An Introduction to State Efforts · 2018-01-26 · the Medicaid population was enrolled in some...

Measuring the Quality ofMedicaid Managed Care:

An Introduction to State Efforts

The Council ofState Governments

Measuring the Quality ofMedicaid Managed Care:

An Introduction to State EffortsTrudi L. Matthews

Copyright 2000The Council of State Governments

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ii Measuring the Quality of Medicaid Managed Care

The Council of State Governments, a multibranch association of the states and U.S. territories,works with state leaders across the nation and through its regions to put the best ideas and

solutions into practice. To this end, The Council of State Governments:• Builds leadership skills to improve decision-making;• Advocates multistate problem-solving and partnerships;• Interprets changing national and international conditions to prepare states for the future; and• Promotes the sovereignty of the states and their role in the American federal system.

CSG’s Center for Leadership, Innovation and Policy (CLIP) serves the state government community bypromoting policy development and leadership training and by recognizing innovative state programs. WithCSG’s membership and regional leadership conferences as a foundation, CLIP is uniquely positioned todevelop and execute critical state problem-solving initiatives with intergovernmental, philanthropic andcorporate partners.

CSG Officers:Chair: Deputy Minority Leader Rep. Tom Ryder, Ill. President: Gov. Paul Patton, Ky.Chair-Elect: Senate President Pro Tempore President-Elect: Gov. Dirk Kempthorne, IdahoChair-Elect: Manny M. Aragon, N.M. Vice President: Gov. Parris Glendening, Md.Vice Chair: Sen. John Chichester, Va.

Headquarters:Daniel M. Sprague, Executive DirectorBob Silvanik, Deputy DirectorHoward Moyes, Assistant Director2760 Research Park DriveP.O. Box 11910Lexington, KY 40578-1910(859) 244-8000Fax: (859) 244-8001E-mail: [email protected]: www.csg.org

Eastern:Alan V. Sokolow, Director5 World Trade Center, Suite 9241

New York, NY 10048, (212) 912-0128Fax: (212) 912-0549E-mail: [email protected]

Midwestern:Michael H. McCabe, Director641 E. Butterfield Road, Suite 401

Lombard, IL 60148, (630) 810-0210Fax: (630) 810-0145E-mail: [email protected]

The Council of State Governments

Southern:Colleen Cousineau, Director3355 Lenox Road, Suite 1050Atlanta, GA 30326, (404) 266-1271

Fax: (404) 266-1273E-mail: [email protected]

Western:Kent Briggs, Director121 Second Street, 4th Floor

San Francisco, CA 94105(415) 974-6422Fax: (415) 974-1747E-mail: [email protected], CO: (303) 572-5454Fax (303) 572-5499

Washington:Jim Brown, General Counsel and Director444 N. Capitol Street, NW, Suite 401Washington, DC 20001(202) 624-5460Fax: (202) 624-5452E-mail: [email protected]

The Council of State Governments iii

Table of Contents

Acknowledgments ............................................................................................................ iv

Executive Summary .......................................................................................................... v

Introduction ..................................................................................................................... 1

Chapter 1: An Overview of Medicaid, Managed Care andQuality Assurance Programs.......................................................................................... 3

Figure 1: Comparison of Medicaid Fee-For-Service and ManagedCare Enrollment, 1991-1998...................................................................................... 5

Figure 2: States with Approved Medicaid Managed Care Waivers, 1999 ........................... 6

Figure 3: Medicaid Managed Care Enrollment by State, 1998 .......................................... 7

Figure 4: Distribution of Medicaid Managed Care Plans by Plan Type, 1998 ..................... 8

Figure 5: Distribution of Medicaid Managed Care Enrollees by Plan Type, 1998 ................ 9

Figure 6: Types of Medicaid Managed Care by State, 1998 ............................................10

Figure 7: Market Share of Medicaid-Dominated Plans by State, 1997 ............................. 11

Chapter 2: State Profiles of Medicaid Managed CareQuality Assurance/Improvement Efforts ....................................................................... 17

Table 1: Medicaid Managed Care Plan Types and Enrollment by State, 1998 .................. 18

Chapter 3: Promising Practices from Four States ............................................................. 39

Chapter 4: Policy Options for State Officials .................................................................... 42

Table 2: State Use of Quality Assurance Techniques ......................................................43

References .................................................................................................................... 49

Appendix A: State Medicaid Managed Care Quality AssuranceProgram Contacts ...................................................................................................... 51

Appendix B: Glossary of Medicaid, Managed Care andQuality Assurance Terms............................................................................................. 55

iv Measuring the Quality of Medicaid Managed Care

The Council of State Governments (CSG) would like to thank the state officials who kindlyresponded to the surveys we sent regarding their Medicaid managed care programs; their namesare listed in Appendix A.

Funding for Measuring the Quality of Medicaid Managed Care was provided in part by TheCouncil of State Governments 21st Century Fund. The 21st Century Fund is an internal founda-tion operating within the Council’s 501(c)(3) organization. The purpose of the Fund is to strengthenthe Council’s policy and research capacity by “supporting” innovative and entrepreneurial ap-proaches to product development.

Corporate contributors include:• American Express Company• BP America• DuPont• Eastman Kodak Company• Glaxo Wellcome Inc.• Metabolife International, Inc.• Pfizer Inc.• Pharmacia & Upjohn, Inc.• Philip Morris Management Corporation• The Procter and Gamble Company• 3M Company• United Parcel Service• Volvo North American Company• Wyeth-Ayerst LaboratoriesThanks also to Connie LaVake of CSG’s production staff for her excellent work on this

report.Finally, CSG wishes to express its sincere gratitude to Susan Rosenfeld, President of

Healthcare Choices, a nonprofit organization based in New York, and Dr. Mark Horn, Directorof Alliance Development at Pfizer Incorporated. Their suggestions and comments were invaluable.

While many individuals and organizations contributed to this report, the contents of thisreport do not constitute the official or unofficial position of The Council of State Governmentsnor any of the above-named individuals or organizations. The findings and recommendations inthis report, as well as any inaccuracies or omissions, remain the sole responsibility of the author.

Acknowledgments

The Council of State Governments v

The Medicaid program was enacted in 1965 as a joint federal and state government programto provide health care for the nation’s poorest individuals. Rising health costs over the threedecades since its implementation have caused policy-makers repeatedly to examine ways to rein inexpenditures. State governments began experimenting with managed care programs for theirMedicaid populations decades ago, but due to greater federal government flexibility in recentyears, the number of state Medicaid managed care programs has exploded. Less than 10 percent ofthe Medicaid population was enrolled in some form of managed care before 1992. Over 54percent of the Medicaid population is now enrolled in managed care, according to the mostrecent Health Care Financing Administration figures.

While some policy-makers saw Medicaid managed care as the magic answer to double-digitincreases in health care costs, others feared that the emphasis on cost savings hurt the quality ofcare provided to Medicaid beneficiaries. Critics say that managed care, with its use of fixedpayments prior to care, contains an inherent incentive to deny care and underserve patients. Dueto the amount of money states spend on Medicaid and the special needs of many Medicaidenrollees, policy-makers have been particularly concerned with providing adequate protectionsfor Medicaid recipients enrolled in managed care plans.

Many state and federal agencies as well as private organizations have developed methods toassess the quality of care provided to patients enrolled in managed care, both private and government-funded. As a way to deal with concerns about quality, states are using quality assurance techniquesfrom other organizations and supplementing them with their own quality measures and programs.

These quality assurance/improvement programs for the Medicaid managed care populationare fairly new, and there are tremendous differences between state programs. These differences,coupled with the ever-changing landscape in the field of quality assurance, make describing,analyzing and comparing the quality assurance efforts of Medicaid managed care programs difficult.Like measuring the course of a river, the study of Medicaid managed care quality assurance is thestudy of a system constantly in flux.

The purpose of this report is to provide a snapshot of state efforts to measure and monitorquality of care in Medicaid managed care programs. Its audience is primarily those who areunfamiliar with Medicaid managed care or with the field of quality assurance, although the infor-mation and findings of this report will be useful to experts as well. To gather information, TheCouncil of State Governments conducted a survey of every state, the District of Columbia, PuertoRico and Guam regarding quality of care measurement and quality assurance features of theirMedicaid managed care programs. Although Alaska, Wyoming, and Guam do not have Medicaidmanaged care programs, contact information for their Medicaid programs is included in Appen-dix A. In addition to original data, the Council used supplemental data from several sources thathave comprehensive information about Medicaid managed care, particularly the Health CareFinancing Administration, the National Academy for State Health Policy, and the Kaiser Com-mission on Medicaid and the Uninsured.

The data from the surveys showed that states use a number of different measures in theirquality assurance programs for Medicaid managed care, including:

❐ Reviewing and approving plans’ quality assurance/improvement programs❐ Requiring periodic plan reports of utilization information, performance measures/quality

indicators, health outcomes measures, enrollment/disenrollment figures, consumersatisfaction information, and/or financial information (e.g., information on solvency)

❐ External quality reviews❐ Random medical audits/chart reviews❐ Focused quality of care reviews❐ Site visits❐ Provider feedback❐ Consumer satisfaction surveys

Executive Summary

vi Measuring the Quality of Medicaid Managed Care

❐ Monitoring enrollment and disenrollment figures❐ Monitoring and investigation of complaints and grievances❐ Dissemination of information to plan members about procedures and rights❐ Consumer participation on plan boards❐ Toll-free hotlines for complaints and grievances❐ Advocate/ombudsman services❐ Certification of plans❐ Accreditation of plansEach state uses some combination of the above measures. These practices may be carried

out in conjunction with one another and may be performed by a state agency, a health plan orother entity that contracts with the state agency responsible for the Medicaid program.

