Constrained Innovation in Managing Care for High-Risk Seniors in Medicare + Choice Risk Plans. CHAPTER VII. CONSTRAINED INNOVATION IN MANAGED CARE FOR HIGH-RISK SENIORS


The four case study managed care organizations (MCOs) all exhibited the innovation, attention to preventive care, and cost-consciousness we expected, given their reputations. They have gone beyond Medicare fee-for-service in an effort to improve care for high-risk seniors. Their new services included screening and other programs to identify these seniors; care management and disease management; network credentialing; and better coordination and more flexible use of inpatient, skilled nursing facility, and home health services. At the same time, their flexibility and willingness to go beyond basic Medicare coverage are limited. The medical focus of the Medicare contract and the lack of clear evidence about the cost- saving potential of many services appears to have led these organizations to proceed cautiously. While their innovations appear to improve care and produce high levels of satisfaction among high-risk seniors, some important needs remain unmet. The experiences of these four organizations thus highlight many ways to enhance care delivery for high-risk seniors. Substantial developments to meet the full spectrum of needs will require more expansive contracts, risk-adjusted payment system, and strong evidence of cost-effectiveness.

The presence of both innovations and unmet needs led us to adopt the concept of “constrained innovation” to describe what was going on in the case study MCOs. We saw many instances where the organizations took advantage of the flexibility provided by capitation to improve coordination of care for high-risk seniors. At the same time, we saw how the Medicare contracts, current practice patterns, and market pressures limited the organizations’ innovations. We also recognize that we selected a small set of well-regarded MCOs whose experience may not be indicative of the actions of all Medicare + Choice plans. Thus, we saw not only how managed care could improve care for a group that has often expressed low levels of satisfaction with managed care, but also how these improvements can still leave some important needs unmet.

Overall, we noted a considerable amount of ferment, experimentation, and change among the four case study organizations. Each had developed and implemented a number of innovative programs to facilitate care for high-risk seniors, with care management being a noteworthy example. They also encountered numerous operational difficulties, and they continually refined their programs. There was no single dominant approach; rather, there were many efforts to use the flexibility provided by capitation to improve care within the organizational context of the MCOs’ structure and the basic Medicare benefit package.

We also noted several instances where the structure of the group model organizations facilitated the implementation of new service delivery and coordination methods. In particular, these MCOs drew on their clinic-centered primary care delivery systems to field care management and other efforts designed to improve care and to facilitate communication between physicians and care managers. The group models also developed relatively small networks of hospitals and skilled nursing facilities that met higher quality standards than required in the fee-for-service system. They then sought to make further improvements and efficiencies in care by having a dedicated set of physicians and nurse practitioners manage all care delivered to MCO patients in those facilities. In contrast, the IPA models had less direct interaction with physicians in their networks. While they established quality standards for hospitals and nursing facilities, they developed much larger networks than the group model MCOs and did not use a hospitalist approach to managing care in those settings. Thus, the IPA model MCOs appeared to offer their members with more choices of providers and more locations from which to obtain care. For policymakers, these organizational differences create a potential choice: whether to encourage the service integration and innovation of the group models or to promote greater beneficiary choice by ensuring their access to care through an IPA’s larger method of physicians, hospitals, and skilled nursing facilities.

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