[Senate Hearing 109-754]
[From the U.S. Government Publishing Office]
S. Hrg. 109-754
SECURING MEDICAID'S FUTURE:
SPOTLIGHT ON MANAGED CARE
=======================================================================
ROUNDTABLE
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC
__________
SEPTEMBER 13, 2006
__________
Serial No. 109-31
Printed for the use of the Special Committee on Aging
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SPECIAL COMMITTEE ON AGING
GORDON SMITH, Oregon, Chairman
RICHARD SHELBY, Alabama HERB KOHL, Wisconsin
SUSAN COLLINS, Maine JAMES M. JEFFORDS, Vermont
JAMES M. TALENT, Missouri RON WYDEN, Oregon
ELIZABETH DOLE, North Carolina BLANCHE L. LINCOLN, Arkansas
MEL MARTINEZ, Florida EVAN BAYH, Indiana
LARRY E. CRAIG, Idaho THOMAS R. CARPER, Delaware
RICK SANTORUM, Pennsylvania BILL NELSON, Florida
CONRAD BURNS, Montana HILLARY RODHAM CLINTON, New York
LAMAR ALEXANDER, Tennessee KEN SALAZAR, Colorado
JIM DEMINT, South Carolina
Catherine Finley, Staff Director
Julie Cohen, Ranking Member Staff Director
(ii)
?
C O N T E N T S
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Page
Opening Statement of Senator Gordon Smith........................ 1
Opening Statement of Senator Herb Kohl........................... 2
Panel of Witnesses
Anthony Rodgers, director, Arizona Health Care Cost Containment
System, Phoenix, AZ............................................ 3
Ron Pollack, executive director, Families, USA, Washington, DC... 28
Jeffrey S. Crowley, senior research scholar, Health Policy
Institute, Georgetown University, Washington, DC............... 37
Greg Nycz, director, Family Health Center of Marshfield, Inc.,
Marshfield, WI, on behalf of the National Association of
Community Health Centers....................................... 54
David Ford, president and chief executive officer, CareOregon,
Portland, OR................................................... 63
Daniel J. Hilferty, president and chief executive officer,
AmeriHealth Mercy and Keystone Mercy Health Plans,
Philadelphia, PA............................................... 84
(iii)
SECURING MEDICAID'S FUTURE: SPOTLIGHT ON MANAGED CARE
---------- --
WEDNESDAY, SEPTEMBER 13, 2006
U.S. Senate,
Special Committee on Aging,
Washington, DC.
A Committee Roundtable was convened, pursuant to notice, at
10:06 a.m., in room SD-562, Dirksen Senate Office Building,
Hon. Gordon H. Smith (chairman of the committee) presiding.
Present: Senators Smith and Kohl.
OPENING STATEMENT OF SENATOR GORDON H. SMITH, CHAIRMAN
The Chairman. Thank you all for coming to this, I think,
very important discussion. Senator Kohl and I share a very
similar position when it comes to Medicaid and understanding
its centrality as part of our safety net to the poor, the
disabled, the elderly, and those particularly with difficult
cases of chronic disease. Yet, I think we both recognize that
as it was structured in 1965, Medicaid is not sustainable. But
notwithstanding that, we have got to preserve it.
Senator Kohl and I, I think, voted the same way on the
budget reduction package because my belief was that there was a
right way and a wrong way to pursue Medicaid reform. I wasn't
persuaded that a budgetary number was the right way to do it if
we are going to be sincere about protecting our most vulnerable
Americans.
I know there are many different opinions about managed
care, or managed anything, frankly. It tends to divide people
along ideological lines, and yet I recognize there is a need
for Medicaid reform. I am sure Senator Kohl will speak for
himself, but I think everybody sees the awful arithmetic we are
facing, and so we are looking for ideas.
I would very much like to produce a legislative package
which represents Medicaid reform as it ought to be done, and
managed care is being done successfully by some companies in my
State and certainly I think the State of Arizona represents a
fairly remarkable model. But I have got many questions and I
think you all have ideas that can help shine a light on this
subject in a way that we can take the best ideas as they are
being developed around the country and put them into a
legislative package to incentivize States to pursue this in a
way that we can keep the promise of Medicaid and be fiscal
stewards of this Nation in a way that is fair to our children.
So that is the purpose of this roundtable. Again, it is not
a hearing in the traditional sense because I want this to be
conversational. I want it to be just more open and I want
everybody to feel comfortable and at home here because whatever
your perspective is, I think we all share the common desire to
preserve Medicaid and reform it in a way that is careful and
thoughtful.
So each of you will have time to make a presentation and
Senator Kohl and I will ask questions, maybe even interrupt you
to make sure we fully understand the points you are making and
glean from you the ideas that are going to be so necessary to
what we inevitably have to do, which is Medicaid reform the
right way, not just a budgetary way. So we value your time and
we thank you very much for your presence here today.
With that, I will turn it over to Senator Kohl.
OPENING STATEMENT OF SENATOR HERB KOHL
Senator Kohl. Well, we thank you, Mr. Chairman, and along
with you we welcome all of our distinguished participants here
today.
There is no question that the current trends in Medicaid
growth and spending are not sustainable for the Federal or the
State governments. We all agree that we need to cut costs. The
question, of course, is how to do that without endangering the
most vulnerable people in our society.
We are pleased to have with us today a distinguished panel
of experts as we explore Medicaid managed care for our high-
cost populations such as dual-eligibles, the disabled and
people with chronic conditions. We look forward to hearing your
recommendations to improve the care they receive through better
coordination of services, while at the same time looking for
ways to reduce costs.
So we thank the Chairman and we thank all of you for being
here, and I am sure this will be an enlightening roundtable
experience.
The Chairman. Thank you, Senator Kohl, and you all may
already know each other, but let me just read an introduction.
The most formal part of this is just going to be to read who
you are here.
Anthony, or Tony Rodgers, if I can call you Tony, is the
director of the Arizona Medicaid program known as the Health
Care Cost Containment System.
Ron Pollack is the executive director of Families USA. He
is a well-known Medicaid advocate, and it is probably not well
known that he is a friend of mine. Thank you, Ron, for being
here.
Jeff Crowley is an expert on disability policy and senior
research scholar at the Health Policy Institute at Georgetown
University. Thank you, Jeff.
David Ford is the president and CEO of CareOregon, a
Medicaid managed care company in Oregon, and a constituent.
Dan Hilferty is the president and CEO of AmeriHealth Mercy,
a large multi-State Medicaid managed care company, and we thank
you for being here as well.
Senator Kohl. We have with us Greg Nycz, who is here from
Wisconsin. He is the director of Health Policy for Marshfield
Clinic, and also the director of the Family Health Center of
Marshfield, a federally funded community health center in
Wisconsin. Greg has been involved with the planning for and
operation of the Family Health Center of Marshfield for over 33
years. He has extensive experience in Medicaid managed care,
having had primary responsibility in the initial contracting
for Medicaid managed care in north central Wisconsin. He
continues to serve on many State advisory groups dealing with
Medicaid managed care contracting.
Thank you for being here.
The Chairman. I didn't introduce you, Greg, because you are
his constituent. I didn't want you to feel left out here.
So, Tony, why don't we start with you and let's see what we
can learn from Arizona. We did have your Governor via
teleconference recently and we appreciated her participation in
our hearing.