From the analysis of original data and the use of existing studies of Medicaid managed care,several conclusions emerge. First, one of the biggest obstacles to assessing the quality of care inMedicaid managed care is the tremendous difference between state quality assurance programs.It is difficult to provide a nationwide analysis of Medicaid managed care without commonly ac-cepted benchmarks of quality used by all programs.

Despite this problem, stakeholders in the debate over quality – government officials, healthplans, providers and consumer groups – are working on the foundational elements of whatconstitutes quality care and how to measure it for Medicaid populations. Collaborative effortsbetween the National Committee on Quality Assurance and the National Association of StateMedicaid Directors, as well as initiatives by the Health Care Financing Administration are stepstoward the development of some common measures of quality.

In addition, the overarching consensus from studies on Medicaid managed care is that itprovides comparable quality to traditional fee-for-service Medicaid. While this is encouraging onone hand, on the other, the hope was that managed care would actually improve care for Medic-aid recipients because they would see the same doctors that individuals with private insurancesee. Also, there are several features of Medicaid that make any comparisons of fee-for-serviceand managed care Medicaid preliminary in nature, including short enrollment times of recipientsand differing reporting requirements among states.

Based on the analysis and findings of this report, adopting one or more of the following rec-ommendations could improve the quality of care for Medicaid recipients enrolled in managed care:

❐ Adoption of 12-month continuous eligibility for Medicaid enrollees.❐ Offering user-friendly, easily accessible guides on plan performance and provider

qualifications for Medicaid beneficiaries to use in selecting a plan and a primarycare provider. Funds should also be provided to translate educational materialsfor non-English speakers. Plans also need to provide user-friendly, culturally sensitiveinformation on accessing care and on patient rights.

❐ An ombudsman/advocate and/or a well-publicized multiple-language hotline should beavailable to assist Medicaid beneficiaries with questions regarding selection of providers,access to care, negotiating managed care arrangements,and the resolution of complaintsand grievances.

❐ Adequate funding, recruitment of staff and competitive pay for quality assurance programs.❐ Broad dissemination of consumer-friendly, easy-to-understand comparative reports of

plan quality based on plan performance information.❐ Periodic objective assessments of the reasons some providers do not participate in

Medicaid managed care programs as well as the level of satisfaction ofparticipating providers with the programs

❐ Aggressive steps to address any provider concerns raised through the assessments.❐ Carefully scrutiny of the causes of commercial plan exits from the Medicaid market. Low

plan participation rates may indicate that payments to plans are too low and/oradministrative requirements too burdensome.

❐ Review of capitated payments to providers and plans and increases in payments wherenecessary to maintain provider and plan participation, program competitiveness andquality of care.

❐ Established procedures and adequate personnel to investigate complaints promptly. Whena pattern of poor quality care appears, states must take appropriate and prompt actionto protect Medicaid recipients.

The Council of State Governments 1

Introduction

The health care delivery system in the United States has beencompletely transformed by the advent of managed care, and gov-ernment-financed health care programs have not been excludedfrom this revolution. For many years, state and federal govern-ment health insurance programs lagged behind the private sectorin adopting managed care as a means to control health care costsand deliver care. Although states began experimenting with man-aged care approaches as early as the 1970s, until 1992 less than10 percent of the Medicaid population was enrolled in some formof managed care. That is no longer the case, however. Accordingto the most recent estimates from the Health Care FinancingAdministration (HCFA), more than 54 percent of the Medicaidpopulation is now enrolled in managed care and the number contin-ues to rise.1 It is not an exaggeration to say that Medicaid managed

care programs have witnessed an explosion in the past decade, due in large part to relaxation offederal restrictions on the use of managed care for Medicaid recipients and the proliferation ofstate government waivers.

Yet, in many ways, the move toward managed care within Medicaid has been a mixed bag.While holding down costs in some states, in others, costs have increased. Moreover, problemswith access to care still remain, especially in states where there has been high turnover of healthplans. Added to these concerns has been the fear that the emphasis on cost savings has causedcorners to be cut and Medicaid beneficiaries to receive lower quality care. The concern about thequality of care in managed care is, of course, not limited to Medicaid programs. Yet becausestates expend so much of their budgets on health care and because low-income populations as agroup tend to have more complicated health problems than higher income populations, statesneed to be especially concerned that quality not be compromised in the pursuit of cost control inthe programs they administer.

The focus of this report is not to analyze directly whether the quality of care provided toMedicaid beneficiaries has decreased under managed care arrangements. Nor is it an attempt tocompare the performance of all health plans nationwide that participate in Medicaid managedcare. At this time, such a comparison is not possible with the data that is available.2 Instead, thisreport seeks to examine the methods that states use to assure quality is not compromised underMedicaid managed care arrangements. Moreover, this report is designed to be an introduction to

________________________1 Medicaid managed care penetration rates as of December 31, 1998, were obtained from Health

Care Financing Administration’s Web site, http://www.hcfa.gov/medicaid/omcpr98.htm Statistical infor-mation about Medicaid managed care, albeit not as up-to-date as HCFA’s Web site, is also available in printform in HCFA’s publication Medicaid Statistics.

2 There are several organizations that are making attempts to measure quality across boundaries andacross different plans, most notably the National Committee on Quality Assurance (NCQA). There are alsoa number of states that have developed report cards for managed care plans, both private plans and thosethat participate in Medicaid managed care. The National Association of State Medicaid Directors andNCQA are developing a database of quality measures (using NCQA’s HEDIS measures) from all Medicaidmanaged care programs that collect this data. In spite of these efforts, a comparison of Medicaid managedcare plans nationwide cannot be done because uniform data for all plans is not available. For a goodoverview of the challenges to measuring the quality of care, see Elizabeth McGlynn’s article, “Six Chal-lenges in Measuring the Quality of Health Care,” Health Affairs, May/June 1997, Vol. 16, No. 3.

2 Measuring the Quality of Medicaid Managed Care

state efforts. It is intended especially for those who may be less familiar with Medicaid managedcare and the field of quality assurance, such as state legislators who are responsible for oversightof Medicaid managed care programs or legislative staff researching these programs.

The first chapter of the report provides background information and an overview of thedevelopment of Medicaid managed care as well as an overview of quality assurance measures andmethods. The second chapter contains narrative descriptions of the quality assurance programsin every state with a Medicaid managed care program, as well as the District of Columbia andPuerto Rico. The third chapter presents innovative quality assurance practices of four states andprovides sources for further information on best practices. The fourth and final chapter presentsanalysis of original research and other studies of Medicaid managed care as well as a number ofpolicy options for state officials.


In order to understand the current discussion of quality con-cerns related to Medicaid managed care, it is necessary to explorethe origins and development over time of Medicaid as the nationalhealth insurance program for America’s poor. This chapter containsa brief overview of the creation of and current issues related toMedicaid, as well as an overview of managed care and qualityassurance as they relate to Medicaid.

The first portion of the chapter discusses the Medicaid pro-gram, including the impetus behind Medicaid managed care andthe development of Medicaid waivers. The next section providesan overview and primer on managed care, types of managed careorganizations and the development of Medicaid managed care.The final section discusses the field of quality assurance — thescience of studying quality. A note to the reader: each of these

three sections examines a jargon-laden area of study. For further assistance with terminology, aglossary is provided at the back of the report.

MEDICAIDMedicaid was created in 1965 as a government program jointly funded by states and the

federal government to provide health insurance to poor Americans. Since its inception, Medicaidhas provided health benefits for diverse populations, including low-income parents and children,the disabled, the blind, and indigent seniors who require assistance beyond what Medicare provides.While the federal government has always established the broad regulatory framework and policyguidelines for the program — such as minimum services that states must offer — states have agreat deal of flexibility in administering the program. A byproduct of this has been wide variationamong states in standards for eligibility and enrollment, benefit levels, types of services coveredand reimbursement rates for services within Medicaid.

Although states have enjoyed considerable control over their Medicaid programs, for manyyears the federal government restricted the use of managed care approaches for federally-fundedhealth care programs. Only after managed care helped to slow the growth of health care costs inthe private sector did the federal government begin to relax its restrictions and encourage statesto try pilot Medicaid managed care programs.

The Impetus Behind Medicaid Managed CareAt the time Medicaid was created, the American health care delivery system was predomi-

nantly a fee-for-service system. Under fee-for-service (FFS) arrangements, doctors, hospitals, andother health care practitioners and institutions charged individuals a fee for each health careservice that was used. Health insurance plans and individuals paid for health care services as theywere used and as they were charged. Medicaid, with a few notable exceptions, paid for care inthe same way that the private system did.3

Chapter 1: An Overview of Medicaid, Managed Careand Quality Assurance Programs

________________________3 A few states had programs for alternative financing or delivery of care under Medicaid prior to the

1980s. One was California, which implemented a voluntary yet widespread program for enrolling Medic-aid beneficiaries in prepaid health plans in 1971. High-profile problems such as fraud, abuse, and quality ofcare concerns in the California experiment led the federal government to pass a law in 1976 that made itvirtually impossible for states to use any kind of HMOs for their Medicaid populations for many years. SeeD. Chavkin and A. Treseder, “California’s Prepaid Health Plan Program: Can the Patient Be Saved?”Hastings Law Journal, January 1977, Vol. 28, pp. 685-760.


