Pediatric Annals

Managed Care for Children With Special Healthcare Needs: Michigan's Approach

Herman B Gray, MD

Abstract

As the national trend toward managed care continues to evolve from traditional fee-forservice, many states have likewise transitioned their state Medicaid programs to capitated, managed care payment systems. Typically, vulnerable populations such as children with special healthcare needs (CSHCN), the disabled, the elderly, those requiring mental health or substance abuse services, and those needing nursing home care have been excluded from the mainstream managed care, riskbased models. As the healthcare delivery system continues to evolve, and under increasing pressure to manage costs, these "carve-outs" are coming under increasing scrutiny. A number of states are now developing specific strategies to address the needs of these unique and challenging populations. In this article, we describe the process used in Michigan to develop a statewide managed care network for CSHCN, including the lessons learned that could be applied to others contemplating similar efforts.

The Maternal and Child Health Bureau of the US Department of Health and Human Services provides the following définition of CSHCN: "Children with special health care needs are those who have or are at increased risk for chronic physical, developmental, behavioral, or emotional conditions and who require health and related services of a type or amount beyond that required by children generally."1 Pediatricians and families of CSHCN have raised concerns that these disproportionate and comprehensive needs have not been well-served in traditional, mainstream health maintenance organizations (HMOs). These concerns have included restricted access to appropriate pediatrie subspecialists, knowledge and expertise of primary care physicians, coordination and communication between primary care physicians (or gatekeepers) and subspecialists, use of a "bottom line" mentality in assessing quality of care, and restricted choices. Many of these concerns are not unique to managed care. Pediatricians, families, state agencies, provider organizations, children's hospitals, HMOs, and child advocates have worked collaboratively to address these concerns and others in Michigan. This work has resulted in the recent development of a statewide, managed care network for CSHCN, with expected implementation in early 1998, that is based on values and principles agreed on by the stakeholders.

THE MICHIGAN TITLE V PROGRAM

The state of Michigan has a large and active CSHCN Title V program, known as Children's Special Health Care Services (CSHCS). Approximately 25 000 children are enrolled, of whom 10 000 are dually eligible for Medicaid. Roughly 12 000 of these children receive some or all of their care at the Children's Hospital of Michigan (CHM)1 a major provider in the state. Historically, CSHCS was preceded by the Michigan Crippled Children's Commission and later the Title V Crippled Children's Program. CSHCS has operated in many ways like a PPO (preferred provider organization) with a network of approved providers; use of prior authorization for costly procedures, drugs, or equipment; and a discounted fee-for-service payment mechanism throughout its existence. It has also had a close partnership with the state Medicaid program (Title XIX). Its budget was relatively stable until the mid- to late 1980s and early 1990s, when it began to grow at an accelerated rate. This rapid acceleration of healthcare expenditures was attributed to the increased cost of health care generally, the complexity of the care needs of enrolled children (eg, prolonged ventilatory support for premature infants), and increased pharmaceutical costs (eg, growth hormone, factor VIII). During this same period, the state was among the first to develop and enroll Medicaid recipients in contracted managed care plans.2 CSHCN were specifically excluded from enrollment in these plans in recognition of their disproportionate costs and the complexities associated with providing their care.

CHILDREN'S HOSPITAL OF MICHIGAN

Children's Hospital of Michigan is the largest children's hospital in Michigan, and thus serves as a…

As the national trend toward managed care continues to evolve from traditional fee-forservice, many states have likewise transitioned their state Medicaid programs to capitated, managed care payment systems. Typically, vulnerable populations such as children with special healthcare needs (CSHCN), the disabled, the elderly, those requiring mental health or substance abuse services, and those needing nursing home care have been excluded from the mainstream managed care, riskbased models. As the healthcare delivery system continues to evolve, and under increasing pressure to manage costs, these "carve-outs" are coming under increasing scrutiny. A number of states are now developing specific strategies to address the needs of these unique and challenging populations. In this article, we describe the process used in Michigan to develop a statewide managed care network for CSHCN, including the lessons learned that could be applied to others contemplating similar efforts.

