7. Managed Care and HIV Disease
Managed Care and HIV Disease
Managed care combines health care financing and delivery in a system where the payer (usually an insurer) exercises some control over provider selection, treatment options, coverage, and payment methods. Managed care has the potential to enhance the development of coordinated care, restrain costs, and maximize use of limited health care dollars. It may have the effect of reducing access to specialty and tertiary care and pharmaceuticals.
The impact of managed care on financing and care of HIV-infected individuals has grown. State legislatures have made significant changes to Medicaid—the largest payer for HIV care— and other health insurance programs in an effort to reduce costs and expand access to care. This includes shifting large segments of their Medicaid enrollees from a retrospective fee-for-service payment system into a prospectively funded managed care system. The number of people with HIV disease enrolled in Medicaid managed care has increased significantly. However, some States have discontinued managed care in their Medicaid programs, reflecting the complexity of public approaches to financing of care.
Managed care enrollment has also increased among the beneficiaries of other insurers. In some health care markets, PLWH have enrolled in significant numbers in Medicare’s managed care program, Medicare+Choice. This often provides access to pharmaceutical coverage and reduced cost sharing for ambulatory care. In addition, HIV-infected individuals receiving private health insurance coverage through their employers are often enrolled in some form of managed care.
These changes affect both HIV-infected individuals and their care providers. CARE Act programs can help make transitions easier and ensure that the unique needs of PLWH are met by assisting managed care plans and payers, including Medicaid, with the design of HIV care systems. CARE Act programs can also help shape the financing of quality HIV services, ensure their agencies’ long-term solvency, and enhance access to care for HIV-infected populations by becoming participants in managed care plans.
The trend toward managed care has implications for the very survival of some CARE Act-funded providers and therefore for the maintenance of coordinated systems of care for PLWH. CARE Act-funded providers that lose Medicaid patients and revenue to managed care plans—but retain responsibility for caring for uninsured patients—may not have adequate funds to serve a growing uninsured population.
Legislative Background TOP
While the CARE Act contains no specific references to managed care, multiple provisions require coordination of payers and programs in order to enhance services and keep the CARE Act as payer of last resort. The following legislative references therefore relate to CARE Act program involvement in managed care systems of financing.
Section 2613(c) requires consortia to submit applications to the State for funding, that, in part.
“(D) demonstrates that the consortium has created a mechanism to evaluate periodically—(ii) the cost-effectiveness of the mechanisms employed by the consortium to deliver comprehensive care;”
Section 2616 allows States, under their AIDS Drug Assistance Programs (ADAP), to fund health insurance to pay for HIV treatments, as follows.
“(e) USE OF HEALTH INSURANCE AND PLANS.—
(1) IN GENERAL.—In carrying out subsection (a), a State may expend a grant under this part to provide the therapeutics described in such subsection by paying on behalf of individuals with HIV disease the costs of purchasing or maintaining health insurance or plans whose coverage includes a full range of such therapeutics and appropriate primary care services.
(2) LIMITATION.—The authority established in paragraph (1) applies only to the extent that, for the fiscal year involved, the costs of the health insurance or plans to be purchased or maintained under such paragraph do not exceed the costs of otherwise providing therapeutics described in subsection (a).”
Section 2617(b)(1)(c) requires States to prepare applications for Title II funding that include information concerning—
“(iii) the average cost of providing each category of HIV-related health services and the extent to which such cost is paid by third-party payors….”
Section 2617(b)(4) states that States are required to “establish priorities for the allocation of funds within the State based on,” in part the:
“(ii) availability of other governmental and non-governmental resources, including the State Medicaid plan under title XIX of the Social Security Act and the State Children’s Health Insurance Program under title XXI of such Act to cover health care costs of eligible individuals and families with HIV diseases….”
What is Managed Care? TOP
Managed care is an approach to health care that integrates health care delivery and financing. Under managed care, insurers exercise some control over the selection of providers, treatment options, benefits, and payment to providers. The goal of managed care is to reduce medical costs while providing quality care by managing how care is delivered.
What is a Managed Care Organization (MCO)?
A managed care organization is a health care plan designed to provide medical services through groups of doctors, hospitals, and specialty providers. Generally, this involves contracting with health care providers to deliver health care services on a capitated (per member per month) basis.