Explosive growth in health care costs throughout the 1970s and ‘80s helped fuel tremen-dous changes in the way Americans use and pay for health care. Many argued that the traditionalfee-for-service system contributed to out-of-control costs because it gave providers and patientsan incentive to access costly and inefficient services more frequently. New health care deliveryand financing arrangements aimed at controlling costs began to appear and became known asmanaged care. In an effort to encourage more efficient delivery and financing systems in healthcare, Congress enacted the Health Maintenance Organization Act of 1973. This act establishedguidelines for and supported the development of HMOs as an alternative to the fee-for-servicesystem.4

Throughout the 1970s, 1980s and into the 1990s, Medicaid also experienced rapid in-creases in spending as well as burgeoning enrollments. In 1992, for instance, state and federalMedicaid spending increased 29 percent over the previous year.5 Analysts argued that cost increaseswere associated with problems inherent to the Medicaid program. Often, Medicaid beneficiariesfound it difficult to find providers willing to accept the low reimbursement rates and the burden-some paperwork associated with treating Medicaid patients. Beneficiaries, unable to find careelsewhere, frequently used emergency rooms as de facto health clinics. Illnesses that went untreatedoften grew more serious for lack of preventative care and early detection and thus required moreexpensive urgent treatment. In addition, low reimbursement rates meant the poor were not ableto see the same doctors as those Americans covered by private health insurance. Too often, theproviders and health care organizations willing to accept the significant disincentives in treatingMedicaid patients were ones that provided lower quality care.

Changes in the larger health care delivery system brought about by managed care, coupledwith increasing pressure to halt the growth of government programs, led states to adopt managedcare approaches for Medicaid programs across the country. Federal and state government officialslooked to managed care as a way to control costs through utilizing more appropriate settings forhealth care, providing better care coordination and maintaining more control over the networkof providers available to Medicaid beneficiaries.6 By 1998, more than 50 percent of Medicaidrecipients were enrolled in managed care arrangements (see Figure 1).

Critics of the move to Medicaid managed care argue that, as with any other service, you getwhat you pay for. Given the already low reimbursement rates and the more complicated healthproblems found in Medicaid populations, there may be little room for health plans to loweroutlays for Medicaid further. According to one study, average outlays for poor women and chil-dren are 23 percent higher than for similar populations in commercial plans.7 Thus, there isalways the danger that some health plans may seek to achieve savings through denying services,thereby compromising the care given to Medicaid beneficiaries.8 States responded to these criticismsby implementing quality assurance programs which seek to monitor utilization rates, complaintsand performance on certain quality measures of Medicaid managed care plans.

Medicaid Waivers — The First Step in the ProcessIn order to qualify for federal matching funds for Medicaid, states must submit and receive

approval of their Medicaid programs from the U.S. Department of Health and Human Services__________________________

4 Health Insurance Association of America, Source Book of Health Insurance Data (Washington,D.C.: HIAA, 1998).

5 U.S. General Accounting Office, Medicaid: States Turn to Managed Care to Improve Access andControl Costs, (Washington, D.C.: U.S. General Accounting Office, 1993).

6 Mark R. Daniels, “Introduction,” Medicaid Reform and the American States: Case Studies onthe Politics of Managed Care (Westport, Conn.: Auburn House, 1998).

7 W. Pete Welch and Martia Wade, “Relative Cost of Medicaid Enrollees and the CommerciallyInsured in HMOs,” Health Affairs, Summer 1995, Vol. 14, No. 2, pp. 212-224.

8 Sara Rosenbaum, “Approaches to Assuring Quality Health Care Through State Contracts withManaged Care Plans,” Access to Health Care: Promises and Prospects for Low-Income Americans,Marsha Lillie-Blanton, et al., ed. (Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured,1999).


(HHS). For many years, the federal government restricted the use of managed care and itsrelated practices — such as using prepaid health plans or restricting an enrollee’s choice ofproviders — due to concerns about fraud and abuse. Gradually, beginning with the ReaganAdministration and blossoming under the Clinton Administration, the HHS and Congress relaxedthese restrictions and have allowed states greater latitude in designing and implementing man-aged care strategies for Medicaid.

There are three different ways for states to receive federal government approval for Medi-caid managed care arrangements.9 The first is through a Section 1915 (b) Waiver, also called aFreedom of Choice Waiver.10 Currently, 35 states have approved 1915 (b) Waivers.11 Thesewaivers usually are limited to certain conditions of participation in the Medicaid program. Underthe Omnibus Budget Reconciliation Act of 1981, Congress gave states the opportunity to:

30

25

20

15

10

5

0

Fee for Service Managed Care

Year 1991 1992 1993 1994 1995 1996 1997 1998Total MedicaidPopulation 28.3 30.9 33.4 33.6 33.3* 33.2 32.1 30.9

Percent inManaged Care 9.5% 11.8% 14.4% 23.2% 29.4%* 40.1% 47.8% 53.6%

* Indicates approximated numbersNote: Some disparities exist between figures due to rounding.

Source: Health Care Financing Administration

25.6

2.7

27.3

3.6

28.6

4.8

25.8

7.8

23.6*

9.8*

19.9

13.3

16.715.3

14.3

16.6

Comparison of Medicaid Fee-for-Service and Managed CareEnrollment, 1991-1998 (in millions)Figure 1:

__________________________9 In addition to the HHS waivers discussed in this section is the Section 1915 (c) waiver, commonly

called the Home and Community-Based Services (HCBS) Waiver, which is not applicable directly to theMedicaid managed care discussion in this report. The HCBS Waiver defers some federal mandates in orderthat Medicaid beneficiaries can be cared for within the home and the community, rather than being placedin an institution for treatment.

10 The name, Freedom of Choice Waiver, can be a little misleading. A 1915 (b) Waiver does not giveMedicaid recipients greater choice in whom they see for care. Just the opposite, it allows states to waive arecipient’s right to choose a provider without restriction.

11 This information is based on an unpublished quarterly report on 1915 (b) Waivers provided by theHealth Care Financing Administration.


❐ Limit the providers Medicaid recipientscould see for care as well as the type of servicesoffered and the location of services

❐ Contract with health plans whose enroll-ees are up to 75 percent either Medicaid orMedicare beneficiaries (sometimes referred to asthe 75/25 rule), and

❐ Enter into pre-paid limited risk contractswith health plans.12

Another option for states wishing to establishMedicaid managed care programs is to obtain a Sec-tion 1115 Waiver, commonly called a Research andDemonstration Waiver. Under Section 1115 of theSocial Security Act, the federal government maygrant waivers to states to administer research anddemonstration projects for Medicaid. 1115 Waiv-ers tend to be statewide, comprehensive Medicaidmanaged care arrangements. Until recently, statesrarely used this option. Arizona and a few otherstates sought such waivers before 1993, butArizona’s was the only demonstration project whosewaiver was for a statewide program. This haschanged considerably since 1993. Currently, 20states have approved Section 1115 Waivers (seeFigure 2).13

The 1997 Balanced Budget Act (BBA) fur-ther opened the way for states to experiment withnew managed care options for Medicaid enrollees.Section 1932 newly enacted under the BBA grantsstates the freedom to design and implement Medi-caid managed care programs without seeking awaiver as well as the authority to require Medicaidrecipients to enroll in managed care programs. The

enactment of BBA signaled that Medicaid managed care, far from being the pilot program of afew states, had entered the mainstream of health care (see Figure 3).

MANAGED CARE

What is Managed Care Anyway?Managed care is a catchphrase for numerous approaches to control the financing and

delivery of health care services. Unlike its predecessor, the fee-for-service system (FFS), whichusually has distinct and separate actors — insurers, providers and patients, for example — managedcare often integrates in some manner the mechanisms for providing and paying for health careservices and uses various means to contain costs. It is important to note that although there arecommon methods that various managed care entities use, managed care should be understood__________________________

12 Julie Hudman, Barbara Lyons, and Risa Ellberger, “Medicaid: The Transition to Managed Care,”Access to Health Care: Promises and Prospects for Low-Income Americans, Marsha Lillie-Blanton, etal., ed. (Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured, 1999). Pre-paid andlimited risk plans are those that receive a set rate per member up front for a specified range of services,rather than paying a fee for each service after health care services had been delivered.

13 This information is based on data from unpublished quarterly reports provided by the Health CareFinancing Administration.

No Medicaid Waivers(Four states, plus Guam, Puerto Rico and the U.S. Virgin Islands)

1115 Waivers Only(12 states; Illinois and New Jersey have approved 1115 proposalsbut have yet to implement their plans. The District of Columbia,Florida and Texas have submitted proposals for waivers but theywere not approved as of 11/1/99.)

