Emerging Practices in Medicaid Primary Care Case Management Programs. Balanced Budget Act (BBA)


The Balanced Budget Act of 1997 included provisions specifically affecting PCCM programs. For example, states can now require Medicaid beneficiaries to enroll in managed care, including PCCM programs, by amending their state plans rather than seeking a waiver. The only populations excluded from this state plan option are certain children with special needs (including SSI children), beneficiaries dually eligible for Medicare and Medicaid, and American Indians/Alaska Natives.18

In our study of eight states (Alabama, Florida, Iowa, Maine, North Carolina, Oklahoma, Texas and Virginia), the most frequently stated impact of the BBA is the "prudent lay person standard" for emergency room utilization, prohibiting the need for prior authorization of coverage. This requirement was specified in a letter from HCFA(now known as CMS) to state Medicaid programs, stating that PCCM programs are required to pay for emergency services that meet the prudent layperson standard.19

State officials struggle with the lack of an operational definition of prudent lay person. Prior to the BBA, many states had determined whether services were emergency or non-emergency (non-emergency meaning not being reimbursable without prior authorization from a PCP); the new regulations no longer allow such classifications. Thus, a major tool for managing care and costs in PCCM programs is no longer available to Medicaid programs.

In response, several states are developing methods to reduce inappropriate emergency room use through educational efforts.

  • Texas created an Emergency Room/Urgent Care Subcommittee, which drafted a common set of protocols for voluntary emergency room use. The Texas Medicaid program is now presenting these protocols to emergency rooms across the state.
  • Maine is focusing its efforts on member education strategies.
    • The state's quality management nurses send letters to PCCM members (or their families) who seek services within an emergency room at least twice per quarter for such issues as earaches, coughs, sore throats, or colds (identified through diagnostic codes in medical records). The letter encourages the member to visit his/her PCP for these issues; attached to the letter is a card that lists steps to managing the symptoms at home. If the member's emergency room use does not change, one of the nurses sends a more forceful letter. If the second letter has no impact, one of the nurses actively manages the member; however, the program has not been in place long enough for any beneficiaries to reach this last stage.
    • The state recently implemented a system for PCPs to refer patients for education. A physician sends a completed Member Education Request Form, which lists the area for education (including appropriate emergency room use), to the PCCM program's enrollment broker. The broker sends an educational flier that contains information about the requested topic area to the member. If this has no discernable impact, the enrollment broker can contact the member by telephone.

The effectiveness of states' efforts to influence physician or patient behavior solely through education -- without the availability of incentives or disincentives -- is limited. One official noted that emergency rooms in some of that state's rural areas are considered gathering places on weekends; patient and provider education has not been effective in changing utilization patterns.

A related issue is the states' ability to promote communication between the emergency room and the PCP. One PCP interviewed for this study expressed frustration that without information about his patients' use of the emergency room, he lacks the ability to effectively oversee his patients. Several states, including Alabama and North Carolina, encourage emergency room physicians to contact the beneficiary's PCP with a description of the encounter. However, such notification depends on the individual emergency room physician's inclination.

Other BBA requirements affecting PCCM programs, such as access standards or lock-in provisions, did not appear to impact these eight states, possibly because they already have these standards in place.

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