STATEMENT OF ANTHONY RODGERS, DIRECTOR, ARIZONA HEALTH CARE
COST CONTAINMENT SYSTEM, PHOENIX, AZ
Mr. Rodgers. Well, thank you, Chairman Smith and Senator
Kohl, and I appreciate the opportunity to participate in this
roundtable, although this isn't quite a roundtable, but that is
OK, and to have an opportunity to discuss our Medicaid managed
care model in Arizona. It is my hope that my written testimony
and the insights that we provide during the discussion will
provide some direction for Congress in terms of some solutions
for Medicaid.
The Arizona Health Care Cost Containment System, called
AHCCCS, for short, was established in 1982. Its principal goal
was to provide quality of care, at the same time cost
containment. We believe these are not mutually exclusive. Over
the years, AHCCCS has been recognized as one of the best-run
Medicaid programs in the United States and we have learned a
few lessons in that time.
I would like to first talk about financial accountability
and cost controls--one of the areas that we have learned that,
as the name implies, cost containment is really important in
Medicaid. We have an underlying belief that unnecessary and
untimely medical care, medications, emergency care and in-
patient care drives costs up in the Medicaid program.
We have learned that the best-performing health plans have
invested in medical management information systems and the
capability of their organizational core competency to
effectively managed members' care, especially the chronically
ill or those who have high-cost medical conditions. We have
found that about 20 to 25 percent of our members generate about
80 percent of our medical costs. Effective case management of
those members has a significant impact on controlling Medicaid
costs.
Another lesson I would like to share with you is that we
have had a great deal of success with our drug management
programs through our health plans. We have the highest generic
use of any Medicaid agency and this is because our plans use
generics first before they go to the most expensive brand, if a
generic is available. Effective drug management is a hallmark
of our Arizona Medicaid program. It was supported in a report
that was done by the Lewin Group that compared Arizona Medicaid
to other Medicaid programs, and it found that in our acute care
program our average cost was $14.75 per prescription, compared
to an average of $47.10 per prescription for Medicaid fee-for-
service programs. In long-term care, our average generic use
was 76.5 percent and a prescription cost of $38.91, compared to
29 percent in other Medicaid fee-for-service programs and $69
per prescription in those programs.
One of the basic tenets of the managed care program in
Arizona is that paying capitation to managed care health plans
that is based on a per-member, per-month reimbursement schedule
needs to be actuarily sound. You have to realize that we
transfer full medical risk to our health plans. To make the
capitation work, you need two things. You need adequate
membership and you need the ability of the plan to manage its
medical risk, and larger memberships or assuring adequate
membership helps them to do that.
But you also have to realize that we don't encourage our
health plans to capitate their provider groups. We would rather
them pay them fee for service and set appropriate rates. In
fact, we probably are one of the few States that is able to set
rates at or close to the Medicare rates for our members.
Additionally, I would like to just quickly talk about
actuarial soundness. Actuarial soundness is an important
principle that is, in essence, a contract between the State and
the health plan that we are going to provide actuarily sound
rates to them. This allows them to have stable financials, as
well as it stabilizes our provider network.
In terms of what happens when you have a stable provider
network, we just have a recent study by Arizona State
University that shows emergency room use in our Medicaid
program was lower than the incidence of emergency room use in
commercial plans. So, actually, our Medicaid program had lower
emergency room use than other commercial plans in our State.
I would like to talk a little bit about our fraud and abuse
program. One of the other benefits of having health plans is
that they also participate and collaborate in fraud and abuse
detection, and this helps us really rout out and prevent fraud
and abuse in our program.
Then, finally, Arizona has the opportunity to make a
quantum leap, achieving even greater program efficiency,
patient care quality and cost transparency. Because of our
Medicaid managed care, Arizona is well organized in its
provider networks and its integrated medical management
processes. That positions us to more rapidly deploy information
technology and to exchange critical personal health information
of our Medicaid members to our provider networks.
I look forward, Mr. Chairman, to this dialog. I think it is
an important dialog and I appreciate this opportunity. Thank
you.
The Chairman. Tony, I live in a very rural part of Oregon
and most of my Udall cousins live in eastern Arizona, in places
like Safford and Thatcher. I guess one of the concerns I have
as a rural Oregonian is how capitated managed care works in
rural communities.
I imagine, David, you would probably admit there is not a
lot of managed care in eastern Oregon. It is only where the
people are. So how do we take care of rural folks in Arizona?
Mr. Rodgers. Mr. Chairman, we have actually found that it
stabilizes the network in the rural area because we can verify
who the members are. Because we are shifting them from
hospitalization and emergency room use of hospitals into the
provider network, it actually gives primary care physicians and
others revenues from our program because we have contracts with
those rural health organizations, everything from our rural
health community clinics to individual providers.
Because we pay fee-for-service, those individual providers
are able to sustain their practices out in those rural areas.
So it has really worked to the benefit of our rural communities
because without Medicaid in those communities, if there were a
number of uninsured, those providers would not be able to stand
in terms of financial stability.
The Chairman. It might have taken a little longer to get to
rural Arizona, but it is there now?
Mr. Rodgers. Yes. Actually, we have been mandatory Medicaid
since the inception. So from the beginning, we have had plans
that have specialized in those rural communities and have
learned how to work with the providers. Because we are able to
integrate health care between the rural communities and
sometimes the tertiary care centers, it really works to control
costs because our goal is to give every person a primary care
physician that is going to be their normal place that they will
go and get care, whether that is a community clinic or whether
that is an individual community provider. So it has worked very
well.
The Chairman. Can you speak a little more specifically to
what incentives you have provided, what oversight you provide,
you know, contract negotiations that, on the one hand, allow
you to capitate things, but on the other hand I think the
concern of many is corners are not cut when it comes to care,
and particularly those with chronic disabilities, dual-
eligibles and the like?
Mr. Rodgers. Well, I think there are three underlying
strategies or operational processes that really help our
process with our health plans. No. 1, we set rates that are
actuarily sound, so we do look at utilization and we look at
cost, and we escalate our rates or increase our rates based on
what we are seeing in the care of members. If we have members
at risk or high risk in a plan, there is an adjustment that is
given to those plans.
In addition to that, our plans over the years have
developed sophisticated medical management programs and case
management, and so they do a lot of prevention especially in
long-term care. Especially with our dual eligibles, there are a
lot of touch points that our plans have with those individual
patients, and the reason is that they are at risk for the costs
and they know if they do early detection, prevention and get
the member to see their primary care physician, it reduces
emergency room use and it reduces in-patient care.
In addition to that, over time, it has allowed a whole
network of home and community-based services to develop in both
the rural as well as the urban areas because we are funding
those services. So, over time, we have been able to elevate the
resources the communities in those communities as well.
The final thing is that our plans pay fee for service, and
physicians in our communities and the other providers like fee
for service. Capitated relationships with providers is much
more difficult for them to manage. But by paying fee for
service and us overseeing that they are paying correctly and
that they are paying on time, it has made it possible for our
provider network to be very stable. We have about 85 percent of
the Arizona providers participating.
The Chairman. Do you know Ron Pollack, next to you?
Mr. Rodgers. Yes, Ron and I have met.
The Chairman. Do you have a Ron Pollack in Arizona,
somebody who is an advocate for care?
Mr. Rodgers. We have a number of organizations that
advocate for care. One of them is our children's health
alliance or children's alliance. They do a lot of focused
effort around children's insurance programs and they have been
a great supporter of AHCCCS. I understand why advocates feel
concerns about managed care. If it is done poorly, it does
create a lot of problems. So it is important that the States
that are getting involved know how to manage managed care, and
if they do, it actually works better for access to providers.
