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DataWatch

The Evolution Of Quality Management In Medicaid Managed Care

Abstract

 
Since the early 1990s almost all states have moved some or all of their Medicaid beneficiaries to Medicaid managed care (MMC). Critics have worried about quality since MMC’s inception. Proponents argued that state Medicaid agencies, as large-scale purchasers of care, would pursue "value-based purchasing" and other strategies to stimulate quality improvements. In this paper we extend and update previous evaluations of the use of managed care for the Medicaid population, the extent to which beneficiaries receive care from Medicaid only and from commercial health plans, and the quality management programs that state Medicaid agencies supported during 2001.

Critics have worried about quality of care in MMC since its inception and have argued vigorously for aggressive quality management and oversight by state Medicaid agencies.³ Proponents of managed care countered that state Medicaid agencies, as large-scale purchasers of care, would pursue "value-based purchasing" by selectively contracting with competing health plans and that this would lead to improved quality of care for beneficiaries.⁴ The goal of value-based purchasing is to restructure the market so that plans compete for contracts on the basis of quality and cost. These efforts have become more common in commercial health care purchasing, although evidence of effectiveness is lacking.⁵

The Centers for Medicaid and Medicare Services (CMS) has been actively promoting a quality management agenda for states. The federal government developed the Quality Improvement System for Managed Care (QISMC) program in 1996 as a guide to quality management oversight for federal and state health care purchasers.⁶ QISMC is required of health plans participating in Medicare, and it served as a voluntary guide for state Medicaid programs.

Subsequently, the Balanced Budget Act (BBA) of 1997 included a comprehensive revision of the federal statutes governing Medicaid managed care. The CMS issued a final rule in 2002 to implement BBA provisions that defined how quality measurement and performance improvement programs should be applied to MMC. These provisions espoused and updated the approach outlined in QISMC and specified that Medicaid programs develop and implement a comprehensive quality assessment and improvement process in both clinical and nonclinical areas and that states conduct an annual external quality review of MMC organizations. Thus, through these and other activities, federal policymakers have promoted the active involvement of state agencies in plans’ quality assurance and improvement activities, and a value-based purchasing agenda.⁷

In previous work we documented the spread of managed care for the Medicaid population and the early adoption of tools by state Medicaid agencies for measuring and improving quality.⁸ In 1995 few states had quality management activities, but many had plans to implement them. By 1998 most states were measuring and feeding back quality-of-care information to health plans along several dimensions and requiring that plans initiate quality improvement programs. However, few if any states could point to any plans that had achieved meaningful improvement in any specific areas of quality. We now report updated data on the use of managed care for the Medicaid population, the extent to which care is being provided by Medicaid and commercial health plans, and the quality management programs that state Medicaid agencies supported in 2001.

Study Data And Methods

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

 
Survey sample and procedures. Through published reports and information released by the CMS, we identified all states (including the District of Columbia) that had enrolled Medicaid beneficiaries in comprehensive prepaid managed care arrangements as of 1 July 2001. We asked an appropriate person in each state (such as the head of the state Medicaid agency or the managed care director) to respond to a survey questionnaire that solicited information about the structure of the managed care program and quality management and health plan contractual requirements. We sent the questionnaire in advance and scheduled forty-minute telephone interviews, which allowed the respondent to seek out answers needed from other agency personnel. Structured interviews were conducted during April–September 2002 by one of the investigators or a trained research assistant.

Survey questionnaire. The survey instrument, designed for closed-ended responses, was based on our prior instruments. We first requested basic descriptive information about MMC activities, including the number of years the program had been in place, the number of contracting plans (including "Medicaid" plans that primarily served Medicaid beneficiaries and "commercial" plans that also served other groups), the populations covered (for example, Temporary Assistance for Needy Families [TANF] recipients), and the proportions enrolled in managed care. We did not differentiate between voluntary and mandatory enrollment.