Elements of Managed Care
Managed care plans vary according to the degree of control over the provider network, use of utilization controls, and payment methodologies. Their most common features include the following:
Models of Managed Care
Managed care models vary in terms of how they implement the above features. Some are more restrictive (e.g., limited provider network, require use of network providers at all times, and require PCP referrals for all services). Others are more flexible and may contract more broadly, permit use of non-contract providers (generally with higher out-of-pocket costs to the patient), and permit specialist self-referrals in certain cases. Following are common health care financing and delivery models that involve some form of managed care:
Trends In Managed Care Enrollment
Enrollment in managed care increased rapidly during the 1990’s as insurers sought to restrain costs, improve predictability of those costs, and retain or enhance their beneficiaries’ access to care. In 2000, 104 million Americans were enrolled in some form of managed care. According to Managed Care magazine, enrollment in HMOs reached a high of 81.3 million as of January 1999, then dropped slightly to 80.9 million by January 2000. There was continued enrollment growth in other types of managed care plans, such as point-of-service plans and PPOs. The pool of people insured under indemnity plans continues to drop. HMO consolidation has begun; the number of HMOs in the United States dropped from 643 on January 1, 1999 to 568 one year later.
The managed care trend has been particularly dramatic for Medicaid, which provides health care services to eligible low-income individuals. In 1983 only 750,000 Medicaid recipients (3 percent) were enrolled in managed care. By 2000, this number had grown to 18.8 million of the nearly 44 million enrolled in Medicaid (43 percent). As of June 2000, according to the Henry J. Kaiser Family Foundation, 43 States and the District of Columbia had more than 25 percent of their Medicaid populations enrolled in managed care, and 14 States had more than 75 percent enrolled.
Alternate Payment Arrangements
Some States are exploring or implementing alternative payment arrangements. One approach is the use of risk adjustment payments that provide the MCO a rate based on the composition and relative healthiness of its beneficiaries. This approach compensates providers of high-cost services (e.g., HIV care services) with a higher per-patient (capitated) payment than providers of other (often less costly) health care services. For example, New York State contracts with HIV Special Needs Plans and pays the MCOs based on their enrollment of Medicaid recipients with HIV and AIDS. There are multiple payment categories based on age and stage of illness. Other States are exploring other risk adjustment practices such as risk corridors, risk sharing arrangements, and chronic disability payments.
Risk Corridor. A financial arrangement between a payer of health care services (e.g., a State Medicaid agency) and a provider (e.g., managed care organization) that shares the risk for providing health care services. Risk corridors protect the MCO from excessive costs for high-cost patients (such as individuals living with HIV disease) by covering amounts above a specified threshold. At the same time, they protect the payer by limiting the profits the provider may earn. Risk corridors limit MCO profits and losses to a specified band (e.g., ±5%). The State and MCO may share the risk outside the band, or the State may assume it.
Risk-sharing Arrangements. A process in which the payer (e.g., an HMO or the State Medicaid program) and the contracted provider each accept partial responsibility for the financial risk and rewards involved in cost-effectively caring for the members enrolled in the plan and assigned to a specific provider. This arrangement is often used to protect providers and managed care organizations serving chronically ill individuals (such as people living with HIV disease) from financial insolvency. The payer and provider share medical insurance premiums, in contrast to traditional indemnity plans in which the insurer receives the premiums and assumes all risk. The premiums are the only payment providers receive, which provides a powerful incentive to control services and costs.
Medicaid and Managed Care TOP
Medicaid Waivers for Managed Care
The Medicaid program is administered by States, which can design their own programs as long as they comply with Federal law (the Social Security Act). Medicaid was created as a fee-for-service program with a defined set of mandatory and optional services. However, States can request waivers to design programs that deviate from legislative requirements. Sections 1915(b) and (c) and Section 1115 of the Social Security Act provide two mechanisms by which Federal requirements can be waived. These waivers require approval by the Center for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA). Program waivers [1915(b) and (c)] and research and demonstration waivers  have been used by States to develop program innovations, including Medicaid managed care initiatives. These waivers allow States to waive such provisions as:
Medicaid Managed Care Models
Most Medicaid managed care is delivered by one of two models:
The Balanced Budget Act
The Balanced Budget Act (BBA) of 1997 contains significant changes for the Medicaid program. For the first time, States are allowed to make enrollment of Medicaid beneficiaries into managed care mandatory without a waiver. States are only required to submit to CMS a State Plan Amendment (SPA) to their Medicaid plan describing the State’s basic eligibility, coverage, reimbursement, and administrative policies.