One of the problems we saw in the early days when I was in
California--I ran a county hospital--we would often get people
who would say I can't find a doctor who will take Medicaid. In
managed care, all the doctors are under contract, so you know
they are going to take Medicaid. So that has really helped our
members quite a bit.
The Chairman. So Arizona's version of Ron Pollack--if they
were here, they would like what you are saying and they would
agree with it?
Mr. Rodgers. I believe so.
The Chairman. Senator Kohl.
Senator Kohl. Go ahead.
[The prepared statement of Mr. Rodgers follows:]
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The Chairman. Ron Pollack, take it away.
STATEMENT OF RON POLLACK, EXECUTIVE DIRECTOR, FAMILIES USA,
WASHINGTON, DC
Mr. Pollack. Thank you, Mr. Chairman. Thank you, Senator
Kohl. I want to thank you before I begin on two counts, one for
conducting this roundtable or----
The Chairman. Square table today.
Mr. Pollack [continuing]. Or square table discussion.
The Chairman. We will be square pegs instead of round pegs
today.
Mr. Pollack. I appreciate the opportunity for the give-and-
take that this affords. This is a very important issue because
it affects as many as approximately 12 million people. They are
the people who need health care the most, and so I deeply
appreciate that.
But I would be remiss not to thank you for the leadership
you have steadfastly provided in terms of the Medicaid program
and protecting and strengthening the program. I think next year
is going to be a challenging year on that score and we look
forward to working with you next year and for many years in the
future.
The Chairman. It will be my pleasure to work with you on
it.
Mr. Pollack. Thank you. I want to start off by just
mentioning that it is important to put in perspective who this
population is that we are talking about today. This critically
important group constitutes less than a quarter of the Medicaid
population and it is the population for whom Medicaid is
literally a lifeline. They also constitute the people who
consume two-thirds of the cost of the program.
By the way, this is not so surprising. There is a recent
book published that was written by Katherine Swartz at Harvard
where she talked about the overall population in terms of
health care, and her findings were that 10 percent of the
American population consume 70 percent of all costs. Actually,
the lowest 50 percent of the population that consumes the least
consumes only 3 percent of the cost. So it is very important
for us to have this conversation today.
Before I go to the heart of what I want to say, I would
like to offer two prefatory comments. The first is that the
primary consideration as we deal with the populations who are
dual-eligibles or eligible for SSI or SSDI is to improve
quality of care. That clearly has to be our top consideration.
I think it is very possible, with improved coordination of
care, to improve quality of care. This is especially important
because this population tends to have multiple chronic
conditions. It is not just one condition for which they go to
see numerous specialists, and to have care coordination is
critically important.
The second prefatory comment I want to make is that, if we
improve quality of care, we might get some cost efficiencies.
That is a far better way to go about trying to deal with
budget-related issues applicable to Medicaid than arbitrarily
cutting eligibility, cutting benefits, or increasing cost-
sharing. My hope is we can wed together improvements in quality
of care and make some cost efficiencies in the process.
Now, Mr. Chairman, you opened up this hearing by saying
that this issue often is viewed as an ideological issue. I am
very much with you in hoping it is not an ideological issue. I
think we do a disservice to everybody if this is an ideological
issue.
The Chairman. I am not saying it should be.
Mr. Pollack. No, no, no, I understand. That is why I am
saying I agree with you that it should not be an ideological
issue. It should be a practical question and we should try to
make sure that we do something that is going to improve the
quality of services and, hopefully in the process, improve the
Medicaid program.
Now, there are several key protections that already exist
for people who are in Medicaid managed care and I will mention
those in a moment. Then I would like to mention some key
protections that I think are important if we extend Medicaid
managed care to this vulnerable population.
Under the Balanced Budget Act of 1997, there are some key
protections that are provided to people who are in Medicaid
managed care and they are very important and they should be
extended to this new population as well. First, enrollees
should have a choice of plans and they should be able to change
plans within the first 90 days and they should be able to
switch every year.
The Chairman. On that point, Ron, can I ask Tony, do they
have a choice of plans in Arizona?
Mr. Rodgers. Yes, they do.
Mr. Pollack. Second, with default enrollments, we should
make sure that we protect existing provider relationships. That
is also critically important. Third, we need to provide
meaningful information for people so that they know what their
choices are, their rights, the benefits, cost-sharing, and the
grievance procedures. Finally, emergency services should be
available without prior authorization using the prudent
layperson rule, so that people who have an unexpected emergency
can go to the nearest facility and get care.
In my testimony, I suggested about a dozen different areas
of additional protections that should be established. I just
want to focus quickly on four; I will mention them and for time
considerations be real brief about it. First, it is critically
important that there be serious care coordination. What is very
important is that there be a sufficient number of care
coordinators available so that they realistically can serve
this population.
One care coordinator for 1,000, 2,000 people does not cut
it, and we shouldn't just have care coordination when emergency
circumstances occur. There has to be a reasonable ratio of
staff for care coordination. There need to be reasonable
standards for care coordination, and I think some real benefits
can come from that and hopefully that will result in some cost
savings and improved care.
Second, I think it is very important to have some type of
ombudsman services so that an individual who is dealing with
some significant health problems can go to a trusted adviser
who can help them understand what their choices are, what their
rights and responsibilities are, and if there are grievances,
can help them with those. Texas and Minnesota have experimented
with it very successfully and I think it is very well worth
doing.
Third, we need to make sure there are specific quality
measures so we make sure that this kind of managed care
actually improves the condition of people. We need to have
assessments about improvements in the functional status of
enrollees, access to care coordination, preparation for care
transitions, and access to behavioral health services that are
very important.
Last, you asked the question about rural parts of a State,
like in Oregon. We need to make sure that, before we require
and implement managed care for this population, the
geographical areas are truly prepared to serve these people,
that there are good primary care networks, and that specialist
networks, and that there are no disruptions in care.
So, in sum, I would say I think the prospects of doing
something in managed care are very well worth pursuing. They
have to be done carefully and we have to make sure that the end
results improves quality of care.
The Chairman. Ron, I want to ask which States, in your
view, in your judgment, are doing it well sufficient that you
would be comfortable with their models, if incentivized on a
national basis.
Mr. Pollack. I think there are some positive things that
you can see in a number of States and some things you need to
be cautious about in a number of States. No State is perfect,
no State is doing a horrible job. So my hope is that given that
we have had some States that have experimented with managed
care for this population we can take the best of what States
have done and try to emulate that. I don't think any single
State would be the model in totality.
The Chairman. That is very good. We will keep the dialog up
as we try to put together a legislative package of incentives
to States. Obviously, we have got to find ways to save money,
but I want to state for the record I share your priority, which
is frankly quality care, and one can't be sacrificed to the
other.
Mr. Pollack. It might well be, Senator, that for those
States or those areas where managed care is being introduced
for the first time, there is going to have to be some
investment, because you have to invest in creating an
infrastructure, and so there may be some short-term costs. But,
hopefully, you will see reductions in emergency care. We will
see more people taking generic drugs. We will hopefully make
sure that there is coordination among the different specialists
who are treating somebody, so that one specialist is not
causing a problem in yet another area that they do not
specialize in. Hopefully, we will have more home and community
care rather than institutional care. All those things offer
promise, but they also require investment in infrastructure.
The Chairman. When you think of investment in
infrastructure, one of my other committee assignments is on the
Commerce Committee and there are just some really exciting
things out there in terms of medical technology and
telecommuting. I don't know if you are familiar with the
Veterans Administration health system, but I was at Roseberg,
OR, the other day and literally watched a physician through a
computer and videoconferencing literally treat a man for
everything he needed right there, and did it almost, I suppose,
with all of the effectiveness of if the guy were in his office
and he was doing it from hundreds of miles away.
