Medicaid Contract Purchasing Specifications
Children with Special Health Care Needs
Part
3.
Payment
Issues
As noted in the introduction, these purchasing specifications
do not address two sets of payment issues: (1) those relating
to the determination of capitation rates paid to MCOs by state
purchasers on behalf of enrolled children with special health
care needs; and (2) payment methodologies used by MCOs with respect
to network and out-of-network providers. For language used by
state purchasers relating to both of these issues, see Table 7.1
(Plan Payment Terms) and Table 7.2 (Provider Payment Terms) in
CHSRP's Negotiating the New Health System, 3rd Ed. (1999),
Vol. 2, Part 4, www.gwu.edu/~chsrp.
In developing language on these issues, purchasers may wish to
take into account the following considerations.
Payments to Plans from Purchasers. Federal Medicaid law requires
that payment rates in risk contracts between state Medicaid agencies
and MCOs be set on "an actuarially sound basis." Medicaid-eligible
children generally tend to have greater unmet health care needs
than other children, and Medicaid-eligible children with special
health care needs tend to have even higher acuity levels. This
means that, in developing "actuarially sound" capitation
rates for MCOs that enroll such children, state purchasers should
ensure that the levels of payment will supply an efficient MCO
with the resources necessary to address the service needs of this
population. In short, in order to be "actuarially sound," capitation rates for this population should be adjusted to reflect
the higher risk that an MCO assumes in accepting treatment responsibility
for such children.
In a letter to State Medicaid Directors dated October 5,
1998, HCFA notes that “[t]he manner in which States decide
to reimburse MCOs and providers for the delivery of services plays
a major factor in how those systems of care operate and how enrollees
access services.” HCFA suggests that “States should
consider … developing rates of payment to MCOs, prior to
enrollment of persons with special health care needs, that assure
adequate payments.” HCFA also suggests that “States
should consider…providing appropriate financial incentives
to providers and MCOs to encourage appropriate delivery of care
to persons with special health care needs. Such approaches also
must recognize that serving individuals with special health care
needs takes more time and resources than with healthier patients….”67
HCFA has not specified, and there is no professional consensus
on, a methodology for adjusting capitation payments to Medicaid
MCOs enrolling children with special health care needs or subsets
of such children. Instead, there is a great deal of experimentation
underway at the state level. For a summary of factors used by
6 states (Colorado, Connecticut, Delaware, Massachusetts, Michigan,
and New Mexico) in varying capitation rates, see Table 17, pp.
144-150, of Kaye et al., Certain Children with Special Health
Care Needs: An Assessment of State Activities and Their Relationship
to HCFA's Interim Criteria, National Academy for State Health
Policy (June 2000), http://www.hcfa.gov/medicaid/needsrpt.pdf.
Other sources of information that interested purchasers may
wish to consult are:
-
National Academy for State Health Policy, Medicaid
Managed Care: A Guide for the States, 4th Ed., Volume IV:
Innovations in Payment Strategies to Improve Plan Performance
(October 1999).
- Holahan, et al., Medicaid Managed Care Payment Methods
and Capitation Rates: Results of a National Survey (1999),
http://newfederalism.urban.org/html/occa26.html.
- Schwalberg, R.., The Development of Capitation Rates
under Medicaid Managed Care Programs: A Pilot Study (Volumes
I and II), Washington DC: Health Systems Research, Inc. prepared
for the Henry J. Kaiser Family Foundation (November, 1997),
www.kff.org.
- Hoag, et al., "Setting Rates for Medicaid Managed
Behavioral Health Care: Lessons Learned," Health Affairs,
Vol. 19/4 (July/August 2000), pp. 121-133.
- Neff et al., "Protecting Children with Chronic Illness
in a Competitive Marketplace" JAMA (1995) 274:23,
pp. 1866-1869.
- List, D. and Ireys, H. "Studies of Service Use by
Children with Special Health Care Needs: What Have We Learned
in 20 Years?" (submitted for publication), www.jhsph.edu/cshcn.
