Health Policy Research Brief December 2009 Creation of Safety-Net-Based Provider Networks Under The California Health Care Coverage Initiative: Interim Findings Dylan H. Roby, Cori Reifman, Anna Davis, Allison L. Diamant, Ying-Ying Meng, Gerald F. Kominski, Zina Kally and Nadereh Pourat rganized provider networks have been developed as a method of achieving efficiencies in the delivery of health care, and to reduce problems such as limited access to specialty and tertiary care, fragmentation and duplication of services, low- Oquality care and poor patient outcomes. Provider networks are based on collaborative agreements between an array of providers offering a comprehensive range of services, bolstered with extensive administrative, structural and financial supports.1, 2 Standard components of networks include private practice and clinic-based physicians, hospitals, and ancillary service providers such as laboratory and diagnostic services. Service providers are organized and supported by an organization that administers important aspects of the network, including provider reimbursement, utilization management, quality assurance and health information technology (HIT).3, 4 Organized provider networks have been used efforts to develop effective networks based by commercial insurers as part of managed on safety-net providers. care, and are being adopted increasingly by Medicaid and Medicare as an important Inherent Challenges in the Safety Net aspect of an effective health care delivery In contrast to the private sector, networks system.5 Research indicates that collaborative based on safety-net systems are less common care delivery networks can enhance the for a number of reasons. Safety-net providers capacity of local primary care and safety-net typically consist of local government health systems, improve access to care, and lead to care facilities, Federally-Qualified Health efficiencies in care delivery, thereby leading Centers (FQHCs), and other private entities, to improved health outcomes.5-9 However, including clinics and providers willing to public programs continue to face important provide free or reduced-cost care to low- barriers in developing organized provider income uninsured and Medicaid-insured networks. This policy brief examines the individuals.10-12 When safety-net care is experience of ten California counties reimbursed, it is ultimately financed through participating in the Health Care Coverage tax revenues redistributed to providers in Initiative (HCCI) demonstration project in various forms, including budget allocations overcoming these barriers and creating and other arrangements. Limited patient provider networks based on existing safety- payments for care as well as service delivery Support for this policy brief net systems. These interim findings should was provided by a grant from and infrastructure building grants may The California Endowment. provide valuable information for future supplement these revenues.9, 13 Over time, the A Publication of the UCLA Center for Health Policy Research 2 Health Policy Research Brief number of uninsured individuals has increased Safety-net providers rely on limited and while government budgets that support care inconsistent financial support from federal, delivery to the uninsured have decreased, state and local sources, as well as on charity and private donations and resources have care provided by physicians and facilities.12, 14, 21 declined.14, 15 Moreover, facilities grapple with The fractured nature of funding contributes regional health care workforce shortages, rising to an absence of organized safety-net systems costs of care, limited access to information and little coordination between providers.12 technology and limited infrastructure Existing subsidies, including community resources and support.7, 16 health center grants and disproportionate share hospital (DSH) payments, are often The limited development and implementation assigned retrospectively based on uninsured of provider networks within the safety net and Medicaid patient caseload, uncompensated are due to numerous challenges.7 Safety-net care, and need.7, 11, 22, 23 Beyond negotiated systems vary considerably in size, scope inpatient Medi-Cal rates and the prospective and organization.7, 11 Most systems provide cost-based rates received by FQHCs, fragmented and episodic care and are burdened development of prospective reimbursement with compromised quality and high costs.7, 17 agreements within safety-net systems has Specific barriers include limited access to been limited.7, 11, 16, 24 primary care services; emergency room overcrowding; lack of access to specialty care, Evidence indicates that participation in an mental health care, and dental care; and organized care delivery network can mitigate financial pressures on patients and providers.7 many of the challenges faced by safety-net Barriers to timely access to specialty care are health care providers.8 Despite this evidence, of particular concern, with many primary care instances of such coordinated networks in the clinics unable to provide specialty services United States are infrequent.7, 25 Nevertheless, onsite or to refer patients to specialty it is feasible to create a comprehensive and providers and coordinate such care.7, 17-19 coordinated safety-net network with These problems are exacerbated by a limited administrative, financial and technological supply of specialists in some regions, many supports that can enhance access to a full of whom are not willing to accept uninsured range of provider types and services.8, 21, 26 or Medicaid patients.7 In addition, the reliance on emergency room services by Existing Examples of Safety-Net Provider Networks uninsured individuals is a major problem, Several examples of organized safety-net especially for patients with primary care- provider networks exist.10 Prior to the 2006 sensitive conditions such as diabetes, implementation of health care reform in congestive heart failure and asthma. These Massachusetts, the state funded safety-net care individuals represent a significant proportion through its uncompensated care pool to assist of preventable and potentially expensive hospitals that provided a disproportionate hospitalizations.7, 20 share of unreimbursed services and to remove disincentives to caring for uninsured Safety-net providers generally lack the capacity patients.25, 27 As early as 1995, two to provide a full range of services to their Massachusetts hospital systems with large patients.10 They rely heavily on private “free care” burdens, Boston Medical Center physicians and hospitals to accept their and the Cambridge Health Alliance, were specialty care referrals and to provide advanced granted permission to establish managed care diagnostic services. Often these services are programs for the uninsured, funded through provided with little or no payment. Moreover, the uncompensated care pool.26 Each medical many private physicians are reluctant to center created a “health plan” that issued accept uninsured patients without membership cards to eligible individuals and reimbursement contracts in place.14, 16, 21 assigned them a primary care provider.28 Health Policy Research Brief 3 Boston Medical Center’s network included Managed Care Approach in Network Design community health centers and clinic-based Modeling safety-net networks on managed providers. The coordinated safety-net network care networks has been examined in several provided comprehensive benefits, access to communities as an innovative way to improve specialty care, and included selection of or health status and control costs.26, 34-36 This assignment to a primary provider for each method was adopted in response to changes patient. The networks were effective in in the local health care markets, including encouraging appropriate use of primary care diminished resources and budgets, hospital services and reducing unnecessary expenditures mergers and deregulation of hospital rates, through reductions in emergency room use among others. Although implementation and preventable hospitalizations.25 Other models have varied between communities, states, including Michigan, Maine, Georgia, use of the managed care approach within the New York, New Jersey and Wisconsin have safety net has been credited with reductions implemented similar health care coverage in emergency room use and hospital days. systems based on uncompensated care pools.25, 27 Managed care organizations are expected to These systems are models of effective, improve access to a usual source of care, coordinated networks operating within the encourage the use of primary and preventive safety net, and have enhanced access and care, increase appropriate service use, and 25, 27 improved outcomes while reducing costs. eventually save costs.26 However, the extent to which these models improve clinical Some states have implemented organized outcomes is as yet unknown.26, 37 networks through Medicaid-managed care or other state-funded programs. In California, Pharmacy benefit management (PBM) and 23 counties enroll some or all of their medication reconciliation are critical Medicaid enrollees in managed care plans, utilization review and management tools while the remaining counties continue to used by managed care systems. These deliver fee-for-service (FFS) care to this services can result in a range of patient care population.29 Increasingly, FQHCs and other and administrative improvements, including safety-net providers are incorporated in such changes