I don't know if that is what you have in mind or if that
meets the standard of infrastructure you think is necessary.
Mr. Pollack. Clearly, those kinds of things require
investment before they can truly be implemented, and so it is
very important not to be impatient about this. You can't just
throw managed care into a place that is not prepared to do it,
and so short-term, there probably are likely to be some
additional costs. Hopefully, in the long term, it not only will
improve quality, but also will achieve some efficiencies.
The Chairman. Very good. Thank you so much.
[The prepared statement of Mr. Pollack follows:]
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The Chairman. Jeff.
STATEMENT OF JEFFREY S. CROWLEY, SENIOR RESEARCH SCHOLAR,
HEALTH POLICY INSTITUTE, GEORGETOWN UNIVERSITY, WASHINGTON, DC
Mr. Crowley. Mr. Chairman, Senator Kohl, thank you for the
invitation to provide a disability perspective as you consider
these issues. I also want to echo what Ron said. I know the
range of disability and HIV groups I work with are really
appreciative of the leadership of both of you over the last
year and hope it that will continue as we go forward.
From my vantage point, it appears that much of the current
policy discussion related to managed care is really about how
to apply managed care to have greater managed long-term care
and how to use this to integrate acute and long-term services
for dual-eligibles. I recognize that this creates some real
opportunities, but I really approach this conversation with
great trepidation.
Today, I don't think we have proven large-scale models for
delivering long-term services and supports in the managed care
environment. Arizona is the only Medicaid managed long-term
care program that operates both statewide and on a mandatory
basis. A number of States have established managed long-term
care programs, but they remain quite small in scale.
Turning to integrated care for dual eligibles, I would say
many of the same things. Large-scale and proven models for
integrating care just simply do not exist yet. So since these
fields are really in their infancy and seniors and people with
disabilities are quite vulnerable, States should not be
permitted through waivers or other initiatives to mandate
participation in these new programs. Further, I think seniors
and people with disabilities need to be engaged in meaningful
partnerships in developing these new programs.
Now, it feels like in the past we have seen that States and
managed care organizations, or MCOs, don't really know how to
work with beneficiary representatives or they don't really
believe that they have the technical expertise needed to really
provide a meaningful contribution. But when we look at
developing workable managed long-term care programs, I think it
is actually the beneficiaries that have expertise related to
their own service needs or how to efficiently provide those
services that managed care organizations simply don't have on
their own.
So, in short, I would say encourage States to experiment in
these areas, but please recognize that it is really premature
to think about mandating participation or about giving States
more flexibility that essentially means waiving essential
beneficiary protections.
Now, in the context of managed acute care services, I think
over time a number of tools have evolved to help us ensure
accountability for what we are purchasing, and this includes a
number of things like the development of clinical practice
standards, adoption of consumer protection systems and the
development of performance measures that allow us to measure
how well MCOs are meeting their obligations. Comparable tools
for managed long-term services do not exist at this time.
So one thing I think the Congress could do is play an
important role in encouraging the development of performance
measures for long-term care. So if we are talking about moving
to managed care and constructing a system based on contracts
where these companies will deliver services, let's develop the
tools to make sure we are getting what we pay for.
The Chairman. CMS has none of that at this point?
Mr. Crowley. No. There is a private group called the Center
for Health Care Strategies that has begun some of this work,
but I think we really need a larger-scale effort to do this. I
would say performance measures for long-term services maybe are
more difficult to develop than acute care. In the acute care
environment, maybe it is easy to say, if you are a new enrollee
we expect you to be screened within a specific period of time,
or we can demonstrate how often we want you to be able to see
your doctor. We are not really sure what we are talking about,
and we are probably talking about less clinical measures for
long-term care when we are talking about people that come into
people's homes and provide personal assistance. It is just a
very different situation.
I would also say that much has been learned over the past
decade about how to do managed care and how not to do managed
care for people with disabilities, and some of things I am
going to say might sound self-evident, but let me just run
through what I think are some key lessons from the past.
The first is go slowly in implementing managed care
programs. The second is that we have to ensure that payments to
MCOs and providers are adequate, and I would really like to
support many of the comments that Mr. Rodgers made about the
importance of actuarially sound payment rates. I think that is
really a critical issue.
We also need to ensure that States maintain an adequate
Medicaid administrative infrastructure. I think some States 10
years ago maybe thought that managed care was going to allow
them to just wash their hands and turn over the headaches of
running a Medicaid program. I think we have learned that that
is not the case and to do managed care right we need to have
people in Medicaid offices actually managing what the MCOs are
doing.
I also think an important area from a disability
perspective is promoting disability care coordination
organizations as a way to use managed care. There are a
relatively small number of these programs that operate around
the country and they coordinate publicly funded medical and
social services and they blend attributes of both social
services and health care organizations. These may be a way that
States could apply the managed care tools to serve people with
disabilities, but minimizing some of the drawbacks we have seen
when States have tried to just serve people with disabilities
in statewide managed care programs developed for the general
Medicaid population.
Then, last, I think we need to consider strengthening
consumer protections. Among other things, this may include more
protections to ensure access not just to qualified providers,
but also experienced providers, requiring States to demonstrate
their capacity before implementing managed long-term care
programs and strengthening beneficiary appeals protections.
So in closing, I would just like to say I am encouraged
that the Aging Committee is considering these issues, and I
would encourage you to look for opportunities, but also protect
beneficiaries, and also the large Federal financial investment
to make sure that we don't rush into new, maybe irresponsible
or wasteful approaches to managed care that don't really help
anybody and may promise more than they can deliver.
So again thank you for inviting me to participate in the
roundtable.
The Chairman. You had a number of really important points
that we should remember in any legislation that we are able to
produce. If you wanted to highlight just one that you just have
to have in any legislation going forward that encourages
managed care, what would that be?
Mr. Crowley. One consumer protection?
The Chairman. Yes.
Mr. Crowley. I guess I would say ensure that beneficiaries
have a right to get access to the providers they need, and so
that means a number of things. It is making sure we have the
networks that are adequate, but there might be very specific
cases where there might be only one qualified or experienced
provider for an individual in their community and they could be
outside the network. So we need structures to allow people to
get outside the networks to get what they need. That is not
about saying everybody needs those rights. We are talking about
really providing a safety valve for those very specific cases.
The Chairman. Of dual-eligibles and chronic----
Mr. Crowley. Right, exactly.
The Chairman. You talked about contract specificity. Do you
think that was the result of poor training, lack of knowledge
or just States wanting to wash their hands of Medicaid and
their responsibility and turn it over to----
Mr. Crowley. Yes. Some of this I said more in my written
statement about the importance of well-written contracts, and I
think what we have seen is that managed care is a major shift
and when States first got into it, they were learning and they
didn't really know what they were doing. I think over the last
decade, we have seen that they have learned that they are
actually purchasing a product and to get what they are paying
for, they have got to be very specific in writing down in this
contract what they expect. I think that has actually been a
major sign of progress that we have seen over the last decade
is that States have gotten much better at doing this.
The Chairman. Tony, does that ring true to you and is that
Arizona's experience?
Mr. Rodgers. Mr. Chairman, absolutely. The management of
managed care, which is the State's responsibility, does require
core competencies of the State employees on how to look at the
performance of a health plan. Over time, you develop your
performance measures and your control points. The contractual
relationship has to be monitored and when a plan is not meeting
their contractual relationship, there has got to be sanctions.