Unlike the waiver process, the SPA process does not require public notice or public participation in the development of a mandatory managed care program. However, it does require CMS to review the draft/model contracts between States and MCOs to assure that they meet all statuary and regulatory requirements. HRSA has developed “model” contract specifications to assist in the review of State contracts.
There are exceptions to SPA mandatory enrollment in managed care. Individuals with dual eligibility for Medicare and Medicaid, children with special needs, and members of Federally recognized tribes cannot be mandated into managed care under the SPA.
The BBA provides some protections for Medicaid recipients selecting or enrolled in MCOs. Recipients must have a choice of at least two managed care entities—either a managed care organization (MCO) and/or a PCCM. In rural areas, individuals who are not offered a choice between two entities are permitted to seek services outside the plan. Beneficiaries are permitted to disenroll with cause at any time, and without cause within the first 90 days of enrollment and every 12 months thereafter.
Significance of Managed Care for CARE Act Programs TOP
The rapid growth of managed care in Medicaid has significance for CARE Act entities since Medicaid is the largest payer of care for PLWH nationally. While early efforts to move Medicaid beneficiaries to managed care often focused on women and children, States have extended managed care enrollment to people with serious disabilities or chronic illness. As States move Medicaid populations into managed care, PLWH increasingly will be enrolled in managed care programs. Implications for CARE Act programs include:
Access to Care
Medicaid managed care offers PLWH a promise of improved quality of care and early access to preventive services, more coordinated care to better serve vulnerable populations with multiple health and social service needs, and potential restraint of rising health care costs. However, built-in financial and organizational incentives also create the potential for reduced access to more costly services such as pharmaceuticals and specialty care.
Financing of PLWH Care Costs
As the demand for primary health care and HIV treatments skyrockets due to the high cost of combination therapies, all appropriate funding streams need to be used effectively to meet the needs of PLWH. However, the CARE Act of 2000 legislation mandates that the CARE Act be the payer of last resort. Thus, other funding streams such as Medicaid must be tapped first. For example, CARE Act providers that are members of managed care plans serve Medicaid managed care enrollees through their Medicaid contracts. If managed care provider reimbursement does not cover the cost of care, CARE Act providers lose money on each patient served.
In addition, CARE Act-funded providers that do not participate in managed care plans may lose Medicaid revenues and patients to Medicaid’s managed care plans. For example, in States that mandate enrollment of Medicaid beneficiaries in managed care plans, providers will need to be part of a managed care plan to get reimbursed by Medicaid for the services provided. CARE Act-funded providers who are not part of a Medicaid managed care plan may be left with the responsibility for caring for Medicaid-eligible individuals for whom they cannot get any Medicaid reimbursements without receiving sufficient funds to serve them.
Managed Care and CARE Act Providers
The impact of managed care on CARE Act programs depends upon State eligibility requirements, the populations affected by the epidemic, and the type of managed care entities under contract with the State. For example, some States mandate managed care only for beneficiaries eligible under Temporary Assistance to Needy Families (TANF), who tend to be women and their dependent children. For States with an increasing number of women with HIV, mandatory managed care for TANF eligibles will have a significant impact on the infected population. This is in contrast to States where the majority of PLWH are disabled and are covered under Supplemental Security Income. Managed care in these States becomes a significant issue only if a State decides to enroll SSI eligibles into mandatory managed care.
Impact of Managed Care on ADAP and HICP
CARE Act grantees and planning bodies are involved in the planning and implementation of several programs that are affected by managed care, including ADAP and health insurance continuation programs (HICP). CARE Act clients often receive their medical care through Medicaid and their medications through ADAP.