The Maternal and Child Health Bureau of the US Department of Health and Human Services provides the following définition of CSHCN: "Children with special health care needs are those who have or are at increased risk for chronic physical, developmental, behavioral, or emotional conditions and who require health and related services of a type or amount beyond that required by children generally."1 Pediatricians and families of CSHCN have raised concerns that these disproportionate and comprehensive needs have not been well-served in traditional, mainstream health maintenance organizations (HMOs). These concerns have included restricted access to appropriate pediatrie subspecialists, knowledge and expertise of primary care physicians, coordination and communication between primary care physicians (or gatekeepers) and subspecialists, use of a "bottom line" mentality in assessing quality of care, and restricted choices. Many of these concerns are not unique to managed care. Pediatricians, families, state agencies, provider organizations, children's hospitals, HMOs, and child advocates have worked collaboratively to address these concerns and others in Michigan. This work has resulted in the recent development of a statewide, managed care network for CSHCN, with expected implementation in early 1998, that is based on values and principles agreed on by the stakeholders.

THE MICHIGAN TITLE V PROGRAM

The state of Michigan has a large and active CSHCN Title V program, known as Children's Special Health Care Services (CSHCS). Approximately 25 000 children are enrolled, of whom 10 000 are dually eligible for Medicaid. Roughly 12 000 of these children receive some or all of their care at the Children's Hospital of Michigan (CHM)1 a major provider in the state. Historically, CSHCS was preceded by the Michigan Crippled Children's Commission and later the Title V Crippled Children's Program. CSHCS has operated in many ways like a PPO (preferred provider organization) with a network of approved providers; use of prior authorization for costly procedures, drugs, or equipment; and a discounted fee-for-service payment mechanism throughout its existence. It has also had a close partnership with the state Medicaid program (Title XIX). Its budget was relatively stable until the mid- to late 1980s and early 1990s, when it began to grow at an accelerated rate. This rapid acceleration of healthcare expenditures was attributed to the increased cost of health care generally, the complexity of the care needs of enrolled children (eg, prolonged ventilatory support for premature infants), and increased pharmaceutical costs (eg, growth hormone, factor VIII). During this same period, the state was among the first to develop and enroll Medicaid recipients in contracted managed care plans.2 CSHCN were specifically excluded from enrollment in these plans in recognition of their disproportionate costs and the complexities associated with providing their care.

CHILDREN'S HOSPITAL OF MICHIGAN

Children's Hospital of Michigan is the largest children's hospital in Michigan, and thus serves as a major provider for CSHCN. As part of the Detroit Medical Center, a vertically integrated academic medical center, it is the largest provider of care to children enrolled in Medicaid. The vast majority of children enrolled in Medicaid who are served by CHM are enrolled in mainstream HMOs contracted with Medicaid. CHM is also the site of approximately 20 Children's Multidisciplinary Specialty (CMS) clinics, state-designated multidisciplinary clinics that provide comprehensive care to children with chronic illnesses or disabilities ranging from AIDS to craniofacial disorders to diabetes. The CMS clinics provide significantly enhanced reimbursement by both Medicaid and CSHCS for the multiple disciplines required to deliver comprehensive care. This innovative program has existed in Michigan for 7 years, and it is to be maintained in any proposed new healthcare delivery system for CSHCN.

STATEWIDE STAKEHOLDERS MAKE RECOMMENDATIONS FOR MANAGED CARE

As cost-containment pressures mounted, state leaders began to consider the possibility of adapting the CSHCS program to managed care as a way to contain costs. Recognizing that such a policy decision would be controversial with families and providers alike, in 1994 the state leaders convened a group of major stakeholders, the Subcommittee on the Managed Care Initiative (SMCI). This group, a subcommittee of the statewide CSHCS Advisory Committee, was chaired by this author and a parent of a child with special needs. Members of the committee included pediatricians from academic medical centers, children's hospitals, and private practice, as well as representatives of the American Academy of Pediatrics, parents of CSHCN, HMO representatives, and representatives of provider organizations and child advocacy organizations.

One of the first activities of the SMCI was to begin to understand the issues confronting CSHCN who were receiving their care via mainstream HMOs. The committee determined early in its deliberations that enrollment of CSHCN in traditional, mainstream HMOs was too risky to support. This observation was based on the following factors: a lack of significant national or state experience with CSHCN in managed care organizations (or at least limited documentation of experience), inadequate actuarial data needed to create reasonable capitation rates, the unpredictable and diverse nature of" the CSHCN population, the fears and concerns of families and providers alike, and the reluctance of the HMO industry to actively enroll these potentially costly children. Instead, a "carve-out" or a separate managed care system to address the specific requirements of CSHCN was recommended in the subcommittee's report: Managed Care for Children with Special Health Care Needs: Physician Case Management Model - A Report of the Subcommittee on the Managed Care Initiative.3 The recommended model for the managed care system was a modification of the Michigan Physician Sponsor Program, a primary care case management arrangement in which the primary care physician serves as the gatekeeper for covered benefits, which are reimbursed on a fee-for-service basis. Services provided by the primary care physician were reimbursed on a fee-for-service basis. In addition, the primary care physician received a monthly case management fee. In the recommended CSHCN model, this case management fee was to be at an enhanced rate, in recognition of the complex needs of the population. This model, although supported conceptually by some leaders in state government, was never fully implemented. However, a similarly designed, Medicaid-funded pilot project was done at CHM. This pilot, although limited in scope, demonstrated some barriers to providing comprehensive care to CSHCN, including identifying adequate numbers of primary care physicians, poor communication between pediatricians and subspecialists, and the inability of physicians to invest enough time in care coordination activities.4

