Making Medicaid Managed Care Work: Input from ED Physicians Can Make the Difference

Arizona and Massachusetts have very different but successful Medicaid managed care projects. Experts in those states share some essential components from an emergency medicine perspective.

Lured by the prospect of saving money on one of their most expensive social programs, state governments across the country are submitting 11-15 Medicaid waivers that allow them to put all or part of their Medicaid population into some form of managed health care.

Few managed care initiatives will have a more drastic effect on the operation of the emergency department, say some ED physicians and managers whose states have implemented managed Medicaid.

There is no gradual transition into a managed care environment for hospitals and physicians whose first experience with managed care is a Medicaid waiver, states Richard Mazandi Iseke, MD, FACEP, Director of Emergency Services at Lawrence General Hospital in Lawrence, MA, and a member of the task force that negotiated with Massachusetts’ Medicaid officials to set up that state’s managed care program four years ago.

"You can’t just view it [in the same way as] a commercial HMO," he emphasizes. "In general, with commercial HMOs, they don’t control most of the market in a particular area, and they are more often in alliances. They are not contracting with everybody. And, they are not a state agency."

With Medicaid managed care, you are dealing with a government agency making programmatic changes across the board. They have no separate contracts from one facility to another, and they are also "inflicting" change on a population not previously empowered to say much about its health care, he continues.

In a commercial HMO, for example, the member has chosen the plan through his or her employer. If there are problems, the member can pressure the HMO directly or through the employer to make changes, Iseke says. It is much harder for Medicaid patients to access the complaint system at a state office directing the care of thousands of lives.

Also, physicians are largely unable to bill Medicaid patients for claims disputed under their health plan unlike a commercial HMO. "It’s a different dynamic."

If a state’s Medicaid managed care plan is not set up properly, with realistic opportunities for members to access their physicians, the ED will bear the brunt of providing primary care, most of it nonreimbursable under the Medicaid’s rules, says Todd Taylor, MD, FACEP, an emergency physician at Good Samaritan Regional Medical Center and Phoenix Children’s Hospital in Arizona and a past president of the Arizona chapter of the American College of Emergency Physicians.

"We [ED physicians] are the ones required by federal law (COBRA/EMTALA) to provide the care. It’s no big surprise that when things don’t go well, people just come to the emergency room," Taylor states. "The Medicaid managed care system is often set up such that they are not required to reimburse hospitals for emergency care. Some places have even taken advantage of that. They know that, if worse comes to worse, the patient can always go to the emergency room."

It is probably more important for emergency physicians to be involved in the development of a state’s Medicaid managed care system than any other segment of the physician community, he believes.

Making their voices heard

In Massachusetts, the state chapter of ACEP, the hospital association, and the state medical association, joined together to approach the state Department of Health and Human Services, says Charlotte Yeh, MD, FACEP, Chief of Emergency Medicine at New England Medical Center in Boston and chair of the ACEP’s government affairs committee.

What started as an information-gathering mission by the physicians turned into several negotiating sessions concerning Medicaid patients’ access to care and the needs and responsibilities of the emergency department.

During these sessions, the physician groups were able to iron out essential details concerning prior authorization procedures, reimbursement for care in the ED, etc., she says.

"As physicians, we are the providers of care,"Yeh states. "If we are not involved in how the policies and procedures and framework are set up, then that will be decided for us and by people who will not have the clinical insight and the frontline insights that we have to make it medically sound and realistically implementable."

Though he was not in Arizona when the state implemented its Medicaid program, the Arizona Health Care Cost Containment System (AHCCCS), in 1982, Taylor has been active in working with the health plans that provide coverage to the Medicaid recipients.

"Through our chapter of ACEP, through the practice management committee, we contacted the state medical director for AHCCCS . . . He set up meetings about every two months, and he brought in the medical directors from all of the different plans that they contracted with, and we sat down and discussed all the problems and solutions."

Though the respective systems are designed differently and the method of input from emergency physicians varies, Iseke, Yeh, and Taylor agree there are some basic principles relating to emergency medicine that are vital to the success of the ED in coping with Medicaid managed care.

COBRA/EMTALA concerns. A lack of access to primary care in the private setting has traditionally led large numbers of Medicaid patients to the ED for their primary source of medical care.

With the advent of managed Medicaid, many states have set up designated primary care providers (PCPs) for their members and then encouraged the development of "triage out" procedures in the ED to force patients with non-emergent complaints to go to these newly designated doctors.

This development can put the hospital and ED in direct conflict with the federal legislation known as COBRA/EMTALA which mandates that EDs provide to every person who presents in their department—regardless of the person’s ability to pay— a medical screening examination sufficient to rule out an emergent health condition.