We then asked about existing data collection and feedback to health plans or enrollees on performance measures in the areas of patient satisfaction, access to care (for example, waiting time in the office), and quality of care (for example, rates of appropriate childhood immunizations). In the areas of access and quality, we chose two and five tracer measures, respectively, that we thought applicable to the Medicaid population. For comparison, we included two access measures and four quality measures from our previous surveys. We focused on measures from the Health Plan Employer Data and Information Set (HEDIS) because we thought that states would be likely to center their quality improvement initiatives on these measures.⁹ For satisfaction, we also asked about efforts to collect data on the comparable fee-for-service (FFS) Medicaid population.

For each quality indicator, we then asked if any plans serving Medicaid beneficiaries in the state had developed "specific plans and parameters for improvement as a quality improvement goal" and whether any plan had demonstrated improvement. We also asked a parallel, although smaller, series of questions in the area of behavioral health that included two established HEDIS measures.

The second part of the survey asked about sanctions or incentives that states might include in contracts or practice (for example, restricting enrollment, financial penalties) and specific regulatory requirements for participating MMC plans such as National Committee for Quality Assurance (NCQA) accreditation, the provision of enabling services such as translators, analysis of disenrollment, provision and use of encounter data (for example, to compare use of services by patients with specific diagnoses), and member services. This section also asked about the existence of financial and nonfinancial penalties and bonuses and other health plan requirements including disease management programs for three specific conditions (high-risk pregnancy, asthma, and diabetes) and requirements for Medicaid- and language-specific member services representatives.

Analysis. The analyses in this study were primarily descriptive. To examine temporal trends, we incorporated data from the 1995 and 1998 surveys with this survey.¹⁰ Because the number of states with programs changed over time, percentages for 1995 and 1998 are based on the thirty states that had an active managed care program in 1995 and the forty-five states that had such programs in 1998, respectively. Because our sample was a near-complete census of the relevant state Medicaid agencies and only one state (Nebraska) declined to respond, we do not report statistical significance or confidence limits.

Study Results

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

 
All but one of the thirty-nine states with eligible prepaid managed care programs (97 percent) responded. Respondents included nine Medicaid directors, one deputy director, thirteen directors of managed care, and twelve directors of quality assurance. Response rates in the prior surveys used for comparison were 100 percent.

Use of managed care and participation of health plans. Since 1995, the number of states with MMC programs initially rose but has now receded, especially for the disabled population. The number of states with programs enrolling TANF beneficiaries decreased from forty-five in 1998 to thirty-nine in 2002. The number with programs aimed at the disabled decreased from thirty-one to twenty-two, while the number of states with programs aimed at the elderly decreased from twenty to sixteen. The six mostly rural states that eliminated their health maintenance organization (HMO) programs for the TANF population had reported in 1998 that 3–12 percent of their TANF enrollees were in managed care plans, and all but one had only one or two active health plans at that time. The proportion of the TANF population enrolled in managed care in the states that continued to use it did not change appreciably (56 percent in 2001, compared with 57 percent in 1998), while the proportion of the disabled enrolled in participating states rose slightly because of the elimination of smaller programs (31 percent to 35 percent).

The average number of health plans participating in MMC also decreased. Whereas states reported an average of 10.5 (±10.1) health plans serving the TANF population in 1995 and 8.4 (±8.1) in 1998, by 2001 states reported a mean of 6.4 (±6.8) plans per state. The number of plans serving the disabled and elderly followed similar patterns. The proportion of "commercial" plans serving the Medicaid population showed a minor decrease, from 57 percent to 51 percent between 1998 and 2001. In 2001, however, seven states (18 percent) reported having no such plans, and eight states (21 percent) had just one commercial plan (the comparable numbers for 1998 were 5 [11 percent] and 4 [9 percent], respectively).

Collection of performance data and use of minimum standards. Exhibit 1 summarizes the extent to which state agencies collected performance data on the MMC population. For most indicators of performance, there were modest increases in the proportion of Medicaid agencies collecting data between 1998 and 2001. For example, by 2001, 89 percent of states were collecting information on satisfaction with care, compared with 69 percent in 1998. The number of states collecting data about diabetic glycohemoglobin doubled over the three-year time period. In contrast, the number of states collecting performance data related to mental health or substance abuse was relatively low (Exhibit 1).