Table

TABLE 1Guiding Principles of Michigan's Subcommittee on the Managed Care Initiative

TABLE 1

Guiding Principles of Michigan's Subcommittee on the Managed Care Initiative

FAMILIES AND PHYSICIANS ESTABLISH PRINCIPLES AND VALUES

The most important activity of the SMCI, which lends itself as a model for the development of systems of care for CSHCN, was the establishment of guiding principles and values on which any proposed managed care system should be based. In the development of these guiding principles and values, it was notable that there was little disagreement between physicians or providers and families. Fundamentally, families wanted the same things from a healthcare delivery system as physicians, although the rank order of importance varied between the two groups. Family representatives emphasized the importance of being able to maintain current physician (especially subspecialist) relationships, of program enrollment being voluntary, enhanced care coordination, and family involvement in decision making. Physician members of the subcommittee stressed easy access to qualified pediatrie subspecialists, reduced bureaucratic barriers to children receiving the appropriate type of care, and concern about the level of financial risk they or their institutions might face.

VALUES DETERMINE OUTCOMES

Committee members believed that the establishment of guiding principles and values was a critical step. They wanted a managed care delivery system driven first and foremost by these values rather than by cost containment. If followed, values would be instrumental in determining outcomes. As the healthcare delivery system, particularly for CSHCN, continues to change and evolve, future plans could be measured against these principles and values. Furthermore, it was considered important that these principles and values be written into any request for proposals and subsequent contract language. Resource materials from the American Academy of Pediatrics,5,6 the Maternal Child Health Bureau,7,8 Family Voices, a national coalition speaking for CSHCN, New England SERVE,9,10 the National Academy for State Health Policy," and others were reviewed by the committee in the development of the guiding principles and values. The three guiding principles established by the committee were (1) each child is unique, (2) families are experts, and (3) all children deserve quality health care based on family choices. These guiding principles are summarized in Table 1.

A complete list of values identified by the committee is summarized in Table 2. As called for by former US Surgeon General C. Everett Koop,7 systems of care designed for CSHCN should be familycentered, community-based, coordinated, and culturally competent. Managed care health delivery systems should recognize the central role of caregiver, advocate, and decision-maker that families play in the care of their children and be designed accordingly. They should respect the diversity of families and facilitate parent - professional collaboration. Care should be provided close to home whenever possible, and should be organized in such a way as to assure appropriateness, timeliness, continuity of care, and comprehensive care. High-quality accessible care provided by qualified providers with the specialized knowledge and expertise to meet the medical and developmental needs of children and families is essential.

PROPOSALS FOR STATEWIDE MANAGED CARE FOR CHILDREN WITH SPECIAL HEALTHCARE NEEDS

In late 1996, a formal Request for Proposals was issued by the state. This request incorporated much of the developmental work done by the SMCl and called for the creation of a statewide network of services for CSHCN- Managed care organizations, including but not limited to HMOs, were eligible to bid. Notable features of this plan include:

* All managed care organizations must provide statewide services.

* Primary care physicians or subspecialists may serve as the principle coordinating physician, essentially the gatekeeper and the medical home. This physician is chosen by the family with physician and system approval. All enrolled children must have a medical home.

* An individualized healthcare plan must be developed for each child. Family participation in this process is required in a collaborative manner with a care coordinator and the primary care physician.

Table

TABLE 2Values for Michigan's Managed Care Delivery System

TABLE 2

Values for Michigan's Managed Care Delivery System

* All covered services identified and approved in the individual healthcare plan are authorized and cannot be denied by the managed care organization. There should be no inappropriate restriction of access to services.

* Appropriate subspecialists and tertiary care centers must be part of the organization's network.

* Initial enrollment in the plan is voluntary. Mandatory enrollment is anticipated.

* The plan must have a medical director with CSHCN expertise.