- Hwang et al., "Comparison of Risk Adjusters for Children
with Chronic Illnesses" (submitted for publication), www.jhsph.edu/cshcn.
Payments to Providers from Plans. These purchasing specifications,
at §204(i)(2) - (4), contain illustrative language addressing
some of the issues relating to MCO payments to providers, both
participating and out-of-network. The language converts federal
Medicaid requirements relating to prompt payment and physician
incentives into Contractor duties. The language does not, however,
speak to the adequacy or reasonableness of the rates or amounts
paid to providers by MCOs. This is because the federal Medicaid
statute specifies reimbursement arrangements between MCOs and
providers only in the case of Federally Qualified Health Centers
(FQHCs).
For other sources of information that purchaser may wish
to consult:
-
American Academy of Pediatrics, Model Managed Care
Agreement, Section Five, pages 12-18 (1998); and
- Andrews, et al., Pediatric carve-outs: The use of disease-specific
conditions as risk adjusters in capitated payment systems,
Archives of Pediatric and Adolescent Medicine 151(3): (1997),
p. 236-242.
Compliance Measures: Parts 1 and 2
Compliance Measures: Contractor shall make available to Purchaser
upon request:
(1) Information Regarding Coverage Determinations
(A) All protocols, provider manuals, memoranda, and other
materials used by Contractor to make coverage determinations
or to instruct providers on coverage, coverage determination
standards and procedures, and prior authorization procedures
under this purchasing agreement.
(2) Enrollment Materials
(A) Instrument used by providers participating in Contractor’s
network in performing initial assessments of newly enrolled
children to determine whether they have special health care
needs; and
(B) Manuals, protocols, guidance, or other materials in
which Contractor describes how an initial assessment is to be
conducted and how confidentiality regarding the information
obtained from the assessment is to be maintained.
(3) Care Plans and Care Coordinators
(A) Manuals, protocols, guidance, or other materials in
which Contractor describes:
(1) the development and implementation of a care plan;
and
(2) the responsibilities of an enrolled child's care
coordinator.
(B) The number of enrolled children with respect to whom
Contractor has developed a care plan and the number of such
plans signed by the family or caregiver of the enrolled child.
(4) Provider Network Information
(A) Credentialing rules and other criteria for selection
of pediatric specialists participating in Contractor’s
provider network;
(B) Copies of agreements with providers participating in
Contractor’s provider network;
(C) Provider Manual pertaining to Contractor operations;
and
(D) Letters of documentation of referral arrangements.
(5) Information Regarding Access to Pediatric Specialists
(A) The following information relating to each pediatric
specialist participating in Contractor’s provider network:
(i) Name;
(ii) Area of practice;
(iii) Provider number;
(iv) Address (including zip code) of each practice site
at which the specialist offers services;
(v) Current office telephone number(s) of each practice
site; and
(vi) Office hours of each practice site; and
(B) The pediatric professionals participating in Contractor’s
provider network who are willing to serve as primary care providers
for children with special health care needs;
(C) Pediatric specialists not participating in Contractor’s
provider network to whom enrolled children with special health
care needs are referred.
(6) Information Regarding Relationships with Other State
and Local Agencies
(A) Copies of memoranda of understanding executed by Contractor
with State Title V Program for CSHCN, State Substance Abuse
and Mental Health Services Agency, and State Education Agency
and State Part C Lead Agency.
(7) Clinical and Other Studies
(A) Copies of any clinical and other studies conducted
by or on behalf of Contractor relating to the quality of items
and services furnished to children with special health care
needs.
(8) Findings and Reports from External Reviews and Accreditation
(A) Copies of any findings or reports from external quality
reviews under §1932(c)(2) of the Social Security Act, 42
U.S.C. §1396u-2(c)(2); and
(B) Copies of any findings or reports of accreditation
surveys relating to Contractor.
Endnotes
- HCFA letter to State Medicaid Directors,
October 5, 1998, “Key Approaches to the Use of Managed Care
Systems for Persons with Special Health Care Needs,” www.hcfa.gov/medicaid/smd-snpf.htm.,
p. 12.
