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Experience in New York City suggests that Medicaid managed care may not be as effective in bringing about changes in facility operations as had been anticipated — at least not until there is a critical mass of enrollees in managed care plans and sufficient reimbursements to enable facilities to afford to make changes.
That’s the view of the United Hospital Fund of New York City following its third survey of ambulatory care facilities’ response to Medicaid managed care.
Meanwhile, an attorney who represents many safety net hospitals and community health centers says that with the managed care rollout in the city taking longer than expected, facilities receiving fee-for-service payments have no incentive or cash to use to fund improvements. "We thought fee for service would become irrelevant," Deborah Bachrach, an attorney with Kalkines, Arky, Zall & Bernstein in New York City, tells State Health Watch, "but it hasn’t."
Kathryn Haslinger, vice president for policy analysis at United Hospital Fund, tells SHW the organization’s survey was started when the state accelerated its policy push for Medicaid managed care. The survey was created to determine how sites have adapted to managed care and the impact it has had on facility finances. Surveyed are hospital outpatient departments and freestanding health centers.
The major finding from the three surveys is that the most important changes in provider operations occurred before managed care really took hold. And key indicators of site readiness, such as the availability of after-hours care, patient tracking, and financial incentives for primary care providers, still have not changed much between the 1997 and 1999 surveys.
All of the primary care sites responding to the survey in both 1997 and 1999 said they had patients who were members of Medicaid managed care plans. But most reported low managed care penetration, with only one in five Medicaid patients seen at the sites enrolled in managed care.
By making primary care services available after hours, providers may be better able to manage their patients’ care and reduce costly and avoidable emergency department use. In the 1997 survey, 77% of sites reported being open at least one evening a week, and 56% said they were open some weekend hours. Those levels of commitment to off-hours care remained essentially the same in 1999.
In general, according to the report, sites sponsored by the New York City Health and Hospitals Corporation and Federally Qualified Health Centers were somewhat more likely to offer evening hours, while freestanding clinics were more likely to be open on weekends.
After-hours care also includes assisting patients who seek care when facilities are closed. Nearly every site reported having an answering service or another provider available, by phone or at another location, where the site could refer patients when it was closed.
Analysts expect that a shift to managed care may encourage primary care practices to adopt operational practices that will help them track patients and make more efficient use of provider time, since missed appointments can reduce productivity as well as disrupt patient care regimens.
The surveys found that the number of sites that called patients to remind them of upcoming appointments did not change significantly from 1997 to 1999, with 46% of sites reporting making such calls most or all of the time in 1997, and 50% doing so in 1999.
Primary care providers also may try to track patient visits and make calls after patients have missed appointments. The number of sites reporting they took such steps rose significantly from nearly 21% in 1997 to 36% in 1999. The Fund says the modest changes overall in patient tracking suggest that sites may be responding to the new managed care environment, with the relatively small improvement due to limited managed care penetration or a belief that the practices are not worthwhile or cost-effective.
A more direct indicator of the influence of managed care may be a site’s use of bonuses or other kinds of financial incentives to primary care providers to encourage them to increase efficiency or productivity and to monitor patient utilization or emergency department use. According to the survey, only 16% of sites reported offering such bonuses or incentives in 1997, and the figure only rose to 19% in 1999.
Ms. Haslinger says the survey findings "may suggest that managed care is very difficult to do. There is a real concern that low-income people have access to services and be able to make informed choices, and it may be that we are not able to keep up with what was an ambitious rollout schedule."
The United Hospital Fund suggests that one reason there only have been small changes between 1997 and 1999 is the delay in implementation of mandatory managed care. "Plans and providers focused on the state’s shift to managed care with considerable expectation. Managed care plans stepped up their voluntary enrollment activities with Medicaid patients in 1995, anticipating the switch to mandatory enrollment that would come [as part of the Section 1115 waiver demonstration project]. Repeated delays . . . and the long wait prior to mandatory enrollment caused plans and providers to lose momentum in their efforts to prepare for managed care."
Ms. Haslinger notes that the roll-out still is in Phase I, which was planned to be a modest beginning and included portions of a pre-existing 1915b waiver project in southwest Brooklyn. "It’s still mostly a voluntary program," she adds.
The report says the lack of significant change also may be due to the limited benefits many sites have realized from their efforts to manage care. Many sites had already adopted after-hours care to better meet the needs of their patients. On other indicators, however, providers could see too little return from their efforts to track patients and little reason to offer primary care providers financial incentives to be more productive.
Also, they may have limited resources available to use to further prepare for managed care.
"Many primary care providers operate with very small margins and have few reserves to invest in managed care readiness," the report says.
"The shift to managed care often means a loss of revenue for these facilities, and the rising number of uninsured persons imposes additional burdens on many sites. These financial strains give sites little recourse, and many may be financially unable to make the changes necessary to adapt to Medicaid managed care. As mandatory enrollment continues, . . . monitoring these sites’ efforts to adapt to the changing health care environment will be crucial," according to the report.
Ms. Haslinger says that in terms of national policy, it is fair to ask the extent to which Medicaid managed care can be looked to as a means of leveraging changes in provider behavior. She also stresses the financial problems faced by facilities. "It’s not reasonable to expect an investment [in information systems, for example] when the income isn’t there."
Ms. Bachrach, whose firm represents many safety net hospitals and community health centers, says that with the slow rollout, many Medicaid patients will remain in fee-for-service programs. But those fee-for-service payments don’t provide any incentives for facilities to help restructure the health care system.
She says there is a need for system restructuring to provide "increased continuity of care and increased care management, the hallmarks of any top-notch primary care system. We’ve seen some movement in that direction under Medicaid managed care, but the fee-for-service payments need to change."
Hospital outpatient rates have been capped at the mid-$60s for more than a decade, Ms. Bachrach says, and the diagnosis and treatment center rate has been frozen for more than eight years.
"The state should reevaluate and adjust the fee-for-service rates to reflect the higher level of care that is being delivered now and will be delivered in the future," she says.
"And the managed care rollout needs to be on a more definite time schedule so facilities can plan. We anticipated an immediate rollout six years ago, but that hasn’t happened.
"Plans for changes that institutions made fell by the wayside as other priorities came up. This is an issue that the administration and legislature need to seriously consider if we’re serious about improving the quality of care for these populations," Ms. Bachrach explains.
[For more information, contact Kathryn Haslinger at (212) 494-0700 and Deborah Bachrach at (212) 830-7223.]