* The plan must have a family-centered care coordinator who is either a parent of a CSHCN or is an individual with special needs.

The initial plan by the state was to start this new system of care with a risk-based, capitated payment methodology. As defined by the American Academy of Pediatrics, capitation reimburses a provider or a group of providers through the payment of a fixed periodic payment in exchange for delivering some defined set of services to a specific population of patients.12 Historically, capitation systems have not been used for populations that, by definition, require more medical care than the general population. Indeed, capitated providers have attempted to avoid this adverse selection. Further, there is limited experience in determining capitation rates for the CSHCN population. The state asked national actuarial consultants to develop rates for disease- and condition-specific categories, and it was the opinion of these experts that a reasonable approach to capitation for the Michigan CSHCS population could be developed. Essential to this process, however, will be the flexibility to examine provider experience and make retrospective settlements if the methodology is determined to be seriously flawed. The most obvious factors complicating this ratC'setting methodology include the relatively small number and diversity of enrollees and the complexity of factors influencing the variation of the cost of care. At the time of publication, no final rates or financial agreements were in place.

LESSONS LEARNED

What lessons have we learned to date in this far from completed journey? We believe there are several important steps to be considered.

* Identify the key stakeholders, including families and physicians, and involve them in every step of the process.

* Decide early in the process whether mainstream HMOs can meet the needs of the population, or whether to establish a CSHCN "carve-out."

* Any healthcare delivery system for children should be consistent with guiding principles or values. These principles or values should be incorporated into all formal contract language. Cost savings should not be the only determinant of program success.

CONCLUSION

It is clear that the task of developing a statewide managed healthcare delivery system for CSHCN is a monumental, complex task. The risks are considerable, both for providers and consumers. There are also potential benefits and opportunities to be gained from managed care, including improved coordination of services, enhanced access to primary care, and more accountability. Only if physicians, families, children's hospitals, and other major stakeholders work together collaboratively will we be able to maximize our opportunities and provide high-quality, cost-effective, principle'Centered care.

REFERENCES

1. Monahan C. Quality Community Managed Care· A Guide far Quality Assurance Measures for Children With Special Health Care Needs. Chicago, IU: University of Illinois; 1997.

2. Bachman S, Burwell B, Albers LA, Hen L. Jackson B. Mauernd CarveOius: Policy ami Programmatic Considerations. Princeton, NJ: Center for Health Care Strategics. Inc; 1997.

3. Managed Care for Children With Special Health Cari Needs: Physician Case Management Model. Michigan Department of Public Health, February 1995.

4. Smyth M, Haas D, Friebe M. The ups and downs for children with chronic illnesses. Managed COTÍ Quarter!}. 1995;3:91-95.

5. American Academy of Pediatrics. The medical home. Pediatrics. I992;90:774.

6. American Academy of Pediatrics. Guiding principles for managed care arrangements for the health care of infants, children, adolescents, and young adulti. Pediatrici. I995;95:113-615.

7. Koop CE. Surgeon Generals Report.· Children With Special Heakli Care Needs. Washington, DC: US Department of Health and Human Services; 1987.

8. Proceedings of the Seventh Annual National SPRANS Special Projects of Regional and National Significance) Workshop. Children twth Special Health Needs: Lessons Learned in Developing Systems of Care. Rerommendanons /or Developing Family-Centered, Community-Based, Cocmdinated, Culturally Compilent Systems of Care. St. Paul, Mirai: Pathfinder Resources, Ine; 1993.

9. New England SEKVE. Enhancing Quality: Standards and Indicators of Quality Care for Children uuh Special Health Care Needs, Boston, Mass: Massachusetts Health Research Institute, Ine; I989.

10. New England SERVE. Ensuring Access: Family-Centered Health Care Financing Systems far Children uith Special Health Needs. Boston, Mass: Massachusetts Health Research Institute, Ine; 1991.

11. Regenstein M, Meyer J, Fox H1 er al. Challenges for Decision Maliers: HDUJ Managed Competition Could Affect Children unth Special Health Care Needs. Portland, Maine: National Academy fot State Health Policy; 1995.

12. American Academy of Pediatrics, Committee on Child Health Financing. Herman S, Gross RD, Lewafc N, eds. A Pediatrician's Guide to Managed Care. Elk Grove Village, III: American Academy of Pediatrics; 1995.

TABLE 1

Guiding Principles of Michigan's Subcommittee on the Managed Care Initiative

TABLE 2

Values for Michigan's Managed Care Delivery System

10.3928/0090-4481-19971101-09

Sign up to receive

Journal E-contents