States in Action Archive
Minnesota: Health Homes Tie Together State, National Health Reform Concepts

Minnesota plans to use the ACA's Medicaid health homes option to build on its current statewide medical home initiative, which began in 2003. Jeffrey Schiff, M.D., the medical director of health care programs at Minnesota's Department of Human Services, said that the provision "is very compatible with our program. Health care homes are already incorporated into our Medicaid state plan, and we make payments for patients who are above a certain level of severity, so this was a natural fit."

The state's expansion of health homes is the next stage in a series of efforts that began in 2003, when it secured a Health Resources and Services Administration grant through its Department of Health to create medical homes for children with special needs enrolled in Medicaid. In 2007, the state enacted legislation requiring medical homes for patients in fee-for-service Medicaid who had complex conditions. Even before that legislation could be implemented, in 2008 the legislature began to plan a broader health home program that will involve all privately insured patients, Medicaid enrollees, and state employees. The state is also working with major employers, including self-insured companies, in the expectation that they will also eventually participate.

Effective July 6, 2010, Minnesota amended its Medicaid State Plan to officially designate "health care homes," using a broad set of criteria for patient-centeredness and quality improvement. These criteria include:

Access and communication standards

  • Availability of electronic communication
  • Appointment availability and triage capacity
  • Registry functionality

Care coordination

  •  Coordination for basic and complex conditions
  • Care transition coordination
  • Coordination with community agencies

Practice-based quality improvement

Certifying Providers as Health Homes
The state began certifying practices as health care homes this past summer, and as of early January more than 45 practices were certified out of 700 in the state, with about one-sixth of the other practices currently awaiting certification. After the passage of the ACA, the state legislature mandated that Minnesota take advantage of the funding provided by the legislation for health homes in Medicaid—a natural step given the increasing emphasis on spreading the health home model in the state. Minnesota was also recently selected as one of eight states to participate in the Multi-Payer Advanced Primary Care Practice Demonstration, further reinforcing the concepts promoted in the health reform law.

"We were already committed to doing all this with the regular 50 percent match, so we see the 90 percent match opportunity as a help to the state budget," Schiff said. "We believe that medical home costs will be made up by decreased utilization of acute care services among patients using health care homes, and we may even see savings as a result." After the eight available quarters of enhanced funding end, the state will continue to provide health care home services at its regular 50 percent matching rate, and will evaluate the resulting costs and savings, including in a required report to the legislature in 2013.

Multi-Tiered Payments and Evaluation
The state's payment methodology for health care homes varies according to patient complexity, which providers report when they submit claims. Rather than choosing a single per member/per month payment, the state uses five tiers of patient complexity, ranging from those with no complicating conditions to those with 10 or more conditions. Additional monthly payments range from $10 for one condition to $60 for most complex cases, plus a 15 percent increase in the base payment for each patient with a major mental health condition or whose primary language is not English.

The payment amounts were based on estimates of the amount of work involved in coordinating care for patients with varying complexities, and on the level of clinical or administrative staff needed to provide a given service. "It was important to us to base the payments on clinical realities and needs," said Schiff. "This will be more challenging for states that don't already have a payment strategy that lines up well with what Section 2703 envisions, but it is certainly achievable."

In order to stay certified in the program, practices have to annually submit data that reflect CMS' "three-part aim" on quality of care, patient experience, and utilization and costs. The state is still developing the evaluation mechanisms. A common concern among states is that health homes will add costs to the health care system—a perception that makes evaluation especially important. The ability to feed outcomes data back to practices so they can compare their performance with that of their peers on a risk-adjusted basis will be critical. Minnesota has started to work with other payers on feeding data back and is trying to look at all patients with a given condition, but these efforts are still in development.

Minnesota sees connections between health homes and other major concepts in health reform, including accountable care organizations (ACOs). "Once there is a model to track cost and quality, it will be possible to reward providers and systems, supporting the ACO concept of returning some savings to providers," said Schiff. Legislation passed in 2010 requires Minnesota to develop a model to carry this out in a way that is compatible with the Medicare shared savings program.

Supportive Environment
A number of factors in Minnesota's health care and policy environments support the state's progress on health care homes. It has a proactive legislature that has aggressively pursued implementation of these concepts for years, and that is open to the idea that health homes can result in improved quality and lower costs. The state also has broad collaborative efforts on quality measurement and improvement. All of its health plans are nonprofit and based in the state, which has helped to foster collaboration and support of institutions that can work on health homes and other quality and cost issues. Minnesota also has a highly integrated provider community: 85 percent of its providers are in about 53 medical groups, and there are relatively few small practices that would find the costs of participating in health home activities prohibitive. The state also has relatively few uninsured residents. (For more information about Minnesota's high-performing health system, please see the 2009 Aiming Higher for Health System Performance report. 

Schiff recognized there are potential challenges for other states in taking up the health homes option in Section 2703, and some factors unique to Minnesota that have contributed to the state's proactive implementation of the concept. Still, he emphasized that the legislation provides states with an important opportunity to build on health homes as part of broader implementation of federal health reform.

For more information: Contact Karen Smigielski, Department of Human Services communications manager, at Karen.Smigielski@state.mn.us.


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