that special-needs populations are the sentinels, and are signal- ing the effects for all Medicaid and uninsured people. They warrant con- tinued study as an important barometer of the health of the safety net in the evolving health care marketplace. REFERENCES Alliance for Health Reform. 1998. Managed Care and Vulnerable Americans: Mental Health Coverage. Washington, DC: Alliance for Health Reform. Alliance for Health Reform. 1997. Managed Care and Vulnerable Americans: Children with Special Health Care Needs. Washington, DC: Alliance for Health Reform. Bartlett, J.G. 1998. Johns Hopkins University School of Medicine Medicaid AIDS Capitated Care Program. In: Capitation of AIDS Treatment: The Health Resources and Services Admin- istration SPNS Program Grantees. Special Projects of National Significance Program, Health Resources and Services Administration. Washington, DC: U.S. Department of Health and Human Services. Bartlett, J.G., and Moore, R.D. 1996. Are Protease Inhibitors Cost Effective? The Hopkins HIV Report, 8,1, 6. Bishop, C.E., and Skwara, K.C. 1997. Medicaid Spending for Persons with Disabilities: Dimen- sions and Growth. Waltham, MA: The Center for Vulnerable Populations, Brandeis Uni- versity. Blancquaert, I.R., Zvagulis, I., Gray-Donald, K., and Pless, I.B. 1992. Referral Patterns for Children with Chronic Diseases. Pediatrics, 90~1), 71-74. Bozzette, S.A., Berry, S.H., Duan, N., Frankel, M.R., Leibowitz, A.A., Lefkowitz, D., Emmons, C., Senterfitt, J.W., Berk, M.L., Morton, S.C., and Shapiro, M.F. 1998. The Care of HIV- Infected Adults in the United States. New England Journal of Medicine, 339~26), 1897- 1904. Buchanan, R.J., and Smith, S.R. 1998. State Implementation of the AIDS Drug Assistance Programs. Health Care Financing Review, 19~3), 39-62. Burt, M. 1992. Over the Edge. New York, NY: Russell Sage. Burt, M., and Cohen, B. 1989. America's Homeless: Numbers, Characteristics and the Programs that Serve Them. Washington, DC: The Urban Institute. Butler, P. 1993. The Role of the Public Delivery System in a Universal Health Care Financing Program. Background paper. Providing Care to the Poor, A Workshop on the Role of Public Providers. Washington, DC: The Henry J. Kaiser Family Foundation. Caton, C.L., Shrout, P.E., Boanerges, D., Eagle, P.F., Opler, L.A., and Cournos, F. 1995. Risk Factors for Homelessness Among Women with Schizophrenia. American Journal of Pub- lic Health, 85~8), 1153-1156.

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