Medicaid Case Management: Kentucky's Patient Access and Care Program

By Miller, Mark E.; Gengler, Daniel J. | Health Care Financing Review, Fall 1993 | Go to article overview

Medicaid Case Management: Kentucky's Patient Access and Care Program


Miller, Mark E., Gengler, Daniel J., Health Care Financing Review


INTRODUCTION

Federal and State expenditures for Medicaid have been escalating since the late 1970s (Grannemann and Pauly, 1983; Holahan and Cohen, 1986; Davidson, Cromwell, and Schurman, 1986; Chang and Holahan, 1989). For example, the average annual rate of growth in these expenditures from 1975 to 1985 was 12 percent (Congressional Research Service 1988). At the same time, Medicaid continues to have problems with access, continuity, and appropriateness of care (Freund and Neuschler, 1986; Freund, 1984; Davidson, 1982; Hurley, 1986). The underlying problem of Medicaid reflects the problem of the health care system at large: increasing costs coupled with unmet needs and unevenness of care. Managed care (i.e., controlling access and coordinating care) has been proposed by both Federal and State Medicaid policymakers as a way of reconciling improved access with cost containment.

Escalating Medicaid expenditures led to the passage of the Omnibus Budget Reconciliation Act of 1981 (specifically, sections 1915[b] and [c]), which granted States considerable latitude to experiment with alternative payment and delivery systems. Consequently, a number of States began experimenting with Medicaid managed care. From 1981 to 1987, the number of Medicaid managed care programs increased from 54 to 177, and the number of Medicaid recipients in these programs increased from 282,000 to 1.6 million. The Health Care Financing Administration (HCFA) estimates 1991 enrollment at 2.5 million--10 percent of all Medicaid recipients. More recently, however, growth in managed care initiatives, particularly risk-based plans, has slowed. Obstacles to implementing risk-based managed care programs have moved States toward PCCM, coupled with traditional fee-for-service (FFS) Medicaid.

States have implemented Medicaid managed care programs with the goals of increasing access to care, improving continuity of care, containing costs through the reduction of unnecessary and inappropriate services, and (to a lesser extent) improving provider participation in Medicaid. At the Federal level, executive budgets have proposed financial and regulatory incentives to encourage States to enroll Medicaid beneficiaries in managed care. However, increased utilization coming from improved access to care, in addition to the administrative costs of managed care programs, can result in more, rather than less, Medicaid spending. Cost-containment occurs only if unnecessary and inappropriate service utilization is reduced.

In this article, we examine the impact of managed care on the use of medical services by Medicaid-eligible persons. (We do not address program cost effectiveness directly. Program cost effectiveness requires that savings from reduced utilization in some services offset costs from increased utilization in other services and program administration.) Although Medicaid managed care programs vary along a number of dimensions, fundamental to each is the role of a case manager with the responsibility to coordinate and control care (Freund, 1987). The case manager can be an individual physician or an institution such as a health maintenance organization (HMO) or clinic. Virtually all case management plans require the beneficiary to choose a primary care provider; these plans also attempt to modify beneficiary utilization patterns through restricted access and coordinated service delivery. Some plans attempt to alter provider behavior through financial incentives and utilization review.

Thus, there are many models of managed care. The specific model we examine is the coupling of PCCM with traditional FFS Medicaid. Case management refers to the assignment of the patient to a physician (or institution) who provides primary care and must authorize additional services. The PCCM/FFS model is a good model to study because it is the smallest departure from the traditional Medicaid program and thus defines one end of a spectrum of Medicaid managed care models undertaken by the States. …

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