Medicaid Plans, Hospitals Clash over Proposed Kids Model

Analyses have projected that implementing children’s health home models nationwide could save Medicaid from $5 billion to $13 billion over 10 years.

Sept. 5—Medicaid insurance companies and hospitals squared off in Congress this week over legislation to expand children’s medical homes nationally.

The Advancing Care for Exceptional (ACE) Kids Act, sponsored by Rep. Joe Barton (R-Texas), would allow Medicaid programs nationwide to use a health home model to coordinate care for children with medically complex conditions. The model designates a provider or team to provide comprehensive care management and care coordination services to eligible children, including coordination of out-of-state care.

The bill would allow the medical homes to use specific age restrictions, which are prohibited under current law, and would incentivize states to establish these models by providing a higher Medicaid federal match for care coordination services.

“The ACE Kids Act will have an opportunity to help children—and their families—who face some of the most significant health challenges,” Rick Merrill, president and CEO, Cook Children’s Health Care System, said at a Sept. 5 hearing of the House Energy and Commerce Health Subcommittee.

But Medicaid insurers raised concerns that implementing a provider-led model outside of managed care networks would negatively impact beneficiaries’ health and increase care costs.

Francis Rienzo, vice president for government relations and advocacy for the Medicaid Health Plans of America (MHPA), argued in a letter to the committee that states already have the authority—through their managed care contracts or under pilots and waivers—to offer such medical homes through Medicaid plans.

Unlike some of the populations enrolled in existing health homes, most Medicaid-enrolled children with complex medical conditions are enrolled in managed care, noted a report by the Medicaid and CHIP Payment and Access Commission (MACPAC).

Among a variety of arguments it raised against the bill, MHPA took aim at hospitals’ performance in Medicare accountable care organizations (ACOs).

Medicare’s “experience with ACOs in recent years has demonstrated the inability or unwillingness of provider-led entities to take and manage full risk,” Rienzo wrote. “The proposal removes this important incentive to keep patients healthy and out of the most expensive care setting—the hospital.”

Although the bill would encourage the use of various alternative payment models, Rienzo noted that it would not require providers to operate under a full-risk capitation model.

“Given the reluctance of provider-led models to take the kind of risk that [Medicaid plans] routinely take, the proposal removes incentives for effective cost containment and creates incentives for fee for volume,” Rienzo said.

The 90 health plans in his organization cover nearly 25 million of the 72 million Medicaid enrollees.

Experience So Far

Supporters of nationwide expansion of the children’s health home model cited the potential of the program, as shown by the Center for Medicare & Medicaid Innovation’s (CMMI’s) Coordinating All Resources Effectively (CARE) pilot with 10 children’s hospitals. The participants were able to cut emergency department visits by 26 percent and inpatient days by 32 percent. In one year, CARE was credited with a 2.6 percent cut in Medicaid costs for the 8,000 children included.

“The idea of a medical home for these kids is not unique, it’s being done, and we need to take it to the national level,” Rep. Kathy Castor (D-Fla.), said, referring to a hospital in her district that has operated one of the pilot sites.

Analyses have projected that implementing such health home models nationwide could save Medicaid from $5 billion to $13 billion over 10 years.

“If we can create a national database in which we are sharing data, working together, driving best practices, in the end we truly can create the savings everyone is looking for but also improve these patients’ experiences,” Merrill said, touching on other provisions of the bill.

Clashes over similar legislation kept it from advancing in the last Congress, but supporters had hoped negotiated changes would allow this version to advance. Rienzo said the bill needs to be amended to mandate that health homes operate within Medicaid plans’ networks and that payments to homes be included in the plans’ capitated full-risk payment rates, as established by each state.

Matt Salo, executive director of the National Association of Medicaid Directors, said the negotiations have improved the bill from its earlier version, especially in allowing more state flexibility to design the medical homes.

MACPAC previously argued the model should build on and coordinate with components of states’ existing healthcare delivery systems, such as primary care case management and comprehensive risk-based managed care models, rather than create a separate delivery system for medically complex children.

Merrill noted that one pilot site in Texas already coordinates well with managed care plans there.

“If [states] opt in, they can use the delivery system that they have in place today,” Merrill said.

Companion legislation was introduced in the Senate by Sen. Charles Grassley (R-Iowa).

Cross-State Need

The new payment model is needed in part to address situations where children are covered by Medicaid and need care from out-of-state providers, supporters said. When children from states that lack a children’s hospital need complex surgery, Merrill said negotiations on coverage by their state Medicaid agency can take months.

“It puts at risk the health of these patients” and leads to “frustration, the anger from these parents, who really want to care for their kid, and certainly us on the receiving end who want to deliver that care,” Merrill said.

In contrast, Medicaid plans use “super-specialists” when such out-of-state care is required and negotiate one-off contracts or rely on preestablished payment rates, Rienzo said.

But others say the current arrangement is not working.

“When you are talking about patients who are crossing state lines and dealing with jurisdictional issues like that, there is clearly a need for additional best practices, additional guidance, and additional tools to make that work well,” Salo said.

Despite the concerns of the Medicaid insurers, the bill has drawn wide bipartisan support and received broad approval during this week’s hearing.

“It’s a no-brainer, as far as I’m concerned, but sometimes no-brainers don’t get passed up here,” said Gus Bilirakis (R-Fla.).

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Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare