Children with Special Health Care Needs: Looking Back; Looking Forward Gary L. Freed, MD, MPH

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

3. 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

4. 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”

5. 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

6. 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

7. Two Systems for Managed Care • Initiated in October 1998 • Detroit Medical Center: Children’s Choice • University of Michigan and Henry Ford Health System: Kid’s Care

8. 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

9. Actual and Perceived Issues • Institutions were concerned • Deliver care well • Manage risk appropriately • Achieve positive margin • Caps won’t work • CSHCN have established needs

10. 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

11. InstitutionalPerceptions 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

12. 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

13. Challenges InvolvingPrimary 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

14. Challenges InvolvingPrimary 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

15. 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

16. Findings fromUniversity of Michigan Evaluation • Emergency Department use • 20% reduction in ED use in Managed Care vs. FFS • Illness severity and complexity are most important determinants

17. Findings fromUniversity 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

18. Findings fromUniversity 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

19. Findings fromUniversity 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

20. Findings fromUniversity 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

21. Findings fromUniversity 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

22. 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