Evaluation of the Medicaid Health Home Option for Beneficiaries with Chronic Conditions: Final Annual Report - Year Two

This report presents findings from the first two years of the long-term evaluation of Medicaid health homes, a new integrated care model authorized in Social Security Act Section 1945, created in Section 2703 of the Affordable Care Act. The model is designed to target high-need, high-cost beneficiaries with chronic conditions or serious mental illness (SMI). The Urban Institute is conducting the long-term evaluation of this program for the U.S. Department of Health and Human Services (HHS), Office of the Assistant Secretary of Planning and Evaluation. This evaluation will assess:

• The care models and processes states are using.

• The extent to which health homes result in increased monitoring and care coordination.

• Whether these models result in better care quality; reduced hospital, skilled nursing facility, and emergency department use; and lower costs.

Findings from the evaluation will inform a 2017 Report to Congress.

The Medicaid health home model elevates the importance placed on integrating physical health care with behavioral/mental health care and on linking enrollees to social services and other community supports. States with health home State Plan Amendments (SPAs) approved by the HHS Centers for Medicare and Medicaid Services (CMS) receive eight quarters of 90% federal match for six defined services: comprehensive care management, care coordination and health promotion, comprehensive transitional care, individual and family support services, linkage and referral to community and social support services, and use of health information technology (HIT). States have flexibility with respect to chronic conditions selected, geographic coverage, providers designated, and the payment system for health home services. The minimum eligibility criteria for beneficiaries include a diagnosis of two chronic conditions, one chronic condition and being at risk of a second, or one SMI.

Evaluation Structure, Timeline, and Methods

The long-term evaluation began October 1, 2011, and will continue for five years. This report examines the 13 SPAs in 11 states included in the evaluation. These include two SPAs from both Rhode Island and Missouri, and one SPA each from North Carolina, Oregon, New York, Alabama, Iowa, Ohio, Wisconsin, Idaho, and Maine. For each included SPA, the evaluation team developed background materials on program design and implementation context and conducting site visits. These will provide a qualitative foundation for tracking and interpreting program progress over the eight-quarter intervention period during which the enhanced federal match is available. Follow-up telephone interviews are being conducted roughly annually after the initial in-person site visits. Quantitative analysis of key outcomes will occur largely in the final two years of the evaluation and will examine utilization and costs for health home participants and comparison groups of beneficiaries.

Profile of State Health Home Initiatives

The health home programs included in the evaluation reflect the substantial flexibility states have in designing their programs, with variation occurring in the designated provider types, the chronic conditions targeted, and how health home services are defined and reimbursed. Most of the 13 SPAs focus on persons with two chronic conditions or one condition and risk for a second chronic condition. States have the ability to define their own qualifying physical and mental/behavioral conditions. Four states included SMI as an independent eligibility criterion. Wisconsin is unique in defining the eligible population as persons with HIV/AIDS served by specialized providers, while Ohio's SPA, and one SPA each in Rhode Island and Missouri focus entirely on persons with serious and persistent mental illness, SMI, serious emotional conditions, or substance abuse who are served by mental health centers. Conversely, North Carolina, Iowa and Missouri's second SPA base eligibility solely on multiple chronic physical conditions. Rhode Island's second program is the only SPA that focuses specifically on younger beneficiaries with special health care needs receiving care from specialized providers known as "Comprehensive Evaluation, Diagnosis, Assessment, Referral, Re-evaluation" (CEDARR) Family Centers. Regardless of whether mental/behavioral conditions are the criterion for eligibility, all health home programs must integrate physical and mental/behavioral health care for all participants.

With one exception, all 11 states are relying on per member per month (PMPM) payment for health home services. The exception to PMPM payments is Rhode Island's CEDARR Family Center-based health homes, which are paid through a mix of fixed service fees and established rates per quarter hour of effort. Several states base their PMPM on staffing needs assumptions (Missouri, Idaho, and Maine). Rhode Island uses a similar methodology based on personnel costs and staffing ratios for its community mental health organizations under the second SPA. The PMPM in Ohio is calculated based on the state's Uniform Cost Report Requirements (licensure ad reporting requirements for community mental health centers), which considers staffing costs, indirect costs related to health home service provision and projected caseloads. New York uses regional and case-mix adjusted PMPM payments for health home enrollees and pays providers 80% of the PMPM during the period when they are attempting to enroll eligible beneficiaries. PMPM payments in Oregon are set at three levels based on the extent to which providers meet established criteria for patient-centered primary care homes.

Implementation and Emerging Issues

Our observations during the first two years of the evaluation have yielded a number of insights regarding key program features and early implementation lessons that we will continue to track over the intervention period.