1915 (b) Waivers Only(25 states, plus the District of Columbia)

Both Kinds of Waivers(Nine states)


Figure 2:States with ApprovedMedicaid Managed CareWaivers, 1999


more as a continuum than as a cohesive whole. On one end of the continuum are providers andplans that use some aspects of managed care, such as physicians acting as case managers for aset fee per patient, but that may otherwise differ very little from a fee-for-service arrangement. Onthe other end of the continuum are fully capitated risk-based Health Maintenance Organizationsthat integrate the functions of health insurance and provider organizations in one entity. Inbetween these two are a myriad of different managed care plans and organizations.

Before discussing different types of managed care entities, a simple review of how FFShealth delivery system provides and pays for care and also how it manages the financial risk ofinsuring individuals when they need care may be useful. Under traditional fee-for-service arrange-ments, health care providers assume little of the financial risk for the services they provide topatients. Health care providers determine the proper diagnosis and treatment for a patient, andinsurers and individuals are responsible for paying for health care services. The FFS system, manyhave argued, creates an inherent incentive structure that results in higher costs. Providers maynot provide the lowest cost service or may order unneeded tests, operations, or other services,due to the fact that they bear little or no responsibility for paying for care, yet they could be suedfor malpractice if they do not adequately addresspatients’ health care needs. Insured patients faceonly indirect incentives to avoid costly or unneces-sary care, because insurance companies are largelyresponsible for paying for care. As insurers facerising costs for health care, they pass their costson to employers and individuals through higher in-surance premiums, higher coinsurance and/ordeductibles.

In contrast to this system, managed care usesa number of practices that seek to alter the incen-tive structure of all of the actors involved in orderto hold down costs. Listed below are some commonmethods used by managed care organizations. Notall managed care organizations use all of the meth-ods; again, managed care is a continuum of prac-tices, not a single set of methods applicable to all.In addition, these practices are not limited to Med-icaid managed care but apply to private insurers aswell.

❐ Capitation is the practice of paying a fixedfee or sum per plan member to a providerover a certain period of time; this fee ispaid without regard for the amount or costof services actually used by the plan mem-ber. As opposed to FFS systems, provid-ers share the financial risk of providing carefor health plan members. With capitatedpayments, advocates argue, providers havean incentive to avoid unnecessary health careservices, because they receive only a setamount per patient. Critics argue that capi-tation gives providers the incentive tounderserve patients, since additionalservices may lower providers’ financial re-turns. This, they add, also creates a conflictof interest, since providers’ financial inter-

Total Medicaid Enrollees .......................................................... 31,117,679Total Enrolled in Medicaid Managed Care ........................ 16,834,390Percent of Medicaid Enrollees in Managed Care ......................... 54%

Note: State Medicaid enrollment includes individuals enrolled in statehealth care reform programs that expand eligibility beyond traditional

Medicaid eligibility standards.Source: Health Care Financing Administration

75-100 percent(11 states, plus Puerto Rico)

50-74 percent(20 states, plus the District of Columbia)

25-49 percent(10 states)

<24 percent(Seven states 1-24 percent; Alaska, Wyoming, Guam and theU.S. Virgin Islands have no Medicaid managed care program)

Figure 3: Medicaid Managed CareEnrollment by State, 1998


ests and the best interests of patients may be at odds.❐ Utilization review is an evaluation of the necessity and appropriateness of a recom-

mended health care service. Plans review the treatment provided and determine if all thetests, services used, etc. were necessary to treat the diagnosed condition. If the care isdetermined to be unnecessary or inappropriate, the plan may deny coverage, i.e., refuseto pay, for the procedure or treatment. Plans may perform utilization review prospec-tively (before services are performed) or retrospectively (after they are performed).14

❐ Prior authorization, a common form of utilization review, requires plan members orproviders to obtain authorization for a specified health care service before it is per-formed. Most plans require prior authorization, for instance, for inpatient or outpatientsurgery and hospitalization. Proponents argue that prior authorization prevents unnec-essary services from being performed and thus lowers costs. Opponents counter thatthis practice is an additional barrier to care that imposes additional costs, diminishesaccess and harms quality.

❐ A network of providers and facilities may be established by the plans for use byplan members. Network providers and facilities agree to accept the plans’ terms andpayment rates and in return receive a guaranteed pool of patients. Plan members mayusually only use approved providers and facilities for health care in order for the cost ofservices to be fully covered by the plan. Greater control over whom plan members seefor care allows managed care plans to control costs more effectively. However, thispractice does limit plan members’ choices and may disrupt care if the provider leaves oris suddenly terminated from the plan’s network.

❐ Primary care case management is the use of providers to serve as gatekeepers andcoordinators of care for plan members. Under this arrangement, a physician would de-

termine, for instance, if referral to a specialist isnecessary for a given health condition. In this way,plans aim to reduce payments for unnecessary andmore expensive specialty care and ensure that planmembers have received necessary preventativecare. Having to obtain a referral from a primarycare provider, however, may mean that patientsare delayed or denied access to needed care.

Types of Managed Care OrganizationsAs discussed previously, under the rubric of

“managed care” there is a considerable variety ofapproaches and organizational models. Each typeof managed care entity uses a slightly differentapproach to the financing and delivery of care. Themajor distinguishing features between models,whether Medicaid managed care plans or commer-cial managed care plans, are usually the level offinancial and organizational integration and the levelof risk shared by the health care payer/insurer andproviders.

Except for Primary Care Case Management

HIO1%

MCO48%

Medicaid-onlyMCO23%

PCCM10%

PHP16%


Total = 585 Medicaid Managed Care Plans

Other2%

Figure 4:Distribution of MedicaidManaged Care Plans byPlan Type, 1998

__________________________14 Some managed care organizations have recently

moved to eliminate utilization review from their cost-control arsenal. For further information, see The NewYork Times article, “Big HMO to Give Decisions onCare Back to Doctors,” from November 9, 1999.


plans, each of the models of managed care de-scribed below involves some sharing of risk betweenplans and providers. Managing risk involves esti-mating who is likely to enroll in a health plan, whatkind of services a plan member is likely to use andhow expensive providing those services will be.Then, the plan determines the premium to chargeper member based on those estimates. In man-aged care, entities that bear risk assume that theexpenses for providing health care services to planmembers will be less than the premiums or thecapitated amounts paid. The amount of risk a planor provider carries varies depending upon contrac-tual obligations. For instance, a plan or providercan limit the amount of risk it carries by limitingthe amount of services for which it will be respon-sible or by designating certain services to be paidon a fee-for-service basis.

Medicaid managed care plans can be cate-gorized by one of the following organizationalmodels:15

❐ Primary care case management(PCCM) is a health care arrangement inwhich a provider is paid a set amount permonth per health plan member to serveas a “gatekeeper” for the health plan bycoordinating and approving access to ser-vices such as diagnostic tests and referralsfor specialized care. The primary carephysician bears little or no financial riskfor coordinating services.

❐ Prepaid health plans (PHP) pay a setmonthly fee per plan member to provid-ers in return for a limited range of healthcare services. Providers, therefore, bear limited financial risk under this arrangement.

❐ Fully capitated risk plans pay a set monthly fee to providers in return for a full rangeof health care services for plan members. The providers assume significant risk for pro-viding services to beneficiaries. There are two major types of fully capitated plans:• Health insuring organizations (HIOs) are health plans that cover and arrange

health care services for enrollees but that are organizationally distinct from providers.• Health maintenance organizations (HMOs) are organizations wherein the con-

tracting plan and the providers of medical services belong to the same organization.There are a number of different types of HMOs, including the staff model, the groupmodel and the independent practice association. (See the definition for HMO in theglossary for further explanation of these different types of HMOs.) The Health CareFinancing Administration, the federal government agency which oversees Medicaid,uses the designation Managed Care Organization (MCO) instead of HMO for fullyintegrated full-risk managed care plans (see Figures 4 and 5).

__________________________15 This typology is derived from Diane Rowland and Kristina Hanson, “Medicaid: Moving to Man-

aged Care,” Health Affairs, Vol. 15, No. 3, Fall 1996, p.150. This typology closely matches the catego-ries that HCFA uses in its reports on Medicaid managed care programs.

HIO2%

MCO34%

Medicaid-onlyMCO22%

PCCM19%

PHP23%

Note: The total number of enrollees includes 4.6 million individualswho were enrolled in more than one managed care plan. It also includes

individuals enrolled in state health care reform programs that expandeligibility beyond traditional Medicaid eligibility standards.


Total = 21.2 million enrollees

Figure 5:Distribution of MedicaidManaged Care Enrollees byPlan Type, 1998


The Development of MedicaidManaged Care Programs in the States

There is no one model for Medicaid managedcare programs. As states moved their Medicaidpopulations toward managed care, they had a num-ber of options to consider in designing a program.First, states had to decide what populations to en-roll in managed care. Many states initially enrolledonly low-income women and children because theirhealth needs are generally easier to address thanthose of low-income elderly or the disabled popu-lations enrolled in Medicaid. As states have gainedmore experience in administering managed care,they have moved to include more diverse groups,such as the disabled, into managed care.16 In addi-tion, states had to decide the geographic bound-aries of Medicaid managed care programs, whetherto establish the programs statewide or only in speci-fied localities such as urban areas. Next, states hadto decide what kinds of managed care programs toestablish, whether a primary care case manage-ment model or some capitated form of managedcare, such as an HMO or a mixture of both. Statesalso have had to establish whether enrollment inmanaged care is voluntary or mandatory for Med-icaid recipients. Each of these factors greatly influ-ences enrollment patterns, plan participation andthe smoothness of the transition to managed care.