Thirty-five states (92 percent) reported collecting encounter data from health plans, but the extent to which they used these data varied. Twenty-four states used encounter data to compare use across health plans, but just fourteen compared use for patients with specific diagnoses, and sixteen compared use for specific demographic groups. Nineteen states used these data to calculate quality measures such as those reported in HEDIS.

Provision of performance data to health plans and consumers. Our 2001 results show that release of performance data to health plans has become more common since 1998 but that states still rarely provided results directly to beneficiaries (Exhibit 2). In addition to feeding back information to plans or beneficiaries, states can release performance results publicly. Twenty-five states said that they released data on satisfaction to the public, compared with thirty-two states that reported this information to health plans and fourteen, to beneficiaries (data not shown). For most other measures of access and quality that we inquired about, states were more likely to release performance results to health plans than to the public.

Discussion

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

 
Since 1995 growth of MMC appears to have peaked and is now receding; commercial health plans are withdrawing from the Medicaid market. As of 2001 more than one-third of states contract with at most one commercial plan. Also, states’ efforts to collect performance data and orchestrate quality improvement have steadily increased, although evidence of effectiveness is still limited. Finally, a minority of states have created contractual mechanisms such as financial rewards or penalties to spur quality improvement, although very few have invoked them.

Implications for choice. The declining number of plans serving the Medicaid market, especially commercial plans, is striking and may spell declining access and choice for some Medicaid beneficiaries. The retrenchment of MMC may mirror trends in the commercial market.¹¹ In the commercial market, managed care organizations tend to enter areas with an abundance of providers and hospitals so that they can negotiate discounted fees.¹² Some areas of the country, including most rural counties and many small cities, are not well suited to this model of care. Of the six states that discontinued prepaid managed care (Vermont, Alabama, Maine, Mississippi, Georgia, and Montana), four are considered rural, and the other two contain large rural areas. Retrenchment is even more evident among complex populations such as the disabled and the elderly, who present challenges to health plans.¹³

Implications for budgets. These findings suggest that it is unlikely that states will be able to rely on continued expansion of managed care as a way to deal with their budgetary problems. Also, the reduced number of plans serving the Medicaid market in most states may mean decreased leverage for state Medicaid agencies seeking to exercise close oversight, foster higher quality, and hold spending in check. State Medicaid programs that use managed care face grater challenges in areas where organized providers are sparse or reluctant to serve the Medicaid population.

Implications for mainstreaming care. In the traditional Medicaid program, patient care is largely relegated to the safety-net system of community health centers and municipal hospitals. MMC was introduced with the hope that it would integrate this care into the mainstream delivery system. Our survey suggests that this promise is unfulfilled at the health plan level, as a sizable number of states have no commercial plans or only one such plan participating.¹⁴ Whether this development augurs poorly for quality of care is unclear. Our previous work showed that Medicaid and commercial plans serving the Medicaid population had similar quality management capabilities but that Medicaid plans had more programs aimed at the special needs of the Medicaid population.¹⁵ Consequently, the growing dominance of Medicaid plans may be a positive development more than a detriment.

Quality monitoring. Proponents of MMC promised greater accountability and raised hopes for higher quality of care. Almost all of the states with MMC programs have now had at least five years’ experience with them.¹⁶ One could expect that they have had ample time to foster effective quality improvement among their contracting plans. Our survey documents the growing adoption of important quality-monitoring activities over time in patient satisfaction, access to care, clinical performance measurement, and related activities on the part of state Medicaid agencies. This information, in conjunction with the external quality reviews now mandated by the CMS, can be an effective prompt for quality improvement. To be useful, however, this information must be used by states in such a way that health plans have incentives or requirements to respond aggressively to areas of deficiency.