Health Home Models: Broadly speaking, states have designed health homes program that fall into one of three general types: specialty provider-based (Missouri [one SPA], Ohio, Rhode Island [two SPAs], and Wisconsin); medical home-based models (Idaho, Iowa, Missouri [one SPA], and Oregon); or care management networks (Alabama, Maine, New York, and North Carolina). The specialty provider model centers on entities that traditionally serve special populations but integrate specialized care with primary care. The medical home extension model is based on the patient-centered medical home, but extends to include specialty and other providers beyond the traditional primary care practice. The care management networks are networks or coalitions of physical and mental/behavioral health care providers, care coordination entities, social services agencies, and other community organizations overseen by a lead organization or administrative entity.

Flexibility: Health home programs differ in the degree of flexibility afforded to participating providers, particularly in terms of enrollee composition and payment processes. More prescriptive models may entail greater up-front provider investments to meet staffing requirements. In these more prescriptive systems under-enrollment or enrollment discontinuities are problematic for providers if they do not generate sufficient revenue to cover these costs.

Care Integration: Integration of physical health, mental health, and nonclinical support services is crucial to the success of health homes, but is a challenge even in states with more experience with integration. Mental/behavioral health and primary care providers in most states report that paying attention to both physical and mental health issues represents a significant culture change in the approach to patient care.

Children: Incorporating children into the health home model presents some challenges. By and large, the health home model is viewed as more applicable to adults and their providers because of its focus on beneficiaries with chronic conditions less common among children, although the model is being applied broadly to children in some states (Rhode Island and Alabama).

Communication: Modes and patterns of communication are still being developed within and across sites of care, and particularly between health home providers, hospitals, and managed care organizations. The extent to which new patterns of communication and new protocols are needed depends in part on how much of a change from the existing care system the health home program represents. In all programs the lack of widespread and interoperable HIT systems and regulatory restrictions on sharing patient information created barriers to communication at all levels.

Provider Issues and Challenges: Depending on the program, providers are either taking on new roles or becoming a part of a more integrated system. Common issues include possible mismatch between who incurs costs and who benefits from return on investments, the inadequacy of data systems to meet provider needs, and the pace and effects of practice transformation.

HIT Infrastructure and Issues: Providers in all states noted the inadequacy of current electronic health records (EHRs) in supporting care integration, the documentation of nonclinical services, or cross-site communication. The lack of funding to support EHR adoption by mental/behavioral health providers was seen as a significant barrier.

Role of Complementary Programs: All states in this evaluation are building on structures and programs that already exist, are attempting to align their health home programs with other reforms. Participating states have been able to draw on resources and technical assistance made available at both the state and federal level in the last several years to support practice transformation, care coordination, and mental health integration more generally.

The Enhanced Match: In many states, the availability of the enhanced federal Medicaid match rate was cited as an important part of the motivation for implementing health homes. However, several states were already engaged in delivery system transformation and indicated that they would have pursued this model of care regardless of the match.

Overview of Evaluation Design and Challenges

Our research design uses a mixed-methods approach employing both qualitative and quantitative data collection and analysis. We have identified several challenges to the quantitative aspects of the evaluation and potential strategies for addressing them.

• The primary challenge is that the two-year implementation window is a short time over which to realize measurable improvements, as all the participating states noted.

• Implementation of health homes is statewide in nearly all cases and occurring alongside a range of other reforms, making it difficult if not impossible to isolate a health home effect and to identify "uncontaminated" comparison groups.

• The variety in state approaches to health home design and enrollment practices may present opportunities to identify state-specific or program-specific design adaptations to support analyses of changes in utilization and cost, although not necessarily their attribution to health homes.

Coming Year Activities

In the evaluation's third year, we will continue to monitor progress in all the states in our evaluation group. We also will be receiving administrative data from CMS that will allow us to begin developing profiles of the health home-eligible populations in each state. We will continue to work with states to identify suitable comparison groups, obtain identifiers for health home enrollees, and obtain information on quality monitoring measures the states are collecting from health home providers. These activities will support quantitative activities expected to begin in the fourth year of the evaluation and be completed in year 5.

Conclusion

For the most part, states included in this evaluation have used the Medicaid health homes option to augment existing programs, to accelerate implementation of existing policies, as one part of larger system reform efforts, or some combination of these strategies. Even so, implementation appears to be a slow process, at least with respect to the eight-quarter intervention period. Particular issues revealed through the site visits are those relating to the need to improve communication across provider types and settings, as well as the special challenges associated with integrating care. We will continue to observe how progress toward full implementation and system reform differs across these maturing programs, and will document these and other implementation issues that emerge. These findings may inform other states considering health homes about challenges encountered and best practices to address them.