States have, moreover, had to determine thecontractual obligations between the state Medicaidprogram and the managed care plans. Within thecontracts, states had to determine program fea-

tures such as enrollment processes, rate schedules and quality assurance/improvement reportingrequirements. Finally, states have had to decide which kinds of services to include in their con-tracts with managed care organizations. Many states have chosen to “carve out” certain sectorsof care (or certain populations that frequently need certain types of care) from their managedcare contracts, such as mental health benefits. Carve-outs establish separate payment and servicerequirements for a certain set of services or a certain population. Due to the number of factorsinvolved in designing a Medicaid managed care program, there is a great deal of variation be-tween states. In fact, it is a little misleading to speak of a state’s Medicaid managed care programbecause within a given state there may be several managed care programs in operation fordifferent Medicaid populations or in different locations (see Figure 6).

One difference that distinguishes Medicaid managed care programs from private sectormanaged care is the type of plans that participate. Among Medicaid managed care programs arecommercial plans that mostly cover those who purchase private insurance but also have Medicaidcontracts. Conversely, there are Medicaid-dominated plans that draw most of their membersfrom the Medicaid population. Medicaid-dominated plans often have been developed by commu-nity health organizations that had experience primarily in treating Medicaid beneficiaries, not inoperating a managed care organization.__________________________

16 Marsha Regenstein and Christy Schroer. Medicaid Managed Care for Persons with Disabilities:State Profiles, (Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured, 1998).

Figure 6: Types of Medicaid ManagedCare by State, 1998

No Medicaid Managed Care(Two states, plus Guam and the U.S. Virgin Islands)

PCCM Plans Only(Four states)

Capitated Plans Only(17 states, plus Puerto Rico)

Mixed Managed Care(27 states, plus the Districy of Columbia)

Note: PCCM stands for Primary care case management plans; Capitatedplans include PHPs, HIOs and HMOs; Mixed means there is a

combination of some PCCM and capitated plans.Source: Health Care Financing Administration


States have tried to attract a good mix of plans to Medicaid managed care programs,believing this to be important for access to a range of providers and for encouraging competitionbetween plans.17 Many commercial plans were eager to enter the Medicaid managed care marketinitially. However, cost savings and capitation payments turned out to be unsatisfactory for many.After an initial trial in Medicaid managed care programs, a good number of commercial managedcare plans scrapped their Medicaid contracts, leaving managed care organizations that are de-voted almost exclusively to serving Medicaid beneficiaries as the main participants in many Medi-caid managed care programs in the states (see Figure 7). This trend alarmed analysts who positedthat commercial managed care organization participation in Medicaid managed care was essen-tial to holding plans with a majority of Medicaid members accountable to system-wide standardsof quality.18

Medicaid managed care is still in its infancy and is experiencing a number of growing painsthat will take time to resolve. For instance, a good number of plans that participate in Medicaidmanaged care lack experience in either of two areas. Plans that were organized from alreadyexisting organizations for serving the poor have a good deal of expertise in dealing with Medicaidpatients yet lack experience in managed care financial management. Plans that have experiencein implementing managed care systems have little experience with the special health needs of theMedicaid population. Both groups must overcome gaps in knowledge and improve their servicesto beneficiaries.

Moreover, many policy makers and administrators did not anticipate the degree of difficultythat Medicaid enrollees would have in adjusting tomanaged care. Cultural, language and educationalbarriers have amplified the disorientation and dis-ruptions of the transition to managed care. In lightof the constraint of choice inherent in Medicaidmanaged care programs — enrollees often pos-sess special problems in dealing with the healthcare system yet lack the resources to go elsewhere— states have the burden to ensure that providersand insurers are offering high quality care to theirvulnerable populations.

MEASURING QUALITY OF CARE

The Institute of Medicine, a group of distin-guished scholars and professionals within the Na-tional Academy of Sciences, has defined quality careas, “the degree to which health services for indi-viduals and populations increase the likelihood ofdesired health outcomes and are consistent withcurrent professional knowledge.”19 In trying to as-sess the quality of care provided to patients, whetherin fee-for-service or managed care arrangements,there are a number of different variables that must

__________________________17 Suzanne Felt-Lisk, The Changing Medicaid

Managed Care Market: Trends in Commercial Plans’Participation, (Washington, D.C.: Kaiser Commissionon Medicaid and the Uninsured, 1999).

18 Hudman, et al.19 Institute of Medicine. Medicare: A Strategy for

Quality Assurance, Volumes I-II, Kathleen N. Lohr, ed.,(Washington, D.C.: National Academy Press, 1990),p. 21.

Figure 7:Market Share ofMedicaid-Dominated Plansby State, 1997

Note: Information for Puerto Rico was not avaialable.Source: Felt-Lisk, The Changing Medicaid Managed Care Market

50 percent or more(Includes the District of Columbia)

30-49 percent

<30 percent(Seven state programs with at least 10,000 enrollees had noenrollments in Medicaid-dominated plans: Georgia, Iowa,Nebraska, New Mexico, Vermont and West Virginia)

Low or no capitated enrollment(States with fully capitated enrollment under 10,000 enrollees)


be examined. These determine whether care was appropriate and based on sound scientificfindings, whether there were any errors or omissions in care and whether the desired outcomewas reached. Three different types of data must be gathered to measure the quality of care:structural, process, and outcome measures of quality.20

Structural measures include information about a health care system’s infrastructure andcapacity to provide care, such as the licensing of providers and institutions; the financial sound-ness of health care organizations; and the accessibility of services. Process measures of qualityattempt to capture whether the process of providing care was satisfactory both in clinical termsand in the patient’s assessment of care. The clinical aspect of process quality measurement isoften captured by what are commonly referred to as performance measures, such as childhoodimmunization rates. Finally, outcome measures of quality include some examination, both indi-vidually and population-wide, of whether patient health actually improved or not following acourse of treatment. If the childhood immunization rate is an example of process quality mea-surement, then the incidence of childhood diseases such as measles, mumps, and polio would bethe outcome measure of quality.

Measuring quality of care is easier said than done. Every organization that collects quality ofcare data — whether a state or federal agency, a private accreditation organization, or a healthcare organization or plan — has to make tough decisions as to how quality of care variables willbe defined and how data will be collected in a uniform, reliable manner in order to get a truepicture of the quality of care delivered by health plans, practitioners and institutions. This is anincredibly complex and difficult task. There are thousands of actors, thousands of different kindsof diseases, hundreds of different information systems that health care organizations use to col-lect data and any number of ways that a particular aspect of quality could potentially be mea-sured. Furthermore, data must be adjusted to take into account the risk involved in enrolling agiven population. Plans that enroll a high number of low-income children, for instance, are morelikely to have to deal with lead poisoning, asthma and other health risks from poor living condi-tions that children from higher income families would not have with such frequency. Thesefactors make it difficult to assess how well a plan meets quality of care standards and how itcompares with other plans. In spite of the seemingly Herculean nature of the task, in the lastdecade various entities concerned with quality of care measurement, reporting and data collec-tion have prepared standards that attempt to capture whether health plans and providers aredelivering quality care.

Quality of Care StandardsPrior to the 1990s, quality of care reporting requirements and data collection for the Med-

icaid program were fairly basic. The federal government required providers and plans to havesome form of quality assurance program and to have a method for handling complaints andgrievances. In addition to these requirements for plans, the federal government required states tomonitor the plans and to contract with an external quality review organization to perform anannual review of managed care plans involved in Medicaid.21 States also had requirements oftheir own ranging from general regulatory oversight of plans, such as monitoring plan adminis-trative procedures and periodic reports, to performing on-site reviews, collecting data from plansand reviewing medical records. There was a wide variation between states in their quality assur-

__________________________20 The three components of quality are discussed in the Institute of Medicine’s Measuring the Qual-

ity of Health Care: A Statement by the National Roundtable on Health Care Quality, Molla Donaldsen,ed. (Washington, D.C.: National Academy Press, 1999), pp. 7-10. These were originally developed byAvedis Donabedian in Explorations in Quality Assessment and Monitoring, Vol. I-III (Ann Arbor, MI:Health Administration Press, 1980).

21 The federal government announced a new proposed rule on requirements and procedures forconducting external quality reviews of Medicaid managed care organizations. The text of this proposed ruleis available in the December 1, 1999, Federal Register, or on the Government Printing Office Web site,http://wais.access.gpo.gov.


ance programs as well as their implementation of federal quality assurance requirements.22

In the early 1990s, a number of organizations and the federal government began to makequality of care monitoring and data collection a priority and developed models for plans to use inassessing quality and fulfilling various reporting requirements. The following is a synopsis of thevarious initiatives developed in response to the need for better standards for quality of care, bothfor public health care programs, such as Medicare and Medicaid, as well as for private insurersand organizations.

