The Omnibus Budget Reconciliation Act (OBRA) of 1981 allowed state Medicaid programs to implement both PCCM and risk-based managed care programs, pending HCFA(now known as CMS) waiver approval. HCFA(now known as CMS) approval required that the state satisfy two requirements.
- The case management restrictions must not "substantially impair access" to primary care services of "adequate quality where medically necessary;" and
- The case management restrictions must be "cost effective."3
Many states focused their first efforts in managed care on PCCM programs, with the goal of moving to risk-based contracting later.
States began enrolling beneficiaries in their PCCM programs by the mid-1980s. In 1986, seven states had implemented PCCM programs, 4 and by 1990, 19 states had such programs. 5 Several factors motivated decisions to implement PCCM programs.
- States wanted to increase access to care. First, by offering physicians a small payment, state officials hoped more providers would accept Medicaid beneficiaries. Then each beneficiary would choose or be assigned to a participating physician, rather than needing to locate a provider who would accept Medicaid on his/her own; this would serve as his/her "medical home."
- States hoped to save money by reducing inappropriate emergency room (ER) and specialist use and other high-cost care. With continuity of care established, the member would presumably contact this medical home, rather than the emergency room, when health problems arose. Moreover, continuity of care would, in all likelihood, lead to better quality of care as well as more preventive care.
- States felt PCCM would be more palatable to physicians than risk-based managed care.
- States believed PCCM was better suited than MCOs in certain areas, such as rural regions where it would be difficult for MCOs to maintain an adequate population base for financial viability.
In typical PCCM programs, the PCP is paid a monthly case management fee for each enrolled Medicaid beneficiary, in addition to fee-for-service reimbursement for all non-emergency primary care services that he/she provides. In return, the PCP is responsible for providing primary care and for prior authorizations to hospitals and specialty care providers.6 Hospitals and specialists are also paid fee-for-service, as long as prior authorization has been obtained.
In many ways, early PCCM programs were more like traditional fee-for-service Medicaid than their managed care counterpart, risk-based programs. For example, a 1995 NASHP study of PCCM programs found that provider requirements were usually very minimal, PCP selection was non-competitive, and most states maintained existing fee-for-service payment rules (such as prior authorization and hospital pre-admission review) but added the requirement that a specified set of services must either be provided or authorized by the PCP.7
PCCM programs have been successful in increasing the access of Medicaid beneficiaries to primary care physicians and creating medical homes, but the impact on costs is more mixed. In certain studies, access and utilization of primary care were noticeably improved, due largely to these provider-patient relationships. While some states showed reduced costs (including New York, 8 and Arkansas 9, no reduction was found in others (including Maryland,1011 Missouri,12 and Utah).13 In some of the latter states, utilization patterns for emergency rooms, specialty care, and prescription drugs remained unchanged. Possible explanations for this include:
- Traditionally-run PCCM programs usually provide little incentive for either physicians or beneficiaries to change their behavior. Since services are reimbursed fee-for-service, more services equal greater reimbursement. The referral process for specialty and hospital care, by itself, does not cut down on this care. In some states, such as Utah, procedures do not exist for denying reimbursement for a Medicaid beneficiary receiving unauthorized services, so specialists and emergency rooms have no economic incentive to deny care to patients who self-refer.14
- With greater access to primary care, it is possible that more health problems that require additional care, such as prescription drugs or specialty care, may be detected.