State, advocates differ on payment plan for medical homes

As state officials prepare to expand the use of so-called “medical homes” to care for Medicaid patients, consumer advocates who have long supported the change are raising concerns about the program’s design.

Medical homes are practices in which doctors and other health care providers play a more active role in monitoring patients’ health. Supporters believe practices using the model can improve patients’ health, lower costs and cut down on emergency room visits by offering extended hours, communicating with patients by phone or email, educating patients about managing their conditions, tracking their health and coordinating their care.

Much of the extra work involved isn’t typically billable, and the state Department of Social Services plans to pay additional money to providers that serve as medical homes for Medicaid patients. But exactly how it gets paid has become a source of dispute.

Currently, most health care providers are paid for each patient visit or procedure they perform, a system known as fee-for-service. Critics say it provides misplaced incentives, rewarding providers for performing more procedures and seeing patients frequently, but not for keeping them healthy.

Most states with medical homes programs still pay providers fees for visits or procedures, but add a separate monthly payment for each patient for whom they serve as a medical home. Advocates say that gives providers a reliable source of income not tied to patient visits, making them more likely to hire staff to coordinate care or educate patients about conditions like diabetes and asthma.

In Connecticut, however, Mark Schaefer, the DSS director of medical care administration, favors a system that builds on the fee-for-service model, raising the fees paid to health care providers who serve as medical homes. The providers would also be eligible for additional payments if they meet certain performance targets that indicate that patients are receiving recommended care and coordination.

Schaefer said the model aligns with a medical home program used for state employees, would avoid additional administrative work for practices, and could be in place by January, when the medical home expansion is set to begin. He compared it to an approach used in the state’s highly regarded Behavioral Health Partnership, in which children’s mental health providers receive increased fees in exchange for meeting higher standards.

But patient advocates say building on the fee-for-service system goes against what medical homes are intended to accomplish and would give providers an incentive to see patients more frequently.

“Enhanced [fee-for-service] encourages overtreatment and over-utilization of services,” Ellen Andrews, executive director of the Connecticut Health Policy Project, wrote in a letter to Schaefer. “It does nothing to encourage innovative services such as email, group visits, referral tracking, medication management, and care management that serve as the foundation of successful [patient centered medical homes] in other states.”

Broader Medicaid changes

The medical home program is part of a larger change set to begin Jan. 1 in the state’s Medicaid program, which serves more than 500,000 people. The HUSKY health plan for low-income children and their parents, the largest Medicaid group, is currently administered by managed care companies that are paid a set monthly fee for each member, which the companies use to pay medical claims. Advocates have argued that the model gives the managed care companies an incentive to deny care.

Starting next year, HUSKY will be administered under another model in which the state pays a company–known as an administrative service organization, or ASO–to run the program, while the state will be responsible for paying medical claims. Other Medicaid programs that cover low-income adults, seniors and people with disabilities will also come under the ASO, which is expected to be charged with coordinating members’ care.

In announcing the change, Gov. Dannel P. Malloy’s administration also announced plans to expand the use of medical homes. The number of medical homes in the program is likely to be small in January, but officials hope there will be more in the coming years as practices adopt the model. Private insurers, Medicare and the military’s TRICARE health plan are also using medical home programs, although the standards vary.

Becoming a medical home can require significant changes for a medical practice, including getting electronic medical records. DSS plans to offer a “glide path” to provide payments to practices that are becoming recognized as medical homes.

Schaefer said during a meeting on the program this month that the payment model he supports could work in concert with the shift to the ASO and would maximize payment accuracy while minimizing administrative burdens.

Paying providers a monthly per-patient fee requires knowing what each patient considers to be his or her medical home. It’s not uncommon for people to change their usual source of care, Schaefer said, and if the state can’t keep up with the changes, it could end up paying providers for patients who no longer use them as a medical home. Requiring patients to enroll with a medical home would also require paying a broker to handle enrollment, he said.

By contrast, adding money on to the fees providers already receive for treating patients would be simpler. Any provider the department identifies as a medical home could receive the enhanced fee by billing the same way it did in the past, Schaefer said.

Schaefer also noted that the department is limited technologically. Its eligibility management system dates back to 1989 and the staff that supports it is 40 percent smaller than it was a decade ago, and Schaefer said selecting a payment method that wouldn’t require changes to the eligibility management system was a factor in the decision.

The payment model is similar to one that the state comptroller’s office and Anthem Blue Cross and Blue Shield are using in a pilot medical home program for state employees, which includes a small fee enhancement and performance-based payments.

“Multipayer compatibility was a major design consideration,” Schaefer said. “As much as possible, we wanted a model that was consistent with what other payers are using in Connecticut.”

Schaefer said the state could start with this model and eventually move to another one.

Concerns about the model

But advocates have said that by not having monthly payments or requiring patients to enroll with a medical home, the department’s model is missing key elements of the model.

Sheldon Toubman, an attorney with Greater New Haven Legal Assistance who has long pushed for the use of medical homes in Medicaid, said that if the state wants to be compatible with what others are doing, it should pay providers monthly fees. A recent article in the journal Health Affairs found that most states using medical homes in Medicaid pay monthly care management fees, averaging $3 to $4 per patient, and Toubman said the two states identified as using enhanced fee-for-service payments are moving away from them.

“Let’s not pretend that we’re doing this in a vacuum,” he said.

Others who spoke at the meeting said the incentives used in fee-for-service systems don’t match the goals of medical homes.

Dr. Daren Anderson, chief quality officer at Community Health Center, Inc., which received medical home recognition earlier this year, said fee-for-service is in direct opposition to medical homes. He said he would prefer a model with less fee-for-service and more payments tied to performance.

Dr. Elsa Stone, a North Haven pediatrician, noted that people hired to coordinate care expect to be paid regularly. If a doctor only gets paid when he or she sees patients, the incentive would be to see a lot of patients quickly, she said, “and that’s not doing what we think is good medicine.”

Others said that having people enroll with a particular medical home, the process Schaefer suggested avoiding, is critical

“You can’t have a medical home if you don’t know where you live,” Andrews said.

Toubman said it would be shortsighted to not hire a broker because of the cost.

Medicaid pays most providers less than the cost of care, and Andrews warned that some doctors could see the increased rates as something they are owed, not payments provided with the expectation that they do more. And she said that including the additional payment in fees providers already receive is “one of the least effective ways to deliver an incentive.”

Neither system guarantees that practices would use the added money for care coordination, Schaefer said. The trick, he added, is to measure how much it happens and reward providers who use services that improve care and patient experiences.

DSS spokesman David Dearborn said Commissioner Roderick L. Bremby listened to advocates’ concerns and suggestions and will relay that information to those working on the new system.