❐ Quality Assurance Reform Initiative (QARI) — In 1991-92, the Health CareFinancing Administration (HCFA) developed QARI as a tool for states to use in assessing thequality of care in Medicaid managed care programs. QARI outlined four areas of assessment: 1) aframework of responsibilities for all of the actors in Medicaid managed care programs, 2) qualityassurance standards for plans, 3) investigations of detailed focused studies of clinical care and4) external review standards.23 Three states served as pilot states for the project but many otherstates used the guidelines in QARI to improve their quality assurance programs.

❐ Quality Improvement System in Managed Care (QISMC) — Building on itsinsights from QARI and in response to the growing use of HEDIS indicators by health plans (seebelow), HCFA began developing QISMC in 1996 as a comprehensive, coordinated oversightand quality improvement system for Medicaid and Medicare managed care programs. Still in thefinal stages of implementation, QISMC takes the QARI guidelines a step further by requiringplans to demonstrate that they are making progress toward improving quality. The QISMC sys-tem will be mandatory only for Medicare managed care plans, but HCFA is encouraging states toadopt QISMC standards for Medicaid programs as well.24

❐ National Committee for Quality Assurance (NCQA) Health Employer Dataand Information Set (HEDIS) — The most widely accepted set of quality indicators for bothprivate and public health plans is the National Committee for Quality Assurance’s HEDIS initia-tive. NCQA first developed HEDIS quality measures for commercial managed care plans. Then,in 1996, it developed Medicaid HEDIS cooperatively with state Medicaid directors and Medicaidhealth plan representatives, establishing several quality measures specific to the Medicaid popula-tion. The most recent version, HEDIS 3.0, incorporates the Medicaid measures into the data setand collection. HEDIS is designed as a guide for health plans for collecting and reporting rawdata on a wide range of quality of care indicators, ranging from child immunization rates tovarious screening rates for cancer to waiting time for appointments with primary care providersto member satisfaction measures. More and more states are using HEDIS indicators to satisfyquality of care reporting requirements for Medicaid because many plans already collect thisinformation.

❐ Foundation for Accountability (FACCT) — One organization that is trying to de-velop performance indicators to rival NCQA’s HEDIS is the Foundation for Accountability. FACCThas developed measurement sets that attempt to factor in health outcomes, to have more com-prehensive data collection for certain conditions and to provide comparisons between FFS andmanaged care plans.25 FACCT and NCQA are also collaborating on a new initiative to developquality measures for children’s health, the Child and Adolescent Health Measurement Initiative(CAHMI). This program began in March 1998 and is currently undergoing field trials. The quality

__________________________22 Suzanne Felt-Lisk, “Tools for Monitoring Quality for Vulnerable Populations,” Access to Health

Care: Promises and Prospects for Low-Income Americans, Marsha Lillie-Blanton, et al., ed. (Washing-ton, D.C.: Kaiser Commission on Medicaid and the Uninsured, 1999).

23 Suzanne Felt-Lisk and Robert St. Peter, The Quality Assurance Reform Initiative (QARI) Dem-onstration for Medicaid Managed Care Final Evaluation Report (Washington, D.C.: Henry J. KaiserFamily Foundation, 1996).

24 Elizabeth Mitchell, Alicia Fagan, and Trish Riley, Consumer Protection and Quality Oversight inManaged Care: How Are States Meeting the Challenge? (Portland, Maine: National Academy for StateHealth Policy, 1998).

25 Felt-Lisk, “Tools.”


indicators developed through this initiative will likely be included in HEDIS.26

❐ NCQA Accreditation of Managed Care Plans — In addition to and associatedwith its HEDIS initiative, NCQA also accredits managed care plans. First developed as a way foremployers to compare health plans for making insurance purchasing decisions, the NCQA ac-creditation process requires plans to undergo a rigorous on-site review of their quality improve-ment programs and structures.

❐ JCAHO Health Care Network Accreditation — Another organization in the ac-creditation business is the Joint Commission on Accreditation of Healthcare Organizations(JCAHO). JCAHO has long accredited hospitals and health care organizations but, with man-aged care blurring the lines between insurers and health care institutions, has moved into accred-iting managed care organizations as well. Due to its traditional focus on health care institutions,JCAHO brings health care organization experience to its accreditation process for health plans.

❐ Consumer Assessment of Health Plans Survey (CAHPS) — Developed as ademonstration project for the Agency for Healthcare Research and Quality (AHRQ), CAHPS hasachieved widespread acceptance as a reliable tool to measure consumer satisfaction with care.The CAHPS survey asks respondents to rate a number of variables including access to andavailability of care, interpersonal skills of providers, wellness advice and patient involvement indecision making.27

❐ Practice Quidelines — The Agency for Healthcare Research and Quality (AHRQ), incooperation with the American Medical Association and the American Association of HealthPlans, has established practice guidelines for providers which are available through its NationalGuideline Clearinghouse, a comprehensive database on AHRQ’s Web site. Practice guidelinesare important especially because they use evidence-based parameters for treating a disease orcondition.

State Efforts to Assure Quality of Care under Medicaid Managed CareAs the multiple competing methodologies for measuring and assuring quality above demon-

strate, assessing quality is still more art than science. Nonetheless, state governments have usedvarious methodologies to develop quality assurance/improvement programs for Medicaid managedcare. Listed below are descriptions of a range of practices that states may use in their qualityassurance/improvement efforts for Medicaid managed care programs. These descriptions werecompiled from a survey of state government officials by The Council of State Governments(described in more detail in the next chapter). States use these practices, among other things, tomonitor the clinical aspects of care, to review plan administrative procedures and functions, tomonitor consumer satisfaction and to protect patient rights.

❐ Requiring periodic plan reports — The ability of state agencies to collect accurate,complete and reliable data from managed care plans is essential to measuring the quality of carefor Medicaid managed care. Despite its universal necessity, states still struggle to find ways tocollect valid and accurate data from managed care plans. Due to federal government waiverrequirements, all states are required to collect encounter data, information about what serviceswere performed during patient visits to providers and other health care encounters.28 States mayalso require managed care plans to provide encounter data to an appropriate state agency.However, the frequency of reports, exact data to be reported and collection methods vary consid-erably. In addition to collecting encounter data, states may also choose to have plans provide__________________________

26 For information on this and other initiatives that address quality measurement for children, seeGlenna Crooks, Jack Meyer, and Nancy Bagby’s, Quality Health Care for Children in SCHIP: A Guidefor State Legislators (Washington, D.C.: New Directions for Policy, 1999).

27 Mitchell.28 Under fee-for-service health care arrangements, policy-makers and administrators are able to use

claims data to track health services. Managed care arrangements did away with sending claims after ser-vices were delivered and, thus, also did away with an easily available data source about health care servicesfor policy-makers. Collecting encounter data is designed to help policy-makers better track the services thatare performed for Medicaid recipients.


aggregate data through written annual or quarterly reports on certain kinds of information, suchas consumer complaints or financial information.

The most common types of data that states collect and review are:• utilization information• performance measures/quality indicators• health outcomes measures• enrollment/disenrollment figures• consumer satisfaction information• financial information (e.g., information on solvency)

This data can be collected in a number of ways, including through surveys or focus groupsof consumers, standardized reporting mechanisms (such as HEDIS data) or encounter data. Statescalculate performance measures themselves using encounter data, such as figuring some HEDISmeasures, or they may require plans to do the calculations.

A number of agents may collect or report data. Plans may report raw data directly to thestate, aggregate data directly to the state, or data to an independent auditor who sends it to thestate. In addition, an external reviewer may collect data and then send it to the state. Informationon health care encounters (i.e. physician office visits, outpatient procedures, or hospitalizations)that is passed to the states with minimal health plan intervention is generally considered to bemore reliable and credible. Data that has been independently verified is also considered morereliable than health plan self-reports.

❐ Reviewing and approving plans’ quality assurance/improvement programs— This is a requirement of the federal government for all Medicaid managed care programs, butthere is considerable variation in implementation and monitoring practices.

❐ External quality reviews — The federal government requires states to conduct an-nual external quality reviews of Medicaid managed care plans. States usually contract with a peerreview organization to serve as the external quality review organization (EQRO). EQROs mayreview medical records; conduct quality of care studies; review the validity of plan reports, datacollection procedures and reporting; and may perform other reviews as specified by the state.

❐ Random medical audits/chart reviews — States may require plans, EQROs, an-other third party contractor, or their own agency staff to conduct random quality of care and/orutilization reviews of Medicaid patients’ medical records. The procedures for conducting “random”reviews vary from state to state, with some states drawing a scientifically-sound random sampleand others using less rigorous methods.

❐ Focused quality of care reviews — States or EQROs conduct studies that assessthe quality of care provided by managed care plans and providers in treating certain conditionssuch as diabetes or asthma.

❐ Site visits — State staff or EQRO reviewers may conduct on-site reviews of plans’administrative procedures, record keeping, clinical care or other requirements.

❐ Provider feedback — States may use surveys, focus groups or other programs toelicit feedback from providers on a number of issues, including provider satisfaction with the planand provider assessment of plan performance and administration.

❐ Consumer satisfaction surveys — States may require plans to conduct phonesurveys or focus group surveys of plan members regarding satisfaction with care and other fea-tures of health plan performance. In addition, states may conduct their own surveys of Medicaidmanaged care recipients or have a contractor gather this information. The most commonly usedtool to collect this information is CAHPS (discussed above).

