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California Experiment with Managed Care Offers Lessons

By Rebecca Adams, CQ HealthBeat Associate Editor

June 25, 2013 -- When California managed care plans took on the challenge in 2011 of caring for seniors and people with disabilities, the insurers initially didn't know which providers had been caring for the beneficiaries or even how to contact the new enrollees, according to panelists at a Kaiser Family Foundation forum last week. The session examined lessons from the transition that could apply to other states now shifting patients to such plans.

One of the biggest problems in the ongoing California experiment as it started was a lack of information about who was signing up for coverage and a dearth of providers to care for the beneficiaries. State officials have tried to mitigate those problems as they prepare to move more Californians into managed care through two other major initiatives that will start Jan. 1: a large managed care demonstration project for people who are dually eligible for Medicare and Medicaid, and new coverage through the health care law (PL 111-148, PL 111-152) marketplace.

California's situation is similar to that in many other states that are steering more people into managed care.

About 51 percent of Medicaid beneficiaries nationwide, or more than 29 million people, got their coverage through risk-based managed care plans in 2011, according to the nonpartisan Kaiser Commission on Medicaid and the Uninsured, which hosted the briefing. About four-fifths of the states offer managed care to at least some Medicaid recipients, and an increasing number of states want to use managed care for more of their beneficiaries.

The transition to new types of systems can be rough.

"They're always kind of hellish," said Howard Kahn, the CEO of the L.A. Care Health Plan, a public managed care plan that offers nonprofit care to about 1.2 million people.

With a huge transition in sight as states prepare for the new coverage options under the health care law, health plans around the nation could learn from some of the mistakes in California. The California Medicaid program (known as Medi-Cal) moved almost 240,000 older and disabled people into managed care plans from 2011 to 2012.

One problem that federal and state officials have already sought to mitigate is the issue of people being unable to get services because computer systems don't immediately recognize that they have enrolled. That was a big concern in California. But there is a waiting period in the federal health care marketplaces and the demonstration programs for dually eligible people. Supporters hope that will solve that problem.

The waiting periods also could help with another issue that popped up in California because of a lack of data. The health plans didn't have information about which providers the enrollees had been seeing, so about 70 percent of people who were switched to managed care were assigned doctors by the plan rather than being able to choose their own physicians. Kahn called that the "biggest single problem other than dollars."

But a related concern about whether there will be enough providers to see all of the new patients is more complicated. Kahn added that insurers also need to "hire up" other professionals to handle an influx of patients, such as administrators, nurses and people to answer the phones.

One potential solution for a lack of providers is for health plans to open and operate their own clinics. Margaret Murray, the CEO of the Association for Community Affiliated Plans, which represents plans nationwide that care for the low-income, said Care Oregon and the Texas Children's Health Plan are two insurers that are experimenting with the idea of running clinics with their own medical teams.
"And plans are using technology in innovative ways," said Murray.

For instance, Kahn's plan sends digital pictures of skin lesions and other conditions to dermatologists, who triage the problems. The most worrisome problems trigger a visit to the dermatologist, while more routine concerns are handled by primary care doctors or other medical professionals, with some quick guidance from the dermatologist.

Churning by people who move from one coverage program to another because of changes in eligibility are another problem in California and a potential concern nationwide when the new coverage options start.

Murray said she hopes that Congress will pass bipartisan legislation (HR 1698) that would require Medicaid programs to offer continuous eligibility to beneficiaries for 12 months. But lawmakers are unlikely to pass anything related to the health care law this year.

A Difficult Population to Manage

The issues that arose in California and that may emerge in other places can be difficult, particularly because of the population that is affected.

The groups of patients that are being shifted to managed care have needs that are complex and sometimes difficult to manage. That includes people with disabilities or several chronic conditions, homeless people and those with behavioral health needs. Because the patients often require more intense care than the moms and kids who have used managed care for years in many places, health plans are having to adjust their oversight of care. More are relying on care coordination and are trying to learn how to help patients with social needs, such as a place to stay.

"We're at a crossroads in managed care—what is it, what will it be, what are we managing?" said Trish Riley, a George Washington University lecturer and member of the Kaiser Commission. One of the big questions, she said, is "how much can you coordinate care?"

That leads to another big question: Does managed care for people with complex needs actually lead to significant savings without compromising the quality of care?

Kahn, the health plan CEO, said yes, but he did not provide specific estimates of savings.

"It's fair to say the state of California has shown evidence that in moving [seniors and people with disabilities] to Medi-Cal managed care there has been some significant cost savings," Kahn said. "The proof of that is they want to move more populations there."

Jane Ogle, the deputy director of health care delivery systems at the California Department of Health Care Services, spoke via Skype and didn't disagree. But she also did not provide a specific amount of savings that is projected or was achieved.

And a consumer advocate—Kevin Prindiville, the deputy director at the National Senior Citizens Law Center—remained unconvinced.

"We see a state agency that is slammed with lots of responsibilities, lots of new programs to implement, lots of changes, and at the same time a legislature that has taken resources and staff away," he said. "We continue to be supportive of the promise of these models of where the program is headed, but we also remain concerned."

Kahn suggested that the biggest concern is the transitional periods for new programs.

"When you're doing a new program like this, you always expect a mess," he said. "But you try to minimize those problems."

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