Medicaid managed care and fee-for-service

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An overview of two Medicaid delivery models

Background

Washington began moving toward managed care in

the late 1980s for Apple Health (Medicaid), when it

was recognized that:

 A fee-for-service model does not lend itself to

care coordination and disease management,

and

 Managed care can control costs while

ensuring quality of care and access to care.

More populations have moved to managed care over

time, with the last large shift occurring in 2012 when

the Medicaid blind and disabled population moved to

managed care. Washington has continued to move

Apple Health (Medicaid) enrollees to managed care,

including foster children, the homeless and newly

enrolled clients.

Today, nearly 85 percent of the full-benefit Medicaid

population is served by managed care.

Per RCW 74.09.522, “The Legislature finds that

competition in the managed health care marketplace

is enhanced, in the long term, by the existence of a

large number of managed health care system options

for Medicaid clients. In a managed care delivery

system, whose goal is to focus on prevention, primary

care, and improved enrollee health status, continuity

in care relationships is of substantial importance, and

disruption to clients and health care providers should

be minimized.”

As directed by the Legislature and to increase access

and improve quality of services provided,

Washington’s Apple Health (Medicaid) program has

largely shifted to managed care, with key exceptions:

 Federal law makes American Indian/Alaska

Natives voluntary and they are exempted

from managed care.

 Clients eligible for both Medicare and

Medicaid services are not enrolled in

managed care.

As directed in 2014 by House Bill 2572 and Senate

Bill 6312, the Health Care Authority and the

Department of Social and Health Services

implemented a phased approach to integrating

physical and behavioral health services in managed

care.

As of April 1, 2016, all Apple Health (Medicaid)

clients residing in Southwest Washington are

accessing all physical and behavioral health services

in an integrated, coordinated way.

Definitions

Managed care is a health care delivery system

organized to manage cost, utilization, and quality.

Medicaid managed care provides for the delivery of

Medicaid health benefits and additional services

through contracted arrangements between state

Medicaid agencies and managed care organizations

(MCOs) that accept a set per member per month

(capitation) payment for these services.

By contracting with various types of MCOs to deliver

Medicaid program health care services to their

beneficiaries, states can reduce Medicaid program

costs and better manage utilization of health services.

Improvement in health plan performance, health care

quality, and outcomes are key objectives of Medicaid

managed care.

Fee-for-service (FFS): Clients who are not served in

managed care receive services through the Medicaid

fee-for-service program, where HCA pays providers

directly for each service they provide.

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Managed care improves quality and manages costs

 Medicaid managed care models typically yield cost savings.

 Medicaid managed care improves health plan performance, health care quality, and outcomes for people

and families.

Managed care and fee-for-service comparison

Service

Managed

care

Fee-for-

service

Description

Care

coordination

Yes

MCOs provide care management to complex patients such

as the blind/disabled population in order to assure

patients connect to needed services, including community-

based resources such as housing and medical services (e.g.

specialty care). MCOs also provide access to 24/7 nurse

advice lines. Establishing similar services within a FFS

context would be prohibitively expensive, given the

necessary infrastructure and training. Such care

coordination is a feature of integrated managed care in

Southwest Washington, which includes the blind/disabled

population.

Outreach and

communication

to providers

and clients

Yes

MCOs engage in significant outreach with their clients,

including health risk assessments at time of enrollment

and extensive coordination of complex conditions and co-

morbidities. This does not occur for FFS populations.

Through provider outreach and contracting, MCOs

establish extensive primary care and specialty physician

networks that include providers that have not historically

participated in the Medicaid FFS program. In addition,

MCOs provide feedback reports to providers on quality

and utilization metrics.

Premium tax

Yes

Washington assesses a premium tax and WSHIP

assessment on all fully insured health plans, including

Medicaid MCOs. In combination, these assessments total

3% of premiums. Because there is federal match (as high

as 100% for newly eligible adults), the premium tax

results in net revenue to the state. For the blind/disabled

http://blogs.chicagotribune.com/files/lewinmedicaid.pdf

Service

Managed

care

Fee-for-

service

Description

population, the premium tax results in a net general fund-

state benefit of $21.5M annually.

Primary care

access

Yes

MCOs are contractually required to maintain adequate

primary care networks, and help patients establish care

with a primary care provider at time of enrollment. This

ensures patients have access to a primary care home and

“whole person” care. Such care has been shown to

improve clinical outcomes and reduce costs. FFS patients

are not assigned to a primary care provider and must find

their own providers.

Population

health

management

Yes

MCOs use data to define the needs of distinct populations

and reach out to these populations to proactively assure

they receive appropriate health care services, such as

preventive care. They also monitor trends with higher risk

populations such as unnecessary emergency room use to

assure appropriate intervention is made.

Performance

standards

Yes

MCOs are required to monitor and report customer

satisfaction scores, performance measure data (HEDIS),

and must meet network distance, customer service and

appointment timeliness standards to assure access and

quality of services. If thresholds of performance are not

met for key indicators, MCOs must establish corrective

action plans.

Quality

improvement

Yes

MCOs are required to follow national standards to develop

performance improvement plans MCOs are subject to

annual external quality review: quality oversight of access,

quality of care and timeliness.

Complex case

management

Yes

MCOs must meet national standards for how they help

clients with complex needs, such as referrals to other

services and medication management.

Utilization

management

Yes

Limited

MCOs use data and prior authorization processes to assure

appropriate, cost-effective health care at the right time,

right place with the right service. HCA provides clinical

oversight to ensure clinical standards of promptness and

Service

Managed

care

Fee-for-

service

Description

quality are met. Utilization management for FFS is limited

to certain services and provider types (e.g., dental, durable

medical equipment, rehab services) and is labor-intensive.

Appeal process

Yes

If the MCO denies a service, enrollees have access to the

MCO appeal process and the independent review process

managed by the Office of Insurance Commissioner. FFS

enrollees do not have this access to appeal and their first

option is an administrative hearing. The MCO appeal

process contains special enrollee protections (e.g.,

mandates a different reviewer decides on the appeal than

made the original denial decision) and is regulated by CFR

and monitored by the National Committee for Quality

Assurance (NCQA) and HCA.

National

standards

Yes

All MCOs are required to have NCQA accreditation, an

extensive process that provides ongoing quality assurance

monitoring. Included in this accreditation is a robust

enrollee grievance resolution process, monitored by both

NCQA and HCA. In some cases, MCOs are required to

provide written resolution. MCOs are required to report

grievances, actions and appeals to HCA each quarter.

Health

screenings and

assessments

Yes

MCOs are required to provide initial health screens and

initial health assessments. For clients who do not choose a

plan, managed care assignments are partially based on

health screening completion rates.

Identification of

special health

care needs

Yes

MCO contracts contain provisions for identifying enrollees

with special health care needs and providing care

coordination activities.

Transitional

health care

services

Yes

Assistance for enrollees upon hospital discharge or other

health care transitions.

Access to other

state services

Yes

Limited

MCOs provide support accessing services such as

transportation, interpreter services, housing and food

assistance. Similar direct assistance is available on a

limited and more ad hoc basis to FFS clients.