❐ Monitoring enrollment and disenrollment figures — States collect data onenrollment and disenrollment of plan members as a proxy measure for consumer satisfaction.

❐ Monitoring and investigation of complaints and grievances — States inves-tigate consumer complaints regarding plans, especially serious allegations of wrongdoing, as away to curb fraud and abuse. In addition, states often keep track of the number and types ofcomplaints made and use this a way to measure plan performance and consumer satisfaction.


❐ Dissemination of information to plan members about procedures andrights — Many states specify that plans make available to Medicaid enrollees user-friendly infor-mational materials, sometimes in different languages, regarding managed care procedures andpatients rights.

❐ Consumer participation on plan boards — In an effort to involve consumers andinsure that consumer rights are protected, some states require plans to have a certain number ofconsumer representatives on utilization review boards, grievance review boards or other planboards.

❐ Toll-free hotlines for complaints and grievances — States may specify thatplans provide and publicize a hotline for plan member complaints and questions. States may alsohave their own hotlines for consumers. The hotlines may be staffed only during business hours ormay be available 24 hours a day. Hotlines usually are toll-free.

❐ Advocate/ombudsman services — States may require that plans have an internalombudsman/consumer advocate, or states may hire their own ombudsman/consumer advocate,who can provide a range of services including advising Medicaid enrollees about plan procedures,handling complaints, providing consumer information and connecting individuals to services.

❐ Certification of plans — Virtually every state requires health plans to be licensed orcertified in order to conduct business in the state. However, some states have implementedquality assurance/improvement certification as a requirement for participation in state govern-ment health programs such as Medicaid.

❐ Accreditation of plans — Related to the above, some states require health plans toseek and receive accreditation from NCQA or another organization as a requirement for the plan toparticipate in state government health programs such as Medicaid. States that also provide qualitycertification for plans may accept accreditation in lieu of state-specific quality certification requirements.

It is important to remember that each state uses a combination of the above methods toassure quality care for its Medicaid beneficiaries. Furthermore, the practices listed may be carriedout in conjunction with one another. Annual external quality reviews, for instance, may includeon-site visits and involve random review of medical records as well as reviews of other health planreporting. Also important to remember is that many of these practices may be performed by astate agency, a health plan or other entity that contracts with the state agency responsible for theMedicaid program. For instance, states may have their own toll-free hotlines for complaints ormay require that plans have hotlines, or both. Finally, some of the practices may apply to privatemanaged care organizations as well as those that participate in Medicaid. An example of this is astate that has a complaint hotline for all managed care plan members, including those in Medi-caid. Each state has a unique mix of features in its quality assurance program for Medicaidmanaged care.

CONCLUSION

The Medicaid program has evolved tremendously since it began in 1965. The same costpressures that have changed the structure of the private health system have effected great changesin public health care systems as well. In just a few short years, the majority of Medicaid recipientshave been moved to managed care arrangements of one sort or another.

Yet the prospect of tremendous cost savings that attracted so many policy-makers to man-aged care arrangements for Medicaid beneficiaries has not been fulfilled in every case. In manystates there is still pressure to contain Medicaid costs and spending. Because Medicaid managedcare programs were originally started to control spiraling costs, the criticism that they containcosts at the expense of quality of care has never been far below the surface. States face thechallenge of creating mechanisms and processes for measuring the quality of care that Medicaidbeneficiaries receive and assuring that managed care organizations meet or exceed a minimumstandard of care for Medicaid beneficiaries. In the next chapter, the report examines in furtherdetail how each state has approached these challenges.


The previous chapter provided an overview of the Medicaidprogram since its inception, including the growth of managed careand the development of quality assurance programs for Medicaidmanaged care. This portion of the report turns to the question ofhow individual states attempt to measure, compare and assure thequality of care provided to beneficiaries under Medicaid managedcare.

The primary data for the following portion of the report areresponses to a survey that was sent to state executive agenciesresponsible for quality assurance/improvement programs for Medi-caid managed care. The Council of State Governments’ staff sentsurveys to state officials in early 1999. The survey asked respon-dents to answer both fixed response and open-ended questions.Survey questions asked respondents how their states measured

quality, on which types of quality measures data were collected, how states collected data, howoften states surveyed patients and providers, and how states protected patients’ rights. Surveyresponses provide the basis for the narrative description for each state. The information col-lected through CSG’s survey instrument was not verified by an independent source. However,officials were asked to review their state profile in October 1999 for accuracy and completeness.Appendix A contains a list of individuals who responded to The Council of State Governments’survey.

A few caveats about comparing the state profiles are necessary. It is difficult to comparestates’ quality assessment efforts due to factors that make each state’s Medicaid managed careprogram unique. As discussed in the previous chapter, each state has a unique mix of Medicaidpopulations and types of plans in its managed care programs. Any given state may have a few ormany types of managed care organizations, a mix of commercial and Medicaid-dominant plans,voluntary or mandatory enrollment in Medicaid managed care and a wide or narrow range ofpopulations (children, disabled individuals, the elderly, etc.) participating in Medicaid managedcare programs. Some states may have only one managed care program for all Medicaid benefi-ciaries (e.g., Arizona or Tennessee), while other states may establish several managed care pro-grams to accommodate the special needs of different target populations (e.g., Virginia’s Medallionprograms or North Carolina’s Access and Alternatives programs). A state that has only a primarycare case management program for its Medicaid population, for example, will usually requiremuch less of participating plans in terms of quality of care reporting than a state that relies almostentirely on risk-based managed care plans (e.g., HMOs). In addition, states that enroll specialneeds populations in managed care programs may require a good deal more reporting by plansto ensure that these populations receive quality care (see Table 1).

A factor that adds an additional level of complexity is the diversity of regulators involved inreviewing and collecting quality assurance data and reports. Among Medicaid programs in thestates, it seems that no two states position the program exactly the same way in the organizationalchart of state government. Some states locate it under the health department, some under hu-man services, and some under a joint health and human services department. The same is true ofthe regulation and oversight of managed care. Traditionally state insurance departments havebeen responsible for oversight of all insurance companies, but with the growth of managed careand the advent of Medicaid managed care, managed care plans have more agencies that oversee

Chapter 2: State Profiles of Medicaid Managed CareQuality Assurance/Improvement Efforts


ComprehensiveComprehensiveComprehensiveComprehensiveComprehensive Medicaid OnlyMedicaid OnlyMedicaid OnlyMedicaid OnlyMedicaid OnlyStateStateStateStateState HIOHIOHIOHIOHIO MCOMCOMCOMCOMCO MCOMCOMCOMCOMCO PCCMPCCMPCCMPCCMPCCM PHPPHPPHPPHPPHP OtherOtherOtherOtherOther EnrolleesEnrolleesEnrolleesEnrolleesEnrollees

Alabama 0 1 0 24 1 0 362,272Arizona 0 2 30 0 1 0 368,344Arkansas 0 0 0 1 1 0 186,215California 5 19 11 2 9 5 2,246,406Colorado 1 5 1 1 1 0 215,936

Connecticut 0 5 2 0 0 0 220,803Delaware 0 3 9 0 0 0 62,010District of Columbia 0 7 1 1 0 0 51,022Florida 0 16 0 1 1 0 915,554Georgia 0 2 0 1 2 0 673, 528

Hawaii 0 8 2 0 0 0 131,761Idaho 0 0 0 1 0 0 30,866Illinois 0 6 4 0 6 0 175,649Indiana 0 3 0 1 0 0 233,065Iowa 0 5 0 1 2 0 190,692

Kansas 0 2 1 1 0 0 84,437Kentucky 0 0 2 1 1 0 325,233Louisiana 0 0 0 1 0 0 40,729Maine 0 1 0 1 0 0 16,295Maryland 0 3 6 0 0 0 306,474

Massachusetts 0 1 11 1 0 0 532,971Michigan 0 15 11 1 0 0 752,568Minnesota 0 7 1 1 0 0 225,498Mississippi 0 4 0 1 0 0 153,562Missouri 0 7 4 0 0 0 252,097

Montana 0 2 0 1 1 0 66,331Nebraska 0 2 0 1 1 0 110,606Nevada 0 4 0 2 0 0 35,089New Hampshire 0 4 0 0 0 0 7,368New Jersey 0 8 2 0 0 0 376,839

New Mexico 0 3 0 0 0 0 193,818New York 0 21 17 1 8 2 634,233North Carolina 0 6 0 1 1 0 559,035North Dakota 0 1 0 1 0 0 22,045Ohio 0 11 2 0 0 0 292,819

Oklahoma 0 5 0 1 0 0 154,270Oregon 0 13 6 0 22 0 299,826Pennsylvania 0 5 5 2 3 0 904,701Puerto Rico 0 4 0 0 0 0 813,791Rhode Island 0 4 0 0 0 0 74,446

South Carolina 0 3 0 0 0 2 15,823South Dakota 0 0 0 1 0 0 43,834Tennessee 0 9 0 0 2 0 1,268,769Texas 0 6 5 1 0 0 437,898Utah 0 6 0 1 8 0 112,803

Vermont 0 2 0 0 0 0 52,153Virginia 0 6 0 1 0 0 299,266Washington 0 15 0 1 14 0 718,023West Virginia 0 3 0 1 0 0 131,349Wisconsin 0 18 3 0 6 2 194,874

TOTALS 6 283 136 58 91 11 16,573,996Note: The number of enrollees includes individuals enrolled in state health care reform programs that expand eligibility

beyond traditional eligibility standards. Alaska, Guam, U.S. Virgin Islands and Wyoming are not includedbecause they do not have Medicaid managed care programs.


