University of Michigan Health System Children with Special Health Care Needs: Looking Back; Looking Forward Gary L. Freed, MD, MPH Director, Division of General Pediatrics Director, Child Health Evaluation and Research (CHEAR) Unit University of Michigan April 16, 2008

University of Michigan Health System

University of Michigan Health System Children’s Special Health Care Services Title V enrolled children Established by state legislature in 1927 Eligibility based on residency, medical condition and age –2,600 qualifying diagnoses –Families with incomes >250% of FPL share in cost of treatment

University of Michigan Health System Traditional Model Specialty care to treat qualifying condition Fee-for-service No gatekeepers Children should see specialists “as needed” Multi-specialty clinics “Crippled children should not be in HMOs”

University of Michigan Health System Initial Thoughts about CSHCN and Managed Care HMOs were not configured to care for children with chronic conditions Focused on adults and well children Cost savings would reduce care quality CSHCN would suffer

University of Michigan Health System Mid 1990s: Changing Economic/Political Environment Michigan received grant from RWJ Foundation Worked with Medicaid group in Boston Interviewed parents, advocates, primary and specialty providers In 1996 Michigan went into the HMO business

University of Michigan Health System Two Systems for Managed Care Initiated in October Detroit Medical Center: Children’s Choice 2.University of Michigan and Henry Ford Health System: Kid’s Care

University of Michigan Health System Key Components Care coordination –Annual care plans for qualifying diagnosis –Dually enrolled CSHCN receive comprehensive care Financing –Cost settling at end of year for plans –Physicians are paid FFS –Care coordinators paid

University of Michigan Health System Actual and Perceived Issues Institutions were concerned –Deliver care well –Manage risk appropriately –Achieve positive margin –Caps won’t work CSHCN have established needs

University of Michigan Health System Initial Effort No risk contracts Tried to determine risk rates Education of institutions by state –Expenditures were predictable –Capitation was a pooled, not individual risk

University of Michigan Health System Institutional Perceptions and Goals Capitation was viewed as a spending ceiling for each child Institutions only wanted cost-based programs, not risk based; risk was “too risky” Medical expenditure would be greater than in FFS The State will change the rules later

University of Michigan Health System Challenges for Institutions Contracting incentives outside of SE Michigan Communities and volumes were too small Children always had the choice of managed care vs. FFS Few data on which to make significant financial decisions

University of Michigan Health System Challenges Involving Primary Care Physicians Very few children for each practice –Worth the hassle to get involved? –Needed a critical mass of patients Pediatricians were already “stretched thin” –Additional time to work with care coordinators A few physicians already had most of the CSHCN patients

University of Michigan Health System Challenges Involving Primary Care Physicians Many not familiar with care coordination Increased expense of staff time to participate –Enhanced payment rates not enough –Longer visits for CSHCN patients Detroit was similar to rural Michigan –Very few pediatricians –Even fewer willing to participate Many did not feel comfortable caring for CSHCN patients

University of Michigan Health System Challenges for Subspecialists No incentives Academic institutions did not provide ownership or engagement Difficult to recruit to Michigan Asked to provide primary care when primary care provider not available

University of Michigan Health System Findings from University of Michigan Evaluation Emergency Department use –20% reduction in ED use in Managed Care vs. FFS –Illness severity and complexity are most important determinants

University of Michigan Health System Findings from University of Michigan Evaluation Expenditures –CSHCN mean expenditures 600% higher than average patients Significant variation by diagnosis and age Pharmaceutical costs significant –Other variables minor in comparison –Managed care enrollment had little, if any, effect on expenditures

University of Michigan Health System Findings from University of Michigan Evaluation Enrollment in managed care –Overall, parents of children with more severe disease chose to keep their children in FFS –Infants more likely to enroll in managed care Less potential to disrupt existing relationships Lack of existing medical home –The State program was more of a medical home model vs. managed care model No effort to push favorable selection No effort to control costs

University of Michigan Health System Findings from University of Michigan Evaluation Utilization of health care services –70% had IHCPs as expected –30% had some aspect of care denied on IHCP Unclear impact on utilization Families not pursuing care? PCP no recommending or referring? –50% of children had a change of their LCC –Only 27% of children received well child care –Overall no difference between managed care and FFS in utilization by diagnosis

University of Michigan Health System Findings from University of Michigan Evaluation Satisfaction with service –Similar for managed care vs. FFS –>80% rated their providers as excellent –<25% experienced problems obtaining needed care –Lower satisfaction associated with having children in fair or poor health, regardless of managed care or FFS

University of Michigan Health System Findings from University of Michigan Evaluation Perceptions of LCCs and PCPs –LCCs based in pediatric clinics are able to better coordinate care –LCCs perceive parental input to IHCP as more important than PCP input –Half of PCPs are not involved in IHCP development –Most PCPs did not discuss IHCPs with families –Many PCPs and LCCs (25%) received care coordination payments for patients of whom they were unaware

University of Michigan Health System Going Forward Care coordination vs. managed care? Institutions unlikely to accept risk Primary care involvement essential Capitation for CSHCN makes providers nervous Little financial incentive for managed care providers

University of Michigan Health System