"I think the key thing, from our perspective, was that we were able to get Medicaid to understand the implications of federal law, that you cannot turn somebody away, and that we were required to do a mandatory medical screening examination," says Yeh. "That was a key piece, because, in the original design, it was to have emergency departments turn people away and not see them."

The medical director of the Health Care Financing Administration (HCFA) has attempted to clear up any conflict caused by the development of Medicaid managed care with a letter to all Medicaid-contracting health plans informing them that they are required to provide coverage for the screening exams and care covered by the COBRA/EMTALA legislation, says Taylor. Not all of the health plans abide by the conditions of the letter, he says.

"Many of them don’t," he states. "But, if you are involved early enough in the process, you can certainly point that out."

Screening examination fees. Once it has been established that ED physicians must see every patient, state officials and physicians must work to establish a realistic method of ensuring adequate care for Medicaid patients and reimbursement for ED services without destroying the efforts of the plan to lower costs, says Iseke.

"We had to see things from Medicaid’s point of view," he says. "Medicaid (previously) made one flat payment to the hospitals for the hospital portion of the bill and, therefore, from Medicaid’s perspective, there was no gradation in terms of intensity of services. If you came in with a rash or a heart attack, the facility portion of the bill was the same. So, from Medicaid’s point of view, if they agreed to pay for any service, it meant they were agreeing to pay for the whole thing. The minute they said, ‘OK we’ll pay for all visits, they were locked into a fee much higher than it should be, and it didn’t vary."

The Massachusetts solution was to establish a screening exam fee separate from the fees that Medicaid normally pays for an emergency visit.

The difficulty for the ED there is, how to establish a screening fee that would cover services that could vary so much, he notes. A screening sufficient to rule-out an MI is different from a screening required to clear someone with a bee sting.

"That’s where we changed the definition a little bit of a screening fee, in that it was meant to be more of an early exam that the physician did to determine whether or not there was the potential for an emergency," Iseke explains. "Once you did the initial screening and it turned out that you needed more screening, that would be charged as an emergency visit. Then, if you did a quick screen and there was obviously no emergency, that would be a screening fee."

The Medicaid representatives and the ED physicians agreed to a fee that was about the same as the first visit in a primary care physician’s office, in Massachusetts’ case about $59S. The fee includes the facility fee, the physician’s fee, and any ancillary services.

Yeh cautions physicians negotiating with Medicaid to be careful when accepting a screening fee.

"Often the response (from Medicaid) is, ‘Fine, we’ll pay you a screening fee.’ But, it’s important for emergency physicians to know that it is not a simple history and physical. It might be. But, it could be as complex as CT scans and MRIs" she says. "When we are being paid for a medical screening examination, it is not a complex workup, basically they are simple H&Ps that don’t require ancillaries and maybe have a prescription at the end. That is not the definition of a medical screening exam under federal law."

The agreement must detail what will and will not be covered under a screening fee and then detail reimbursement for services delivered beyond that level, she says.

Authorization procedures. Calls for authorization are a part of any managed care plan’s operating procedure. Yet, the difference between making calls for some members of commercial HMOs and making authorization calls for all Medicaid patients can be vast.

In Massachusetts, the negotiators were able to iron out the details of who would be called and when, says Yeh.

"We were working with the medical society and the primary care clinicians on this," she notes. "We were able to say, ‘Do you truly want to be called each and every time a patient shows up in the ED?’ I mean, let’s take a true emergency. A guy comes in with real chest pain, he ends up with a huge heart attack, needs thrombolytics, admission to the critical care unit, emergency angioplasty etc. Do you want us to call you and say, ‘Hey, you’ve got a patient with chest pain, we don’t know anything about it, but he looks bad and we’ll get back to you.’ Then, we call them back a second time and tell them what is going on and what we are doing about it. Now, you’ve got two calls on an emergency patient, when we would have called them anyway once we had stabilized and evaluated the patient and could make some decisions about how to coordinate care."

They were able to agree that there would be no initial call for authorization for emergent patients, says Yeh. If someone clearly had an emergency medical condition, the ED would just manage the patient.

On the other side of the spectrum, she adds, the ED physicians were able to get the agreement that they would also not have to call on someone who came in with a clearly non-urgent or emergent complaint.

The primary care clinicians (PCCs) didn’t want to be called every time someone came to the ED with a sore throat either, she says. By that time, it would make more sense for the ED physician to treat the patient.

"If somebody comes to you with a simple sore throat and you do what is required under federal law, you do a history and physical, you examine the patient, and you say, ‘Gee, this could be a strep throat,’" Yeh explains. "Technically, at this point, you can turn that person away. But, do you want us to tell that Medicaid patient who has just gotten to our ED, maybe with or without two or three kids in tow, that, ‘We know what your problem is but we aren’t writing the prescription. Go, see your PCC ?’"