Some States have kind of--and I have talked to other States
about this--a fear factor of, well, we don't want to be too
tough. But the managed care organizations respond to this
because each of the managed care organizations that is
performing has invested. If you allow a managed care
organization not to perform, you are, in essence, penalizing
those who are performing. So that is an important role that the
State plays and you have to have the core competency.
I agree it does take time to build that, but the benefits
later--you really begin to see increase in community-based
services. You see a stable network, and then you can start to
build on that--new quality measures, new performance
requirements--and really do best practices. One of the major
concerns I have is there is no comparability between States in
terms of how they are paying into their care and whether it is
justified. I look at what other States are paying PMPM and I
just wonder how is that justified compared to what we are
paying PMPM, so to speak.
[The prepared statement of Mr. Crowley follows:]
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The Chairman. Greg, take it away.
STATEMENT OF GREG NYCZ, DIRECTOR, FAMILY HEALTH CENTER OF
MARSHFIELD, INC., MARSHFIELD, WI; ON BEHALF OF THE NATIONAL
ASSOCIATION OF COMMUNITY HEALTH CENTERS
Mr. Nycz. Chairman Smith and Senator Kohl, what I hope to
add to this conversation is the concept that managed care, does
not always have to occur in the third-party environment. Growth
in technology, electronic medical records and health care
systems, provides opportunities to manage care at the provider
point of contact level. This can be particularly important in
some of those rural areas that you talked about.
Last year, as a federally funded community health center,
we served over 45,000 low-income people, all of whom were under
200 percent of the Federal poverty level. Of those, about 6,000
were the folks you are most interested in today, the dual-
eligibles and special needs Medicaid population.
I would really like to state my appreciation for what you
are trying to do in launching this initiative. I was really
excited to hear you were pursuing a more challenging and
potentially more rewarding path than simply just cutting
Medicaid spending. I think this is terrific.
I would also like to thank you for your support in
expanding our Nation's community health centers which work as
front-line providers to meet the health care needs of our
Nation's most vulnerable residents. With the support of
Congress and the President, we have had an opportunity to
expand over the last few years and the privilege to now serve
over 14 million of our Nation's most vulnerable citizens in
over 5,000 center sites across this Nation.
If we are to add value for taxpayers and also protect and
promote health for our neighbors with limited incomes, we must
manage their care more effectively across the continuum of
financing systems as people move from Medicaid to uninsured and
back to Medicaid. If we forget about them when they are
uninsured, they come back into Medicaid with much higher costs
and needs, and a lot of work that was done in managing their
care in Medicaid is lost in the interim when they go through an
episode without insurance.
I believe that to achieve this we must pay attention to
strengthening the primary care infrastructure and fully
capitalizing on the value of the medical home concept, which
was mentioned as important in the Arizona experience. By
medical home I mean having a primary care provider who knows
you and knows your circumstances and is your primary point of
contact in the health care system.
I believe part of the backlash that we experienced with
managed care among more affluent populations stems from the
frequent disruptions in the patient-provider trust relationship
that occurred as competing managed care firms sought to move
market share from one provider panel to another. So as you seek
to make greater use of the positive aspects of managed care for
highly vulnerable populations, greater attention should be paid
to exploiting the synergies that are possible in linking
medical home concepts to third-party managed care initiatives.
Community health centers are clearly well-suited to partner
with managed care firms for this purpose.
I would also encourage the Committee to invest in advancing
best practices for optimizing health and functioning among
special needs populations. As you seek to harness the potential
of managed care for Medicaid special needs populations, there
will be opportunities to gain experience with point-of-care
management, third-party management and hybrid systems using
State Medicaid programs as natural laboratories.
I would also ask the Committee to address of loss of State-
level purchasing power related to the privatization of Medicare
and Medicaid in the post-Part D era. If Medicaid drug rebates
could be extended to Medicaid managed care arrangements, an
estimated $2 billion over 5 years could be saved.
Alternatively, pharmaceuticals could be carved out of managed
care arrangements and paid directly by the States.
An example of this approach is the excellent system created
by Wisconsin's employee trust fund which carved out pharmacy
benefits from their managed care contracts and consolidated the
purchasing power of employer-sponsored plans without disrupting
care management activities because they used technology to feed
back all the data to the HMOs as frequently as on a daily basis
if the HMOs wanted it at that level.
My final point, all too frequently overlooked, is that we
must end the historic neglect of oral health in low-income
populations. A growing body of evidence links dental disease to
systemic health problems like cardiovascular disease, diabetes,
prematurity low birth weight, and respiratory problems in
institutionalized patients. I urge the Committee to address
oral health as key to better managing the care of Medicaid
beneficiaries, particularly those with special needs.
Health centers have a lot to offer in efficiently managing
the health care needs of vulnerable populations because they
offer key services critical to improving and maintaining
health. We define primary care to include not just medical
services, but also services related to mental health, dental
health and enabling services. Several studies have found that
health centers save Medicaid 30 percent or more in annual
spending per beneficiary due to reduced specialty care
referrals and fewer hospital admissions, saving an estimated $3
billion in combined Federal and State Medicaid expenditures.
The continued expansion of health centers means medical homes
for more people and even greater savings.
Thank you very much for the opportunity to present today.
The Chairman. Thank you, Greg. I really compliment you and
all in the community health care center community. I think it
is one of the answers to our problem, and not the total answer,
but I am a tremendous fan of the work that you do.
Have you seen a reluctance of managed care companies
willing to work with community health centers?
Mr. Nycz. In our State, no, but I know that goes on in
other parts of the country.
The Chairman. Does it have to do with reimbursement rates
and stuff like that?
Mr. Nycz. It might, but I think Congress has done a great
deal already to try to help that situation in terms of working
it out with wrap-around payments under Medicaid and Medicare in
ways that don't disrupt traditional contracting arrangements
with HMOs. But Health Centers really do have, I think, a great
potential to team with managed care firms because we can manage
front-line care and get preventive care and enabling services
to people, but we can't do it all. So linking with managed care
firms is actually a very natural thing that could be very
helpful for the most vulnerable people.
The Chairman. I need to understand better the point you
were making about dental care as an indicator of some larger
health care issues. Is that the point you were making?
Mr. Nycz. That, and the fact that when I talk with folks in
the disability community, one of the things they frequently
tell me as a health center is we can help--by providing dental
access. For instance, we have the PACE program which tries to
get people out of institutions or living in home settings for a
longer period of time. We are working with them and they are
very excited about the construction of our new dental facility
because they can't get the dental care they need for all their
patients.
The studies particularly for institutionalized patients
indicate that particularly with periodontal disease, the kind
of bacteria that inhabits the mouth doesn't stay there and it
can migrate in the body and cause infections, pneumonia, and so
forth, and there is a growing body of scientific evidence on
this topic.
So if you want to best manage care and you want to improve
quality, we can't forget about mental health, we can't forget
about oral health, and we can't forget that some people,
particularly in very special needs populations, need what we
refer to as enabling services. They need additional help in
getting access to care and in managing that care, and health
centers, are an important cog in the or better health care
system that you are trying to build.
The Chairman. I think it is important to state for the
record that if you don't have mental health, you don't have
health, and I really appreciate your emphasis on that. Since I
have a brother who is a dentist, thanks for including them,
too.
Senator Kohl.
Senator Kohl. Go ahead.
The Chairman. Well, thank you very much, Greg. We
appreciate the great model that Wisconsin is, and not just the
Senator sitting over here, but in so many fields, but
particularly in medicine. It is something of a trailblazer just
like Oregon, and so we admire that very much.
