Several states phasing out primary care case management for Medicaid, but it still thrives in more rural areas
Primary Care / Medicaid
November 30, 1996
6 minutes read
Primary care case management (PCCM) has been a palatable and cost-effective alternative to HMOs for many states. It has done particularly well in areas where managed care is not spreading rapidly, such as Arkansas, New Mexico and South Dakota—the only three states that use PCCM solely.
But, as more states embrace capitation and risk-sharing arrangements, it is becoming a less attractive route for most states to deliver primary care to Medicaid recipients. While not set for extinction, state experts concede that it may be losing ground to managed care.
Currently, some 30 states have PCCM programs in place, according to the National Governors’ Association. Arkansas remains firmly committed to PCCM, but Michigan and Maryland are phasing out their programs. Massachusetts is considering whether to do the same. And Florida, which has the largest pool of Medicaid recipients in PCCM, will be shifting more of them into HMOs.
Under PCCM, recipients are assigned a primary care physician who gets a nominal monthly fee to manage care and make referrals for specialty services. It is basically a fee-for-service delivery system with a case manager.
Doctors find PCCM palatable because it enables them to transition into "managed care" without being held financially responsible for patient outcomes. Patients like it because it is not as restrictive as HMOs. And states like it because it attracts physicians to Medicaid, keeps Medicaid patients out of emergency rooms and provides them with a "medical home."
Arkansas, which has minimal managed care, says PCCM has cut costs and improved quality. A recent University of Arkansas study of the two-year-old program found it saved the state’s $1.3 billion Medicaid program nearly $31 million over 17 months, more than four times what officials had expected.
Although there remain access problems for a quarter of the Medicaid population, the study found that PCCM, overall, has improved primary care access for recipients and cut unnecessary use of hospital services, including emergency rooms. Lab and X-ray outlays alone dropped 11%.
Part of Arkansas’ success hinges on its electronic claims payment system, which lets doctors easily transmit claims, verify patient eligibility, and get reimbursed quickly.
Almost all doctors sign up
The system has been so effective that almost all doctors have signed up to treat Medicaid patients. The state also has been able to provide doctors comparative cost and quality performance data.
Medicaid Director Ray Hanley admits that budgetary or political pressures could force the state to more aggressively manage its Medicaid program. But he says the analysis of the first two years of experience with PCCM convinces him that the state can do a better job of controlling costs, delivering primary care, and boosting quality than HMOs ever could in his rural state.
Florida has had a PCCM program, called MediPass, since 1991. The state has been phasing in the enrollment of AFDC recipients and those on Supplemental Security Income. The program has grown rapidly in the last year as more populous areas of the state have come into the program. A 1995 University of Florida evaluation found that MediPass yielded a savings of about 13.7% over fee-for-service. Results from the survey of enrollees and physicians showed consistent patterns of satisfaction with the program. Despite the success, state officials are planning to steer more enrollees into HMOs.
Today, 670,440 recipients are in MediPass and 369,149 are in HMOs that contract with Medicaid. Medicaid recipients who failed to choose MediPass physician or an HMO were auto-assigned to MediPass. But, in 1997, those "defaults" will be auto-assigned both to HMOs and MediPass in order to level the playing field.
Charles Kight, program administrator, says the state is doing this because there are a lot of marketing curbs on HMOs in Florida. "We’ve limited their ability to gain access to this population," he says. Mr. Kight says the PCCM model has been a stepping stone to managed care for recipients and physicians and enables recipients to access primary care. Prior to this program, "there wasn’t much interest (among doctors) in participating with the Medicaid population," he acknowledges.
Mr. Kight says Florida isn’t rushing to end PCCM. "It has an important role," he says, but HMOs do, too.
In Maryland, which just got the go-ahead from the Department of Health and Human Services to shift its Medicaid population into mandatory managed care, the role PCCMs have played is over. Since 1991, about 300,000 Maryland Medicaid patients have had a choice of joining an HMO or a PCCM model. Only about a quarter of the population is in HMOs; about 45% are enrolled in PCCM.
Weakness of PCCM
John Folkemer, a deputy director in the Department of Health & Mental Hygiene, says the weakness of PCCM is that it allows providers to escape financial risk for patient care. He says the state would rather contract with managed care organizations (MCOs) and put the risk for patient outcomes on them.
The state is confident that it won’t disrupt patient relationships with primary care providers because it is encouraging physicians who have treated Medicaid patients to stay in the program and join an MCO. If a traditional provider isn’t able to get a contract, the state is authorized to assign the provider to a network.
Michigan Medicaid also is phasing out its PCCM program. While it has been contracting with HMOs for more than 20 years, in 1980 it began offering PCCM as well. Although PCCM has produced a 10% cut in Medicaid outlays, state officials have decided that MCOs would provide more coordinated and better quality care as well as being more cost effective, says Esther Reagan, assistant to the chief executive officer, Medical Services Administration. In February, the governor decided to phase out PCCM in areas where he could contract with MCOs willing to accept risk.
Ms. Reagan says an MCO would offer a medical home for patients as well as the budget predictability the state is seeking. The state is hoping to maintain relationships between patients and physicians by giving extra points during the competitive bidding process to MCOs that bring physicians into their network. "We are trying to show primary physicians that we did value and still value the relationship they have with those patients," she says. PCCM also will exist for awhile in rural, underserved areas of Michigan.
Massachusetts is considering following suit, a decision it will make by year’s end. More than half of its Medicaid population—280,000—is in PCCM. PCCM has enabled the state to make improvements over fee-for-service Medicaid and focus on quality efforts with providers, says Louise Bannister, assistant director for the PCCM program. Physicians have told her that Medicaid does a better job of funneling quality data to them than some commercial HMOs. Ms. Bannister acknowledges that the program is at a crossroads, however. To move the program to the next stage, the state would need to invest heavily in computers and staff and essentially become its own HMO.
"We are looking at whether we want to do that or whether we want to transition all of our Medicaid enrollees into commercially contracted HMOs," Ms. Bannister says. The state has saved money with PCCM; during the first year, it saved nearly $20 million. The second-year analysis is still underway.
Is PCCM a permanent fixture?
Although many states are going through similar soul-searching, experts agree that states will continue to rely on PCCM to control costs and beef up primary care access
Whether PCCM will remain a permanent fixture will depend on a mix of factors, including a state’s comfort with managed care and its budgetary demands, says Rachel Block, director of HCFA’s Medicaid managed care team. Ms. Block believes that, over the long run, "many states will keep PCCM as an option in at least some geographic areas for some populations."
—Janet Firshein
Contact Mr. Hanley at 501-682-8292; Mr. Kight at 904-488-5871; Ms. Reagan at 517-335-5000; Ms. Bannister at 617-348-5527; Mr. Folkemer at 410-786-9506; and Ms. Orloff at 202-624-5319.
Several states phasing out primary care case management for Medicaid, but it still thrives in more rural areas
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