While the Federal mandatory Medicaid benefit package does not include prescription drugs—and States decide on such benefits—most State Medicaid agencies provide prescription drug coverage. However, States often place limits on this benefit. For example, the covered cost of medications may be capped at a certain dollar amount annually or there may be limits on the amount of medication dispensed per script or the number of scripts per month. Medicaid managed care may place additional limitations on such coverage. Therefore, PLWH may rely more on ADAP to meet their medication needs not covered by Medicaid. Similarly, as managed care plans dominate the health insurance marketplace, PLWH enrolled in HICP may face some of the same issues as Medicaid managed care beneficiaries. Such limitations may lead States to prioritize and fund ADAP.
Roles of CARE Act Entities in Implementing Managed Care TOP
CARE Act entities can help ensure that PLWH needs are addressed as local and State areas implement managed care. As discussed below, they can educate others about managed care, enhance provider capacity to participate in managed care, and assist with feedback and evaluation of managed care.
CARE Act entities should keep informed of managed care developments in their communities, such as what providers will provide HIV care and the types, quality, and cost of services. CARE Act entities have the opportunity to provide input or formally comment upon their State's draft managed care legislation, waiver, or State Plan Amendment as they are developed. They can also ask to review the State's draft or model contracts with MCOs and inform Medicaid officials of provisions that are needed to ensure quality care for PLWH, such as:
Mechanisms to Protect Patient Rights. A defined grievance and appeals process provides PLWH with a way to appeal when:
Monitoring and Evaluation Role
CARE Act entities should monitor MCO implementation to make sure that PLWH are receiving adequate health care services. Grantees and planning bodies can assist with monitoring by:
Community-based organizations and other providers with a significant number of Medicaid-eligible patients typically need to focus on the following areas in order to take part in managed care networks:
Providers also need to continue to serve current patients and maintain existing service infrastructures. If these basic networks cease to exist, many HIV patients could find themselves without access to high quality services.
CARE Act programs can help build the capacity of its funded providers to compete in a managed care environment. For example, they can help CARE Act-funded providers adapt administrative and financial systems to meet managed care requirements. The need for such assistance might be assessed as part of the determination of capacity development needs of providers serving traditionally underserved populations, which are then prioritized.
Many people are unfamiliar with how managed care works. Educating PLWH consumers is crucial to assuring access to quality care for PLWH. States, planning bodies, and funded providers can help to educate PLWH on how best to interact with the managed care system to get their needs met. Consumer education is especially critical when a managed care system or initiative is being introduced in a State. It might cover:
Education efforts should target CARE Act case managers as well, because clients often turn to their HIV case manager with questions about notices they receive from the State Medicaid program about managed care (and other matters).
HAB has developed resources and funded training programs to educate consumers about managed care. For example, Your Passport to Managed Care is a pocket-sized guide to assist consumers with tracking information needed to negotiate the system. To obtain this document, see References below.
Methods of Funding Providers
CARE Act entities need to reassess how they fund providers in a managed care environment. The standard grant or contract approach of programs submitting applications and receiving funding annually may not be consistent with the Medicaid managed care infrastructure. Most MCOs prefer a single contract versus multiple ones, especially for a full continuum of services. Also, some of the CARE Act providers currently being funded for case management, outreach, and other activities may not be large enough to come to the managed care table and secure contracts to provide services. Planning bodies and grantees need to rethink how they approach programming and funding to assure the viability of their funded providers in the managed care market place.
The Role of HIV Case Management in Managed Care
Traditionally, in the managed care marketplace, case management has meant utilization review—authorizing the services in the most cost-effective setting for the patient’s health status. By contrast, HIV case management makes sure that all services needed by PLWH to stay engaged in the health system are available. This is not well recognized or understood in the managed care marketplace. Planning bodies—including PLWH members and their funded providers—will need to convey firmly to State Medicaid officials and to MCOs the importance of including HIV case management as a covered service. Overall, clear communications are necessary among MCOs, planning bodies, and providers on expectations about case management.
Case management can play an important role in the transition period from traditional fee-for-service Medicaid to managed care plans. Case managers, especially those with experience serving PLWH, can provide vital information regarding the overall quality of service and success rates for individual patient treatment. The case manager is a key contact person and should receive information about all services accessed by a given patient in order to identify gaps in the health care delivery system. Case management records can provide valuable information regarding service quality, costs, and success rates and integrate different types of information. To take advantage of case management services in this manner, a managed care plan should establish a communication network and incorporate case managers, primary care and specialist providers, consortium members, and community-based CARE Act-funded providers.
Managed Care Resources TOP
Risk adjustment practices and their impact on HIV services. See a summary report of a HRSA-sponsored risk adjustment meeting held in May 1997, “HIV Capitation Risk Adjustment Conference Report.” Available from The Kaiser Family Foundation at 1-800-656-4533.
CARE Act and Medicaid coordination. See “Improving Coordination between Medicaid and Title II of the Ryan White CARE Act,” April 28, 1995, prepared by the Office of Legislative and Intergovernmental Affairs, Health Care Financing Administration (HCFA), U.S. Department of Health and Human Services.
Managed Care Terms and Definitions. See one of the following: Making Medicaid Managed Care Work: An Action Plan for People Living with HIV, published by the National Association of People with AIDS (NAPWA), February 1997. Medicaid Reform and Managed Care: Implications for People with HIV and the Organizations that Serve Them, an AIDS Action Foundation Report, 1996.
Health Resources and Services Administration (HRSA), HIV/AIDS Bureau (HAB). “HIV Services and Managed Care.” CARE Act National Technical Assistance Call Report. Rockville, MD: U.S. Department of Health and Human Services, July 1997.
HRSA/HAB. Access to and Quality of HIV/AIDS Care in Medicaid Managed Care Programs: A Summary of HAB’s Research Program, 1996-2000. Rockville, MD: U.S. Department of Health and Human Services, 2001.
HRSA, HAB. “By Definition: The Language of Managed Care.” INNOVATIONS: Issues in HIV Service Delivery. Winter 1995.
HRSA, HAB. “HMOs and HIV: The Managed Care Revolution,” INNOVATIONS: Issues in HIV Service Delivery. Rockville, MD: U.S. Department of Health and Human Services, Winter 1995.
HRSA, HAB. “Identifying the Unknown: Developing Capitation Rates for HIV Services,” INNOVATIONS: Issues in HIV Service Delivery. Rockville, MD: U.S. Department of Health and Human Services, Winter 1995.
National Association of People With AIDS. Making Medicaid Managed Care Work: Action Plan for People Living with HIV. Washington, DC: National Association of People with AIDS, 1997.
HRSA, HAB. “Managed Care and HIV/AIDS,” HRSA Care ACTION. Rockville, MD: U.S. Department of Health and Human Services, June 1998.
“For first time ever, HMO enrollment drops in 1999.” Managed Care Outlook. Managed Care, November 2000.
HRSA, HAB. “Managed Care Survival: Options for Safety Net Providers,” INNOVATIONS: Issues in HIV Service Delivery. Rockville, MD: U.S. Department of Health and Human Services, Winter 1995.
Kaiser Commission on the Future of Medicaid. “Medicaid and Managed Care,” Medicaid Facts. Washington, DC: Kaiser Commission on the Future of Medicaid, 1997.
“Developing a Managed Care Delivery System in New York State for Medicaid Recipients with HIV.” AJMC. November 1999.
“Developing a Managed Care Delivery Section for People with HIV/AIDS.” AJMC. November. 1999.
Kaiser Commission on Medicaid and the Uninsured. “Medicaid and Managed Care.” Kaiser Family Foundation, December 2001.
Westmoreland, Tim. “Medicaid and HIV/AIDS Policy: A Basic Primer.” Federal Legislation Clinic of Georgetown University Law Center, 1999.
Mathematica Policy Research. New Rules, New Roles: How Title V/MCH and Ryan White Programs and Providers are Adapting to Medicaid Managed Care. October 1999.
AIDS Action Foundation. Medicaid Reform and Managed Care: Implications for People with HIV and the Organizations that Serve Them. Washington, DC: AIDS Action Foundation, 1996.
Center for Health Policy Research “HIV/AIDS Related Provisions of Medicaid Managed Care Contracts,” May 1998.
Center for Health Policy Research, George Washington University School of Public Health. “Experiences of HIV-Infected Beneficiaries in the Move to Mandatory Medicaid Managed Care in Three States.” Washington, DC: George Washington University School of Public Health, March 1999.
Center for Health Policy Research. A Nationwide Study of Medicaid Managed Care Contracts. Washington, DC: George Washington University School of Public Health, 1998.