[The prepared statement of Mr. Nycz follows:]
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The Chairman. Turning to Oregon, David Ford, thank you.
STATEMENT OF DAVID FORD, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
CAREOREGON, PORTLAND, OR
Mr. Ford. Thank you, Mr. Chairman and Senator Kohl. It
seems like there is a lot of simpatico across the issues here.
My name is David Ford. I am the president and CEO of
CareOregon, in Portland. I would like to focus my remarks
pretty much on Medicaid and the SSI population, the blind,
disabled and aged, because in a lot of states that isn't a
covered benefit but we have been doing that in Oregon for 10
years, as well as in Maryland and a number of other States, but
it is not widespread.
Because we are fully capitated and the capitation often
doesn't keep up with medical inflation, we are driven to be
innovative and take things and look at things in different ways
with our benefit partners. One aspect of that is care
management of the complex member. We are defining the complex
member as the person that doesn't have just one disease, such
as diabetes, they have got a heart condition, high blood
pressure, and they may have some problems with their feet.
These are people with four or more comorbid conditions, and
one of the issues that was brought up previously is focusing on
where the dollars are spent. We found that in our 100,000
members across the state, 3 percent of the people use 30
percent of the services. That is an area that we have intensly
focused on. We have grants from the Center for Health Care
Strategies to develop methodologies working with our highest
needs members.
Our view is if we can take people that are not well
connected to either the medical system or the social system,
add more services, not cut services, but add more services, we
can actually stabilize them and manage them into a more chronic
care state which is much more stabilized, and they use less
services.
Before I came to Oregon 3 years ago, I ran Medicaid HMO
here in Medicaid in the District and Maryland. The remarkable
thing that I found to Oregon was the different SSI use of
hospital services in Maryland compared with Oregon. After 2
years in Maryland, we dropped the hospital utilization rate
from 2,300 days per 1,000 to 1,900 days per 1,000. That means
for every 1,000 people, there were 1,900 days of
hospitalization. In Oregon, we started with a base of 1,300 for
the same matched population and dropped it to 1,000 days per
thousand.
So the question is there: Why a 900 days-per-thousand
difference between Oregon and Maryland for that same
population? There are some reasons for it, but the question
when I got to Oregon was how do you go from 1,000 days per
thousand down to 800, and the issue really became looking at a
framework for quality.
I think we are overlooking a lot of the work that we have
done nationally at the Institute of Medicine. They published a
book about 5 years ago called Crossing the Quality Chasm. In
that, they have a number of explanations of why the health care
system today is failing, and then recommendations, and actually
a blueprint under that--and that is commented on in my
amplification in the slides--about where to go.
We don't have to go all over. The concerns about quality
and improving quality while creating more efficient health care
is right before us and this model. So that blueprint is
something that as you develop your rhetoric and work with your
staff, we would consider you looking at.
A Johns Hopkins professor-doctor who has been doing work
there for her whole career, Barbara Starfield, has done a lot
of studies about when you have multiple conditions with four or
more comorbid conditions, the complexity of care goes up and
the cost just skyrockets. Things are out of control when we
don't provide services.
In the previously mentioned grant that we have received, we
have done pilots over the last 3 years with our complex
members. We are in the beginning of the third year. The first
year, we set up nurse care management for our complex members
and did a lot of care coordination. We saved about $5,000 per
member a year on a matched study. In the second year, we saved
$6,000 per member a year.
One problem that we ran into with this program is a
backdrop of this entire discussion--not enough trained medical
professionals. To address this, we have evolved the model to a
team-based approach where we have a social worker with a
behavioral specialist, a nurse team leader, and two medical
assistants helping coordinate care so that we can have a higher
touch and broader reach. There is a huge demand for
coordinating services, but we have got to find an economical
way to reach out effectively.
It is not the care that people receive that is driving the
cost of health care; it is the care that they don't receive.
This is counter-intuitive to the last generation of managed
care where you put gatekeepers and road bumps between the
patient and getting care. We are saying that is passe. We have
got to get aggressive about knocking down barriers to services.
The Chairman. That has saved you money?
Mr. Ford. Hands down, no question about it.
The Chairman. Is that generally recognized among your
competitor----
Mr. Ford. We have got 12 plans in Oregon, all local, and
absolutely that is recognized. It is also the realization that
it isn't just clinical services. A lot of services are provided
by family members and others. So partly what we are looking at
now is dialoguing with Intel, which has a digital care unit,
around creating some software to integrate and create
collaborative working systems for people who are very complex
so that you can integrate between what the family is seeing and
doing the care managers, the people in the community settings,
so that the medical records, with privacy, are shared.
We can't coordinate and articulate this care if we can't
see it and work together, and one of the failings of our system
is it is so fragmented. We are seeing the opportunity to
integrate care through effective software opportunities and we
are beginning to experiment and dialog with that, until Intel
announced its big layoffs.
This is not by any means a doomsday kind of scenario. The
problem that was articulated by the Institute of Medicine in
their book To Err Is Human is that healthcare is unsafe, it is
fragmented, it is inefficient, it is slow, it is inequitable.
In Crossing the Quality Chasm, they come up with a series of
solutions that prescribe how we get safe care, how we create
efficient care, equitable and so forth. It is up to us to
follow through on this blueprint we have developed, and care
will go up in quality and it is better care and it costs less
and it is more humane from my perspective.
The Chairman. David, how would you address the rural issue?
Mr. Ford. I think there needs to be more collaboration. We
are involved in that now. Understanding there are manpower
shortages, and there are maldistributions of workforce, I think
you can integrate specialty care through what you saw in
Roseberg in terms of some availability of technology. I think
that we need to invest in manpower and dedicate financial
incentives for caregivers to go to rural regions, because they
do get burned out.
There are ways to integrate the system more effectively
through capitation. I have done some work in Australia and
Finland around the community taking responsibility for the
care. I think we haven't put the dedicated effort like Tony was
saying, into developing an expertise to do this. This is-- a
means problem, as well as lack of focus to actually do the work
to create integrated systems.
We are not really using the words ``managed care'' as much
anymore. We are really talking about--and I would like the
roundtable to consider something like ``managed
collaboration.'' Through software, through collaborative work,
through driven people, we don't have to leave everything a
free-for-all and, you know, here is some money and it is up to
you to negotiate your way through this difficult high-tech
endeavor. We have got ways to collaborate with our members to
articulate care much more effectively.
The Chairman. The Institute of Medicine--what is the name
of this----
Mr. Ford. Crossing the Quality Chasm is the book.
The Chairman. If you had one recommendation as we try to
develop legislation, we should go look at that book?
Mr. Ford. I would defer to Ron, but I think that a lot of
us here would feel like that framework has a lot of backbone
that we can flesh out further to come up with more explicit----
The Chairman. The provider community understands what they
are saying and they respect it and they agree with it?
Mr. Ford. We actually took a study delegation to Alaska to
look at some advanced primary care reform practice that the
Native Alaskan health services are doing in Anchorage. It was
knock-your-socks-off exciting in terms of how they have created
team care and services, adding behavioral health at the point
of service for people, and it was all based on this fundamental
framework laid out in Crossing the Quality Chasm. They have
been working with the Institute for Health Care Improvement for
15 years. This is not a new idea. It is just that it is not in
the pair community very well and it is for some reason not
incorporated as heavily into policy as it might be.
The Chairman. Senator Kohl, do you have any questions?
Senator Kohl. No.
[The prepared statement of Mr. Ford follows:]
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The Chairman. Dan.