A seemingly untapped management tool for states is the use of penalties and rewards, financial and nonfinancia1.¹⁷ Contractual penalties and bonuses are commonly used in other areas of economic endeavor. In a difficult economic environment, however, states may be reluctant to enforce these provisions, particularly if they have concerns about driving more plans out of the Medicaid market.

Study limitations. As with all surveys, we relied on self-reports about specific programs and activities of the state agencies. Respondents may not have had accurate knowledge about all of the issues contained in the survey. We did, however, target the senior Medicaid official with responsibility for quality management and encouraged respondents to consult with others in instances where their own knowledge was lacking. It is also plausible that the activities reported reflect the process "as designed" instead of "as implemented" and that these programs might be less effective than envisioned.

After ten years of rapid growth, has MMC fulfilled the promise of expanding care while controlling costs and improving quality? While prepaid managed care initially spread widely within the Medicaid program, it appears to have stabilized and may now be receding. Many states are now collecting and feeding back performance data, and public release can serve to motivate improvement.¹⁸ Our data suggest that trends in quality management are going in the right direction, although there is certainly opportunity for many states to intensify their efforts.

Editor's Notes

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

 
Bruce Landon (landon{at}hcp.med.harvard.edu) is an assistant professor of health care policy and medicine, Department of Health Care Policy, Harvard Medical School, and Division of General Medicine and Primary Care, Beth Israel Deaconess Medical Center, in Boston. Eric Schneider is an assistant professor of health policy and management in the Department of Health Policy and Management, Harvard School of Public Health. Carol Tobias is director of the Health and Disability Working Group, School of Public Health, Boston University. Arnold Epstein is a professor and chair of the Department of Health Policy and Management, Harvard School of Public Health.

This work was supported by a grant from the Robert Wood Johnson Foundation. The authors acknowledge Regina Murphy for assistance with conducting the surveys and Lorraine Scampini for excellent programming support.

NOTES

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

 

1. R.E. Hurley and S.A. Somers, "Medicaid and Managed Care: A Lasting Relationship?" Health Affairs 22, no. 1 (2003): 77–88[Abstract/Free Full Text]; J.K. Iglehart, "Medicaid: The American Health Care System," New England Journal of Medicine 340, no. 5 (1999): 403–408[Free Full Text]; and D. Rowland and K. Hanson, "Medicaid: Moving to Managed Care," Health Affairs 15, no. 3 (1996): 150–152.[CrossRef][Medline]
2. CMS, "National Summary of Medicaid Managed Care Programs and Enrollment," 30 June 1998, www.cms.gov/Medicaid/managedcare/trends98.pdf (22 April 2004); and B.E. Landon et al., "The Evolution of Quality Management by State Medicaid Agencies: A National Survey of States with Comprehensive Managed Care Programs," Joint Commission Journal on Quality Improvement 28, no. 2 (2002): 72–82.[Medline]
3. See, for example, B.E. Landon, C. Tobias, and A.M. Epstein, "Quality Management by State Medicaid Agencies Converting to Managed Care: Plans and Current Practice," Journal of the American Medical Association 279, no. 3 (1998): 211–216[Abstract/Free Full Text]; B.E. Landon and A.M. Epstein, "Quality Management Practices in Medicaid Managed Care: A National Survey of Medicaid and Commercial Health Plans Participating in the Medicaid Program," Journal of the American Medical Association 282, no. 18 (1999): 1769–1775[Abstract/Free Full Text]; and J.W. Fossett et al., "CHCS Resource Library: Can Medicaid Managed Care Be Managed?" www.chcs.org/publications3960/publications_show.htm?doc_id=211343 (18 May 2004).
4. J. Boehm, "Confronting Health Care Purchasing Challenges within a New Framework," CHCS Issue Brief (Princeton, N.J.: Center for Health Care Strategies, 2001).
5. See, for example, A.T. Lo Sasso et al., "Beyond Cost: ‘Responsible Purchasing’ of Managed Care by Employers," Health Affairs 18, no. 6 (1999): 212–223[Abstract]; J. Maxwell, P. Temin, and C. Watts, "Corporate Health Care Purchasing among Fortune 500 Firms," Health Affairs 21, no. 3 (2001): 181–188; and Agency for Healthcare Research and Quality, Theory and Reality of Value-Based Purchasing, Pub. no. 98-0004 (Rockville, Md.: AHRQ, 1997).
6. Landon et al., "Quality Management Practices."
7. CMS, Medicaid Program: External Quality Review of Medicaid Managed Care, Final Rule, 24 January 2003, www.cms.gov/medicaid/managedcare/eqr12403.pdf (15 January 2004); and CMS, Medicaid Managed Care: New Provisions, Final Rule, 14 June 2002, www.cms.gov/medicaid/managedcare/f4136.pdf (15 January 2004).
8. Landon et al., "The Evolution of Quality Management"; Landon et al., "Quality Management by State Medicaid Agencies"; and Landon et al., "Quality Management Practices."
9. National Committee for Quality Assurance, "The Health Plan Employer Data and Information Set (HEDIS)," www.ncqa.org/Programs/HEDIS/index.htm (20 January 2004).
10. Landon et al., "Quality Management by State Medicaid Agencies"; and Landon et al., "Quality Management Practices."
11. J. Holahan, J.M. Wiener, and A.W. Lutzky, "Health Policy for Low-Income People: States’ Responses to New Challenges," Health Affairs, 22 May 2002, content.healthaffairs.org/cgi/content/abstract/hlthaff.w2.187 (22 January 2004).
12. See, for example, M.A. Morrisey, "Competition in Hospital and Health Insurance Markets: A Review and Research Agenda," Health Services Research 36, no. 1, Part 2 (2001): 191–221[Web of Science][Medline]; and M. Casey, A. Knott, and I. Moscovice, "Medicare Minus Choice: The Impact of HMO Withdrawals on Rural Medicare Beneficiaries," Health Affairs 21, no. 3 (2002): 192–199.[Abstract/Free Full Text]
13. See, for example, P. Silberman et al., "Tracking Medicaid Managed Care in Rural Communities: A Fifty-State Follow-up," Health Affairs 21, no. 4 (2002): 255–263[Abstract/Free Full Text]; and B.C. Vladeck, "Where the Action Really Is: Medicaid and the Disabled," Health Affairs 22, no. 1 (2003): 90–100.[Abstract/Free Full Text]
14. See, for example, S. Felt-Lisk, R. Dodge, and M. McHugh, Trends in Health Plans Serving Medicaid—2000 Data Update (Washington: Kaiser Commission on Medicaid and the Uninsured, 2001); and T.A. Coughlin, S.K. Long, and J. Holahan, "Commercial Health Plan Participation in Medicaid Managed Care: An Examination of Six Markets," Inquiry 38, no. 1 (2001): 22–34.[Web of Science][Medline]
15. Landon et al., "Quality Management Practices."
16. M.R. Gold and J. Mittler, " ‘Second-Generation’ Medicaid Managed Care: Can It Deliver?" Health Care Financing Review 22, no. 2 (2000): 29–47[Web of Science][Medline]; and A.M. Epstein, "Medicaid Managed Care and High Quality: Can We Have Both?" Journal of the American Medical Association 278, no. 19 (1997): 1617–1621.[Abstract/Free Full Text]
17. Fosset, "Can Medicaid Managed Care Be Managed"; and M.B. Dyer, M. Bailit, and C. Kokenyesi, "Are Incentives Effective in Improving the Performance of Managed Care Plans?" CHCS Working Paper (Princeton, N.J.: CHCS, March 2002).
18. See, for example, J.H. Hibbard et al., "Strategies for Reporting Health Plan Performance Information to Consumers: Evidence from Controlled Studies," Health Services Research 37, no. 2 (2002): 291–313.[CrossRef][Web of Science][Medline]

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