Early PCCM programs were implemented when Medicaid reimbursement rates to physicians were extremely low compared to the rates of other payers. Many Medicaid agencies were concerned about retaining sufficient provider participation to offer adequate access to primary and preventive care. As a result, contracted PCPs were not asked to accept any financial risk for provision of care. Until recently there were only two major forms of reimbursement among state PCCM programs.
- Fee-for-service payment for all services provided to members, plus a case management fee. In 1998, 26 of the 29 states (90 percent) with PCCM programs used this method.28
- Fee-for-service payment for all services, including an enhanced rate for routine office visits by PCPs, with no care coordination fee. In 1998, 4 of the 29 states (14 percent) used this method. 29
It was thought that continuing fee-for-service payments would create an incentive for PCPs to see their members on a regular basis. The 1998 data also showed that two states (California and New York) shared any savings generated by the PCCM program with contracted PCPs, in addition to one of the standard forms of reimbursement, to create an incentive for PCPs to closely manage referrals and specialty care. Recently, some states have begun applying such financial strategies as capitation or bonus payments, used by MCOs, to their PCCM programs.