STATEMENT OF DANIEL O. HILFERTY, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AMERIHEALTH MERCY AND KEYSTONE MERCY HEALTH PLANS,
PHILADELPHIA, PA
Mr. Hilferty. Good morning, Mr. Chairman and Senator Kohl.
I appreciate being here today. I represent AmeriHealth Mercy
Health Plan, based in Philadelphia. I also have the good
fortune of being the Vice Chairman of the Medicaid Health Plans
of America. MHPA is our Washington-based interest group and
trade association, and with us today is our president, Thomas
Johnson, who does a great job for us here on the Hill.
On behalf of my colleagues in Philadelphia, I really
appreciate the opportunity to be with you today. The one good
thing, coming last in such an august group like this, is I
found myself learning a lot, but I also found myself checking
off a number of the things that have already been said that I
don't want to repeat.
The Chairman. But not everybody has said them, so go ahead.
Mr. Hilferty. That is right. I am going to try to do it.
First of all, I would like to, on behalf of our
association, thank the both of you for the leadership that you
have provided in really bringing the discussion of Medicaid to
the forefront. The bipartisan commission has gone a long way to
making the discussion of Medicaid policy and Medicaid reform a
household discussion. I find that for the first time my family
and friends actually know what I do because they are reading
about Medicaid on a regular basis.
Our organization and its affiliates work in 16 States. We
managed the care in some way, shape or form for about 2 million
Medicaid recipients. We have 23 years of experience in the
industry and we are very proud of what we have learned. We feel
that we really know the medical assistance population.
We started out basically working with the TANF population
and the SSI population. Over time, States have moved more with
their managed care models toward the aged, blind and disabled,
and we have had an opportunity to really learn a lot about that
business. What I would like to do is I would like to move off
of my prepared remarks and focus on that more expensive
population.
First, I would like to say I really agree with what Ron
said about if you have a quality product, efficiencies might
follow. I would adjust that slightly and say quality definitely
leads to efficiency. Then I would like to focus on what David
said about a small portion of the population eating up the
large bulk of the dollars for care. We have found that with the
aged, blind and disabled, those with chronic diseases, those
with multiple chronic diseases, roughly 20 percent of our
membership utilizes 80 percent of our costs. So you think of
the disparity there.
So here we are as managed care spending a lot of time
traditionally, the traditional denying care or making sure
people get pre-authorization. Well, what we are saying is if we
shift focus to coordinating care across the whole population
base, but focus on that 20 percent, not only will we provide a
higher level of quality of care for those individuals and their
quality of life will improve, but efficiencies will be there as
well.
So I would like to focus on--and I have this in here--I
would like to focus on one of our programs. We really decided
that if we were going to be effective, if we were going to
survive and the State's ability and the Federal Government's
ability to fund these programs decreases, we had to really
shift from a gatekeeper perspective to more of a care
coordination perspective.
We developed a program called PerforMED, which is an
intensive case and disease management program, and we decided
to look at those disease states that were really costing us. We
identified them by category, then more specifically by member,
and we put in aggressive case management, one-on-one regular
dialog with the member, regular interaction with not only the
primary care physician, but the specialist community.
David makes an excellent point. The key way to do that--and
we talk about having real-time data in front of everybody so
that you have got not only the managed care organization, you
have got the provider, you have got the patient, you have got
other organizations that interact with that member and their
disease state. When everybody has real data, you make
collaborative decisions, and we believe that collaborative
decisions are usually better for the member and more efficient.
We have a program that I focus on in my written remarks
that I would just like to comment on and it deals with juvenile
asthma. We are seeing in our membership in many of our States
that asthma is increasing dramatically across the board, and
mainly in young people. So we started a program called Healthy
Hoops. We saw that many of these children with asthma weren't
participating in any athletics, dance, other activities. They
were on the sidelines.
So we decided to put a program together where we would
teach them basketball, but what we said was we have got to get
the clinicians involved and we have got to get the providers
involved. We formed a coalition. It isn't our program; it is
the asthma coalitions in the regions in which we do it. We
decided that we would teach them basketball, but in order for
them to participate--it was more or less a carrot/stick thing--
their parent and/or guardian had to participate in the program
as well. So it was part classroom and part fun and games with
local basketball legends who taught them the game of
basketball.
What we found is that the parents were enthused about this
program. They came on a regular basis. They learned about the
children's meds, they learned about the need for nutrition,
they learned about how to use the inhaler, what the problems
are with the inhaler. They really got a grasp of the disease
that they were dealing with. We felt that this put these
children at an advantage where they could overcome some of the
obstacles that they had. The fun of it is they have learned
basketball. We have done it Philadelphia and we have done it in
South Carolina. We are next doing it here in Washington, DC,
and in Florida, in Broward County.
What are the results? The proof is always in the pudding.
The results for us really show what has happened. The 2004
class--and the problem with it is each class is only about 500
children, so you have got to really expand it to have a
national impact. But with that class of 2004, we found there
was a 70-percent reduction in emergency visits. That is
significant. There was roughly a 13-percent decrease in use of
emergency medications, which is pretty significant as well. We
also found that once they got involved in the program, they
were hooked on it for life.
So what I am saying is you take all the points that we have
made across the board and if the quality is there and you focus
on individual high-cost disease states and set up
comprehensive, aggressive outreach and education programs, it
leads to a higher quality of life, improved health status and,
finally, efficiency, which we all know has got to be a key part
of a program.
In closing, I would just like to say that the bipartisan
commission--and you were talking about some program and you
were saying, I think, only this group and a small group gets
excited about the things that go on in Medicaid. But I was
excited about the bipartisan commission. I really enjoyed
hearing about the different perspectives. Well, out of the work
of the bipartisan commission and Congress' deliberations in the
past year, we are looking at $10 billion, roughly, in savings
over the next 5 years in the program.
Well, MHPA sponsored a study by the Lewin Group which
really shows that if managed care is implemented across the
country for Medicaid recipients, whether it is a mandate or
incentive-based, to get States to really move toward managed
care models, the savings are roughly about $83 billion over the
next 10 years. So what I am saying is it is not just about the
dollars, but if you build those programs that focus on that 20
percent of the population--I am not saying ignore the other 80
percent; they have needs as well--but truly focus on those
high-cost populations and do it in a quality way where the
State monitors, measures and is involved in the process, you
are going to get a higher quality of life. You are going to
have folks who--there is a certain dignity around the way they
are receiving their care and the program is going to be far
more efficient. I am a believer in it, I get excited about it,
and I ask you to really consider going in that direction.
Thank you.
[The prepared statement of Mr. Hilferty follows:]
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The Chairman. Thank you very much, Dan. I wonder if in this
basketball program you have, if any of these kids are of
sufficient talent that the owner of the Milwaukee Bucks ought
to keep his eye on them.
Mr. Hilferty. Well, maybe. I don't know, Senator, but I was
going to talk to Senator Kohl. I would like to be a general
manager someday. [Laughter.]
The Chairman. You operate in enough States. Do you have a
perspective on the rural question that we began with?
Mr. Hilferty. Yes, and I would just put a different slant
on Tony's point. I thought Tony made the key point that it is
about having a provider network; even though the distance
between the various providers is longer, have a provider
network that is under a cap system that is incentivized to
really be part of the Medicaid program.
Then from our vantage point, much like we reach out to the
populations that I discussed, the managed care entities have to
have a program that overcomes the obstacles--once you have the
provider network in place, that overcomes the obstacles to get
people needed care. Sometimes that is transportation, sometimes
it is the time of day that a physician or a clinic might be
open for them to visit for care.