Then, not only would Medicaid have to pay the ED screening fee, they would most likely have to foot the bill for transportation to the PCC and a second evaluation at the physician’s office, she says.

What the PCC really needs, Yeh contends, is the data on the visit.

The ED physicians agreed to provide the information and also educate the patient about the correct way to access the system in the future.

The most complicated category of patients were the patients whose conditions could be serious, but were not immediately life-threatening.

The Massachusetts physicians reached the consensus that between certain hours of the day, 8 a.m. to 8 p.m., ED physicians would call the PCCs after the screening examination and discuss how to coordinate care, says Yeh. After 8 p.m. and before 8 a.m., the patient would be treated in the ED and it would be paid for as an emergency visit.

Different programs, different approaches

Under the 11-15 waiver program, states are being given considerable leeway in how they establish their Medicaid programs. Some are choosing to contract directly with individual primary care physicians or groups to manage Medicaid recipients’ care for a capitated fee, while other states contract out the system to HMOs that then contract with the health care providers.

Both systems have their pros and cons, but to be successful, most programs must ensure an adequate primary care base, ensure the quality of care, and still be able to demonstrate significant cost savings, say experts.

In Arizona, for example, the state did not have a Medicaid program before 1982, says Richard Potter, Deputy Director of the Arizona Health Care Cost Containment System (AHCCCS). When deciding to implement a Medicaid program, they decided to start with managed care.

After receiving the 11-15 waiver, the state established a set of requirements and then contracted with HMOs that met those standards.

Since then, AHCCCS has demonstrated a consistent 7% savings over the standard Medicaid programs of other states in their area, says Potter.

Through member surveys and extensive financial reporting requirements and studies of utilization, AHCCCS keeps track of each plan’s performance to determine whether or not they will keep the contract for their given area.

"You have to establish a performance environment," says Potter. "The state has to be sure, when it puts the program together, that it is putting together enough incentives for HMOs to provide all of the medically necessary services and disincentives for not providing them. That sounds real simple. But, in practice, there is a lot to think about."

For example, says Potter, they tell HMOs that they have to ensure that members get a routine office appointment within three weeks, an urgent appointment within two weeks, and an emergent visit the same day, he says. "But, if I am an HMO and I don’t do it, is there a penalty?" he asks.

Potter acknowledges that his agency exercises less control over health care decisions compared to states that directly contract with providers.

For example, on an information-gathering visit to Taylor’s ED at Good Samaritan, Potter noted that for each health plan there was a different authorization process for emergency care.

Despite discussions with the plans’ medical directors about forming a standard procedure for all AHCCCS-contracting plans, the disparity remains, he says.

"As regulators, we don’t want to get into the practice of dictating care," Potter says. "For instance, the health plans don’t have the same drug formulary. We brought that to them and it had some merit. But the plans say, ‘Wait a minute, I cover this because I use it as a substitute for providing this kind of therapy,’ but the other plan says, ‘I don’t believe that, here is what we use instead.’ By trying to standardize the formulary, we found that we as an administration were dictating care. We don’t want to cross that line out there."

When Massachusetts initiated its program four years ago, Medicaid members were given an option of belonging to the PCC (primary care clinician) program or to join a standard HMO, say Yeh and Iseke.

Most chose the first option, says Yeh. A PCC could be an individual physician or a group of physicians or even a nurse practitioner. Because the physicians negotiated with the state and each other during the development of the plan, the agreements they reached held almost across the board.

According to surveys of Medicaid members, patient satisfaction is up, the state has dramatically improved that population’s access to primary care, payments to primary care physicians were up, she says. "You had a program you could look at and say, ‘Gee, this worked out pretty well.’"

In the past year, however, efforts have been underway to put more of that population into standard HMO plans, Yeh says. This, she fears, will result in lowered physician input into how care will be delivered under Medicaid.

"If you now split up the Medicaid population among all the commercial HMOs, the question is, who is speaking for those in that vulnerable population?" she asks. "On the other hand, they look at it as mainstreaming what was once a typically isolated population and maybe that’s a good thing."

The jury is still out among most physicians in the state about the recent changes, says Iseke. And, what most physicians dealing with managed Medicaid should keep in mind is that both the state agency and the physicians feel that what they are doing is the best thing for the members.

"We really tried to sit on their side of the fence and imagine we were running a Medicaid program and what goals we would want to have so that we could achieve savings," he says. "In their view, any money they save will go to increasing access and expanding coverage to other groups in the state who are uninsured, especially kids. It is not just a fiscal view that they have."