Medical homes for Medicaid: The North Carolina model

Physicians running the state's regional care networks think their care management system could work for other Medicaid programs that are about to become much larger.

By Doug Trapp — Posted Aug. 2, 2010

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As state Medicaid programs continue to move away from fee-for-service pay, a growing number of enrollees today are served by traditional managed care plans, where enrollees choose physicians who are often paid a fixed amount to coordinate their health care.

But Community Care of North Carolina doesn't manage care like a typical Medicaid health plan.

In North Carolina, most new Medicaid enrollees are placed into enhanced medical homes. A group of 14 nonprofit, doctor-directed regional care networks identify local resources and tailor quality-improvement goals to local Medicaid patients' needs. Some even receive home visits from care coordinators.

Community Care is still an effort to manage care, but one that is driven by patient needs, physicians in the program said. The networks can adapt to local patient populations better than a typical Medicaid health plan, said Elizabeth C. Tilson, MD, MPH, medical director of Community Care of Wake and Johnston Counties, one of the networks.

It's a different situation for the physicians, too. Doctors and the networks are paid a per-member, per-month care coordination fee. Physicians also receive regular reports on the results of their care compared with other physicians in the region and state.

"It's a program that's designed to support doctors," said Leonardo Cuello, staff attorney for the National Health Law Program, a health advocacy group for low-income people.

More physician observers are starting to recognize the Community Care model as one that delivers results. Traditional managed care companies don't manage chronic diseases nearly as well just by calling patients once a week from outside the state, said Kent King, MD, a family physician and immediate past president of the Oklahoma State Medical Assn.

And the need for such effective care management will become only greater. An estimated 16 million people will gain Medicaid coverage under a national eligibility expansion beginning in 2014. Many of them have been without medical care for years. Backers say North Carolina's example could show other states that maintaining quality and saving money in Medicaid don't need to be mutually exclusive goals.

Proving its worth

Community Care, which began in North Carolina as a pilot project in 1998, is one of the oldest and largest Medicaid medical home programs.

More than a decade ago, North Carolina was considering traditional managed care plans for its Medicaid program, said Allen Dobson Jr., MD, Community Care's president. Many doctors were familiar with a primary care case management model. But Dr. Dobson and others felt that just giving a person a primary care physician was not enough.

So planners asked physicians what they needed to do their jobs well, Dr. Dobson said. Based on feedback, they developed pilot nonprofit care networks to handle selected areas' Medicaid enrollees. The state later expanded to 14 networks covering the entire state.

Each of the networks is a virtual integrated health system, Dr. Dobson said. Each has a medical management committee of local doctors who develop best practices, a medical director, and a clinical pharmacist, among others. Care managers follow up with patients and identify special patient needs.

"It's a very physician-driven, community-driven program," Dr. Dobson said. "It's not top-down. It's a little bit bottom-up."

The state also gave physicians financial incentives to see Community Care patients. It increased Medicaid pay to near Medicare rates and started paying a care coordination fee of at least $2.50 per member per month, according to the North Carolina Dept. of Health and Human Services. In exchange, physicians had to make themselves available at all times for consultations and care, among other requirements.

By focusing on improving chronic illness treatment, Community Care has chalked up some big wins. The program reduced asthma patients' emergency department inpatient admissions by 40% between fiscal year 2003 and 2006, according to independent research, and its diabetes monitoring has also seen notable gains.

Other quality gains have been less dramatic. For example, the Community Care Plan of Eastern Carolina -- one of the 14 networks -- had only a 2% increase in cholesterol screenings for diabetics between 2008 and 2009. Community Care has produced mixed results at times for certain other outcomes measurements.

Still, the effort has saved the state significant money. Between fiscal 2003 and 2007, expenses were $574 million less than the projection for a traditional primary care case management program, according to the consultant Mercer.

Comparing doctors with their peers on patient outcomes has proven effective, some reported.

"Physicians by nature are extremely competitive," said James Robert Powell, MD, clinical associate professor of medicine at the Brody School of Medicine at East Carolina University and Community Care clinical director for Pitt County. If their scores are low, they'll try to improve them.

The program's care managers are also a key part of its success, Dr. Powell said. Diabetics might not provide honest accounts over the phone of what they are eating, for example, but care managers follow up in person. "When you go out to somebody's house, there's not a whole lot that can be hidden very well."

Strictly speaking, Community Care is not a complete medical home program. For instance, National Committee for Quality Assurance standards require at least some patient data be collected electronically. But many Community Care physicians are still paper-based, Dr. Tilson said.

Also, access to specialists is not perfect, Dr. Dobson said. The state recently reduced Medicaid specialist pay, discouraging some specialists from seeing Community Care patients. Other specialists have complained that they must contact a patient's primary care physician before treating the patient, Dr. Powell said.

