States are increasingly relying on managed care approaches to finance and deliver health care and behavioral health services to people enrolled in Medicaid. Under a managed care approach, states provide capitated financing to Managed Care Organizations (MCOs) that then contract with health care providers under arrangements intended to reduce costs and increase the quality of care. The Kaiser Family Foundation reports that the number of Medicaid beneficiaries enrolled in managed care nearly doubled between 1999 and 2008, rising to 71 percent of all Medicaid beneficiaries.39
Medicaid managed care began in many states with a focus on enrolling children and families. However, a growing number of states now allow people with disabilities to enroll in managed care plans, and some states require this enrollment. As discussed earlier in Section 4 (mental health services), in most states managed care arrangements for medical care are separate from arrangements for managed behavioral health care, administered by different MCOs, and delivered by different provider networks with separate payment systems.40
The implementation of Medicaid managed care often is accomplished through a waiver of some Medicaid rules, including a waiver of freedom of choice requirements, allowing the MCOs to contract with a limited set of providers. States generally provide some wraparound reimbursement for services provided by FQHCs, in addition to the payment provided to the FQHC by the MCO.
All three of the states where site visits were conducted for this study are in some stage of implementing managed care for mental health services. In California and Illinois, mandatory enrollment in Medicaid managed health care for people with disabilities is just beginning, so the implications for financing and delivering care for chronically homeless people and PSH residents are not yet clear.
In Massachusetts, most Medicaid benefits are administered through managed care delivery and financing systems, with a separate managed care arrangement (and separate MCOs) for some behavioral health services.
7.1. How Does Managed Care Deliver Services Linked to Permanent Supportive Housing
Capitated financing and the quality or performance standards included in many managed care contracts change the financial incentives for health care providers. If reimbursement is no longer provided on a FFS basis for hospitalizations and emergency room visits, this creates incentives for the MCO or the network of health care providers under contract with the MCO to improve their coordination and management of health and behavioral health conditions to reduce use of these costly services and provide more cost-effective interventions. Under managed care arrangements, MCOs may be able to offer services that would not otherwise be covered as benefits under a state Medicaid plan, if these are effective substitutes for more costly covered services.41
During site visits and through supplementary contacts with programs in other parts of the country, we learned about a number of managed care arrangements:
In Massachusetts, the behavioral health carve-out managed by the MBHP (the carve-outs MCO) has the flexibility to identify special need population cohorts and create special contracts with providers to cover their needs. A recent example of a specially-focused program is the CSPECH, in which MBHP collaborates with the Massachusetts Housing and Shelter Alliance. CSPECH is a demonstration that has expanded through MBHP contracts to fund nine partnerships with community organizations around the state to serve a total of 300 chronically homeless people with mental health and substance abuse problems who qualify for enrollment in MBHP-funded services.
One of the CSPECH organizations, the BHCHP, provides a CSP for people experiencing chronic homelessness who are Medicaid-eligible. All have multiple chronic conditions and were identified as high-risk/high-user Medicaid clients. The program serves approximately 24 people, although more than 200 BHCHP clients would qualify for the program. Program goals are to stabilize people in housing and manage their medical and support needs, saving money on uncoordinated medical care to pay for supportive and case management services. Program elements include home care services, case management, and medical and behavioral health services, all covered by Medicaid. Housing subsidies are provided by HUD Housing Choice Vouchers.
- Pennsylvanias managed care behavioral health carve-out arrangement has allowed counties to achieve savings by providing community-based services that reduce the use and costs of inpatient hospital and other high-cost care. Single-county or local behavioral health managed care consortiums in nearly 50 counties have achieved savings that they been allowed to retain and devote to funding supportive housing for Medicaid enrollees under a cooperative arrangement with the Pennsylvania Housing Finance Agency. Funds have been used to leverage capital and operating/rental resources, one-time move-in expenses, and for supportive services. More than 3,000 people have benefited from these arrangements since 2008.
7.2. New Arrangements for Managed Care for Residents of Permanent Supportive Housing
In Louisiana, the state has selected a MCO that is responsible for administering its new behavioral health carve-out. Included in covered services are services to people in PSH or eligible for PSH. Negotiations are under way on the level of funding that will be provided.
In California, for more than a decade most Medicaid-reimbursed mental health services, including psychiatric hospitalizations and community-based mental health services, have been administered through county-level managed care arrangements. California is now moving to require nearly all disabled Medicaid beneficiaries in the states urban counties to enroll in Medicaid managed care plans for their medical care, under the terms of a recently approved waiver.
In Illinois, the state legislature enacted a Medicaid reform law in early 2011, mandating that 50 percent of all Medicaid recipients in the state be in coordinated care by January 2015. The law provides authority for the states Department of Healthcare and Family Services (DHFS) to design approaches to coordinated care that include primary care, behavioral health services, hospital services, rehabilitation, and long-term care services. In June 2011, DHFS released a summary of key policy issues related to care coordination, with a request for stakeholder comments.42
Plans for coordinated care in Illinois are likely to include a range of innovative approaches to delivery systems and payments, in addition to traditional fully-capitated managed care arrangements. DHFS has asked for stakeholder input regarding special arrangements to accommodate entities that want to provide coordinated care to particularly expensive or otherwise difficult clients and is considering sponsoring demonstration projects to launch care coordination. In conjunction with the opportunities created by the Illinois Medicaid reform law, the Michael Reese Health Trust has provided a grant to support an intensive planning effort involving HHO and the AIDS Foundation of Chicago. Their work is intended to lay the groundwork for creating an Accountable Care Organization (ACO) for a very vulnerable target population of people who are (or will be) enrolled in Medicaid.
7.3. Challenges, Obstacles, and Limitations of Managed Care
7.3.1. The Usual Managed Care Organizations Are Not Geared to Serving Chronically Homeless People
Typical MCOs do not have significant experience or staff expertise in providing care to chronically homeless people, and they may not have established contracts or payment mechanisms that support the intensity, frequency, and types of services involved. For example, some MCOs have established programs that rely on case managers or nurses who provide health education or case management services by telephone, an approach not adapted to working with people with complex health and behavioral health needs.
7.3.2. Services May Be Much More Limited for People Who Are Dually-Eligible for Medicare and Medicaid
Homeless or formerly homeless dual-eligibles (people who are enrolled in both Medicare and Medicaid) typically begin coverage with Medicaid only. While covered by Medicaid, dually-eligible chronically homeless people and PSH residents in Massachusetts are served through MBHPs behavioral health carve-out. However, once Medicare eligibility begins, people must switch to FFS care. When this happens they lose behavioral health coverage for services such as ACT through MBHP and instead get coverage under Medicare for limited inpatient, outpatient, and injectable drug treatment. They supplement this coverage with what can be covered under Medicaids FFS care, which is more limited and often requires people to change their primary provider relationship.
Massachusetts recently received an award from a grant program administered by the newly-created federal Coordinated Care Office, to demonstrate integrated care for people who are dually-eligible for Medicare and Medicaid. The Coordinated Care Office was established by the ACA with the goal of improving coordination among federal and state governments and supporting innovations in care delivery and financing for dual-eligibles. One focus of these efforts is the most chronically ill and costly segments of the populations enrolled in both programs. Massachusetts is including people who are chronically homeless in the demonstration.
7.4. Looking Ahead to 2014: How is Managed Care Likely to Change?
Many states are likely to rely on managed care delivery and payment mechanisms as they expand coverage to people who are newly eligible for Medicaid. Medicaid managed care enrollment will likely keep expanding to include other groups of people with disabilities who are currently enrolled in Medicaid. This will make it increasingly important for PSH service-providers to establish contracts with MCOs so they can continue to get Medicaid reimbursement for the services they provide.
Some provisions of ACA may create opportunities for states to re-examine the separation between managed care arrangements for medical care and behavioral health care services and consider re-aligning delivery systems and payment mechanisms to support more integrated approaches to care.
MCOs are expected to play significant roles in the implementation of ACOs, health homes, and other changes in health care delivery and financing. These and other developments may offer new opportunities for MCOs to understand patterns of health care use and costs associated with chronic homelessness and PSH, and to become partners in financing services in PSH in more communities.