I guess what I am saying is if the States focus with the
managed care plans on setting up the network of having adequate
funding for the clinicians and they know they are going to get
that funding, they will be supportive of the program. Then it
is incumbent upon the plans, with oversight by the States, to
make sure that those members get introduced on a regular basis,
are educated on a regular basis, and overcome the obstacles to
access that care.
The Chairman. Obviously, I think we have here people who
run plans and programs that are very successful and are
providing quality care, and also winning efficiencies and cost
savings. But, obviously, you can't please everybody. There has
got to be occasionally a patient who is just unhappy with an
outcome, with a denial or whatever, and I wonder if perhaps
Arizona can speak to that, and David and Dan. What recourse do
your patients have if they don't like what you have done?
Mr. Ford. There is a whole structured call-in process and a
grievance process that we are required to provide, and there is
a fair hearing process by the State if it were to get to that
level. But the other thing that we do is we have data that
allows us to look at the continuity of care. We look at bad
outcomes and we go to the hospital and the other providers and
work on behalf of the patients around improved care.
But in the open system, nobody looks at that on the back
side of that and we have committees of doctors from the
community that look at adverse outcomes and we do remediation.
We actually are now using this Institute of Medicine and the
Institute of Health Care Improvements guidelines and we are
saying this appears to be a problem with your drug
reconciliation. Do you have a program? Here is what is going
on. They often get back.
We talked actually last week about is that response back
just sort of a paper response or will we look back in 6 months
and say you said you would do this and then we would begin
auditing that kind of thing. We are all in favor of
accountability. The burden of accountability is on us because
there is no other place to get it.
Mr. Hilferty. Senator, if you do Medicaid in one State, you
do Medicaid in one State. I mean, each State has different ways
of approaching it. Interestingly enough, we think as a plan
that it is a benefit to keep a member in your plan for at least
a year so that you can impact their health status. The flip
side of that is some governments say, well, really, a member
should have the right to opt out and move to another plan at
any point.
What I would like to suggest is there is a happy medium
there. In the Commonwealth of Pennsylvania, the plans don't
market. There is a benefit consultant who works with an
incoming member and helps them decide what is the best network
for them, what is the best plan for them, and they choose that
plan. That has worked very well because people coming in feel
comfortable, seem to have less complaints and are ready to
access the care of the plan.
On the flip side, there are folks that have the right to
opt out of a plan and move to a competitor if they are not
satisfied, if they exhaust all of the opportunities to really
grieve or whatever it might be over care. So we believe that we
can have a happy medium where we spend a lot of time up front
educating members about what they will get from a particular
plan and competition is good, No. 1, but No. 2, not make it so
that a member can jump from plan to plan every month or every 3
months or even every 6 months, but build a period of time where
a plan can really work aggressively with that member, with that
family to make sure they are getting the services that they
need to get. When that happens, there seems to be less
complaints.
Mr. Pollack. Mr. Chairman, can I add a few things?
The Chairman. Yes.
Mr. Pollack. I think there are several things that are
important. First, I think there needs to be a coordination of
grievance systems between Medicare and Medicaid so that people
don't fall through the cracks or have contrary systems for
dealing with problems.
The Chairman. There is none now?
Mr. Pollack. It is not adequate and we need much more
adequate coordination.
The Chairman. Would that be done through CMS?
Mr. Pollack. Yes.
Second, since this is a low-income population, to the
extent any benefits might be withdrawn, there needs to be
continued benefits during the pendency of a grievance claim.
This is a fundamental right. It is actually something that was,
in a different context, ruled on by the Supreme Court in the
1960's.
Third, I think it is critically important to have some help
available to people. I mentioned ombudsmen before. Some people
call them different names, but we need some people who can be
of assistance to an individual. Remember, when benefits are
potentially being terminated or reduced, the person is actually
in some significant need of health care and they themselves may
not be in the best position to deal with the problem. So they
need some kind of help.
So I think those kinds of systems need to be in place, and
then there is a matter of fundamental fairness: If there is a
denial of certain services by a plan and you have gone through
the internal grievance process, there needs to be, as part of
this coordinated plan, an external system where the person
making the decision was not involved in the original decision
and has competence in that area of medical judgment.
The Chairman. Did you have anything to add to that, Tony?
Mr. Rodgers. Mr. Chairman, the process that we use starts
with the health plan. One, they have to notify the beneficiary
why they are denying care by sending them a letter that says
this is a service we are not approving, et cetera. So that is
the first place typically a beneficiary may learn about a
denial of care, and that happens whether it is a benefit denial
or there is a feeling that the services aren't required, et
cetera, and that starts the process.
The health plan is the first level that we expect the
dialog to occur, typically with the physician and the health
plan. If the member is still not satisfied, we review the case
and we have a unit that does that advocacy for the member,
validating that we agree with the health plan. But, ultimately,
they still have the right to go to a State fair hearing, where
there is an administrative law judge. In those cases where we
have a policy that our plans are following that they are
challenging, that is typically what goes to the State fair
hearing, where they are challenging the policies of the State.
So we do have this tiered process and what it does is it
informs us on what the issues of our beneficiaries are. This is
a very important part of how we actually improve our programs,
and the best health plans are using that data to actually
create either better networks or better understanding with
their physicians, et cetera. We also allow the physicians to
grieve. They can grieve a health plan, as well. So there are a
number of ways that beneficiaries have their rights protected
in our system.
The Chairman. Does anyone else have a comment?
Mr. Crowley. Just very briefly, I want to echo what Ron
said. I think he got it right. I think it is important that
most of what we are talking about is a sort of formal appeals
system. For beneficiaries that often works well if they have a
legal advocate, but we know most people don't have that. So I
think we need to think more about ways that people can have an
alternative without sacrificing their rights to really work
with their doctors.
I can't point to this as a huge success, but in the
Medicare Modernization Act there is this new exceptions
process. While there have been problems implementing it, one
thing that is attractive is that it is really meant to be an
initial first step that is less formal than a formal appeal,
where working with your doctor you can resolve some of these
things. Most people don't have lawyers and they are sick and so
they don't want to deal with it, but if there is an easier way,
we could resolve some of these without requiring five steps of
appeals and lawyers and everything else.
The Chairman. That may be a good model, then.
Mr. Crowley. Potentially, or learn lessons for how to
improve upon it.
The Chairman. Greg, do you have a comment?
Mr. Nycz. Well, more or less getting back to the rural
issue, if you think about community health centers as being
able to help work with the community to set up a clinic in a
rural town that didn't have doctors, maybe didn't have mental
health providers--you leverage health centers to create the
infrastructure in that town that will help enable some of the
managed care activities.
I look at it as a one-two punch. Where we have workforce
issues, community health centers have been shown to stabilize
and or create practices. I would note that it isn't even just
in rural areas. In some inner-city areas that have seen a mass
exodus of private doctors, you need to go back in there and set
up that primary care infrastructure that is central to good
care management.
The Chairman. Well, gentlemen, this is the first in a
series of roundtables or square tables that I am going to do
because I am very earnest about pursuing this as one of the
ways to preserve Medicaid. So let me simply thank you for your
time and your talents that you have shared with us today. We
have taken it all down and you have certainly increased my
understanding and I am going to do my level best to reflect
that in creating new American law to strengthen, not weaken,
Medicaid.
So this not being a formal hearing, I won't adjourn it, but
just thank you very much, and have a very good day.
[Whereupon, at 11:30 p.m., the Roundtable was concluded.]