Many states' Medicaid programs have been influenced by Community Care, according to administrators. Since 2006, more than 30 states began medical home programs in Medicaid and the Children's Health Insurance Program, according to a June 2009 report by the National Academy of State Health Policy.

Other states taking notice

Oklahoma launched a Medicaid medical home program in January 2009 after spending time examining other states' models -- including Community Care, said Melody Anthony, director of provider services for the Oklahoma Health Care Authority, the state's Medicaid agency.

Oklahoma provides incentive pay and care coordination fees based on physicians' level of participation in the three-tiered program. Doctors who lead care teams, among other tasks, can nearly double their care coordination fees, which begin at about $3 per member per month.

The state also staffs a care management department with nurses to help doctors obtain care for patients with catastrophic or complex medical conditions. That's not as good as the coordinator system in Community Care, but it's a start, said Russell Kohl, MD, a family physician in Vinita, Okla., and member of the task force that examined other state models.

Vermont's Blueprint for Health, which began in 2003, has pilot community care teams operating in three of the state's 12 hospital service areas, including for Medicaid patients, said Lisa Dulsky Watkins, MD, the program's associate director. Each offers medical homes based on NCQA standards with nurses coordinating care.

Illinois Health Connect began offering medical homes to 2 million eligible Medicaid enrollees statewide in November 2007, said Margaret Kirkegaard, MD, MPH, the program's medical director. Physician practices and others serving as medical homes can receive $2 to $4 per member per month in coordination fees. Early data suggest that the program has saved Illinois money, in part through decreased hospitalizations and ED visits, she said.

Despite Community Care of North Carolina's successes, traditional managed care remains an attractive option to state lawmakers. The number of Medicaid enrollees in managed care plans at any one point in time reached 33.4 million in 2008, a seven percentage point increase over 2007.

"Even in North Carolina, you still have fragments of people out there who think we should go that route," Dr. Powell said.

North Carolina lawmakers keep asking tough questions about Community Care's spending, said Robert Lee Rich Jr., MD, a Community Care participant and medical director for Bladen Medical Associates in Elizabethtown, N.C. "We have to continue to do a good job and produce savings."

Protecting Community Care was the North Carolina Medical Society's top priority this year, said society spokesman Mike Edwards. "We feel it's the only way to manage the Medicaid program in an efficient and cost effective manner."

Traditional managed care's quality improvement strategies can also produce results. For example, the Passport Health Plan in Kentucky sent a series of reminders that significantly increased the percentage of diabetic members who received eye exams. Medicaid managed care plans are examining how they fit into the patient-centered medical home model, said Thomas Johnson, president and CEO of Medicaid Health Plans of America, an association of health plans.

A managed care plan could set up a Community Care-like plan on its own, but it would take significant time and money, Dr. Dobson said. Instead, states might want to emulate the North Carolina example by building a support structure around motivated physicians and then putting them in charge of its success, he said.

"Physicians want to do a good job," he said. "We just don't have systems to support physicians doing a good job."

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Coordinating care lowers costs

Community Care of North Carolina -- the state's medical home program for Medicaid -- has been far less costly to the state in terms of Medicaid spending than a traditional primary care case management program.

Estimated savings
2003 $60.2 million
2004 $124.2 million
2005 $81.2 million
2006 $161.8 million
2007 $147.1 million
Estimated fiscal 2007 savings
Outpatient $43.89 million
Physician $33.72 million
ED $26.93 million
Pharmacy $26.33 million
Inpatient $11.61 million
Other $4.66 million

Source: "CCNC/Access cost savings -- State Fiscal Year 2007 Analysis," Mercer, February 2009 (link)

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Medicaid costs vary widely

Medicaid covered nearly 60 million people in 2007. Roughly two-thirds of spending is directed toward people with disabilities and seniors, though those demographics make up only a quarter of enrollees:

Enrollment Spending
Children 29.0 million $60 billion
Adults 15.0 million $36 billion
Disabled 8.8 million $126 billion
Seniors 6.0 million $75 billion
Total 58.8 million $300 billion

Note: Disabled enrollment includes 4 million children. Dollar figures are rounded.

Source: "The Medicaid Program at a Glance," Kaiser Family Foundation, June (link)

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External links

Community Care of North Carolina (link)

Patient-Centered Primary Care Collaborative (link)

National Committee for Quality Assurance on patient-centered medical homes (link)

National Academy for State Health Policy on building medical homes in state Medicaid and CHIP programs (link)

"A Nationwide Survey of Patient-Centered Medical Home Demonstration Projects," Journal of General Internal Medicine, May (link)

Campaign for Better Care (link)

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