Table 1: Medicaid Managed Care Plan Types and Enrollment by State, 1998


their activity. Every state has chosen to deal with the overlapping regulatory jurisdictions ofMedicaid and managed care in its own way.29 In terms of quality assurance/improvement over-sight and reporting for Medicaid managed care plans, some states have quality assurance staffwithin the Department of Health who are responsible for collecting data and providing oversight;others choose to keep quality assurance for Medicaid managed care within the Medicaid pro-gram. States may also have dual quality of care reporting for managed care plans or may requiresome collaboration between agencies.30

In addition to the above considerations, one must also recognize that each state’s qualityassurance/improvement program possesses different goals and values that determine the datathat is collected and the degree of data specification. For instance, a large, sparsely populated,predominantly rural state with a large low-income elderly population may want to examine theincidence and treatment of high-blood pressure and heart disease in its elderly Medicaid popula-tion and thus will require plans to report measures to that effect. A smaller, urban state with aMedicaid managed care program targeting young children will have a very different focus. Thereare wide variances between quality assurance initiatives and in the data that is collected due to thepolitical, social, geographic and cultural factors that shape the goals of a Medicaid managed careprogram in a given state.

All of the factors above influence greatly the type of quality assurance programs statesinstitute for Medicaid managed care. Although the comparability of performance measures acrossplans and across borders is being addressed by organizations such as NCQA through HEDIS datacollection and reporting, many issues continue to make comparisons difficult. Policy-makersneed to bear in the mind the differences between programs so that they can make effectivecomparisons.

However, while it remains difficult to compare Medicaid managed care programs and plansacross state lines, the question of what level of regulation is necessary to ensure quality care is asurgent as ever. And, although regulation may be perceived as onerous and costly to some, stategovernment regulation is still one of the most important lines of defense in protecting the qualityof care that consumers receive.31

Some additional notes of clarification need to be made about the profiles. First, Alaska,Guam, the U.S. Virgin Islands, and Wyoming are not included because they do not have Medic-aid managed care programs. Next, commonly used terms are abbreviated in the profiles to avoidrepetition. Abbreviations in the profiles stand for:

CAHPS = Consumer Assessment of Health Plans SurveyEPSDT = Early and Periodic Screening and Diagnostic TestingEQRO = External Quality Review OrganizationHEDIS = Health Plan Employer Data and Information SetHMO = Health Maintenance OrganizationMCO = Managed Care OrganizationPCCM = Primary Care Case ManagementQARI = Quality Assurance Reform InitiativeQISMC = Quality Improvement System in Managed Care

Finally, standard terms are used as much as possible across profiles. However, in somecases specific language was necessary due to the language used in a survey response. The readeris encouraged to use the glossary in Appendix B for explanation of any unfamiliar terms.

________________________29 For specific information on how states divide oversight responsibility for managed care, see the

recently released report from the Reforming States Group and the Milbank Memorial Fund, TrackingOversight of Managed Care (New York: Milbank Memorial Fund, 1999).

30 Maureen Booth and Anya Rader, Quality Oversight in Managed Care: The Role of InteragencyCoordination (Portland, Maine: National Academy for State Health Policy, 1999).

31 Alice Gosfield, “Who Is Holding Whom Accountable for Quality?” Health Affairs, May/June1997, Vol. 16, No. 1, pp. 26-40.


Alabama

For its Medicaid managed care program, the state of Alabama defines quality of care prima-rily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to careAlabama uses EQROs and periodic medical audits to measure the quality of care provided

to Medicaid managed care enrollees. Additionally, Alabama collects data on quality of care throughonce or twice yearly surveys of Medicaid recipients, site visits and dialogue with managed careorganizations. In addition, the state is developing plans to survey providers on quality of careissues through report card reviews. Alabama seeks to protect patient rights through membersatisfaction surveys, the complaint/grievance system, hotline access, and medical record reviews.

Arizona

For its Medicaid managed care program, the state of Arizona defines quality of care primarilyin terms of :

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Patient access to care• Physician evaluations• Provision of preventative servicesArizona collects performance measures based on HEDIS 3.0. In addition, Arizona recently

completed a large satisfaction survey of Medicaid enrollees. Patient satisfaction surveys will beperformed biennially. Health plans are also required to perform member satisfaction surveys.Arizona performs annual on-site reviews of both health plans and program contractors andmonitors its provider network quarterly. Arizona also completed its first statewide survey of physi-cians and plans to perform this survey biennially as well. Arizona investigates all quality of carecomplaints received by the Arizona Health Care Cost Containment System (AHCCCS) and moni-tors during its site visits the health plans’ responses to quality of care complaints. The state alsorequires health plans to provide a summary of grievances received and appealed by subject.Arizona gathers encounter data, in addition to using Medicaid recipient surveys, physician surveys,site visits and dialogue with managed care plans to collect data on quality of care.

(See Chapter 3 for more information on Arizona’s quality assurance program.)

Arkansas

For its Medicaid managed care program, the state of Arkansas defines quality of care pri-marily in terms of:

• Patient satisfaction with care• Patient access to care• Physician evaluations• Provision of preventative servicesArkansas’ Medicaid managed care program follows a primary care case management model;

there are no risk-based managed care plans available under Arkansas’ Medicaid program. Inappraising Medicaid managed care quality, Arkansas employs medical chart audits, consumersurveys, disease status analysis, and immunization and preventative care utilization. Arkansasconducts surveys of Medicaid managed care recipients for satisfaction with the quality of carethey receive one to two times per year. The state also conducts physician surveys one to twotimes per year. In addition, Arkansas contracts with an EQRO to gather both clinical and admin-


istrative measurements of the quality of managed medical care and analyzes paid claims data.Additional Survey Comments: We contract with an EQRO for both clinical and adminis-

trative measurements for managed medical care and have found it helpful to both recipientsand the provider community. Providers, in turn, feel the EQRO products are more usefulthan [the ones] they receive from HMOs, etc.

California

For its Medicaid managed care program, the state of California defines quality of careprimarily in terms of:

• Comparative performance• Patient satisfaction with care• Patient access to care• Provision of preventative servicesThe Division of Audits & Investigations of the California Department of Health Services

(CDHS) conducts annual medical audits of the care Medicaid recipients receive under managedcare. Managed care plans must conduct their own quality improvement projects; an EQRO re-views them. California collects HEDIS measures data through an NCQA certified auditor andtracks encounter data using a Management Information and Decision Support System (MIS/DSS) as well as beneficiary complaints to the state’s Ombudsman. Using these data, the CDHSmonitors trends in the quality of care provided. In 1999, California used CAHPS to surveyMedicaid managed care recipients and will perform these surveys every other year. Californiaalso performs site visits and maintains open communication with managed care plans. Californiaattempts to protect patients’ rights through its contracts with plans as well as through reviews ofgrievance and complaint records, informational materials for consumers from health plans, andoperational procedures of the plans.

Colorado

For its Medicaid managed care program, the state of Colorado defines quality of care pri-marily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Physician evaluations• Provision of preventative servicesColorado conducts focused studies of medical records to study the quality of health care

provided, provider surveys to measure access issues, and HEDIS measure calculations for allMedicaid programs. Colorado measures client satisfaction through annual member surveys andthrough complaint monitoring. The state tries to maintain open communication with HMOs andmakes annual site visits to monitor HMOs’ compliance with the Medicaid contract.

Additional Survey Comments: Working collaboratively with HMOs is important. Statesmust understand the pull of NCQA for HMOs and attempt to develop complementary sys-tems. In addition, medical record review, which is the closest look possible at quality of care,should not be overlooked or replaced entirely with other kinds of measures.

Connecticut

For its Medicaid managed care program, the state of Connecticut defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care


• Attention to patient rights• Patient access to careConnecticut collects data through the use of the CAHPS satisfaction survey. In addition,

Connecticut monitors complaints, utilization data, and audits by an EQRO to determine thequality of care. Connecticut also collects data on quality through site visits, complaints, hearingsand dialogue with managed care plans.

Additional Survey Comments: What counts are outcomes and health status of the popu-lation, but it does not seem that there is a strong relationship between payment method andoutcomes or health status. Other factors such as environment play a role. Processes of caremust also be considered. In the Medicaid context, one should probably focus on childrenwith special needs, the disabled and the frail elderly.

Delaware

For its Medicaid managed care program, the state of Delaware defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Patient access to care• Provision of preventative servicesDelaware contracts with an EQRO to perform focused and individual studies on selected

criteria. Managed care plans provide monthly utilization reports to the state as well as monthlygrievance and appeals reports. The state conducts consumer satisfaction surveys of Medicaidrecipients in managed care annually, conducts direct on-site visits, reviews grievances and ap-peals records, and maintains open dialogue with managed care plans. Delaware uses CAHPS tosurvey Medicaid recipients. Managed care plans use 10 questions from Delaware’s survey whenthey do their own annual surveys.

Additional Survey Comments: There is still a need for comparative performance mea-sures, HEDIS notwithstanding. Particular needs are in the areas of mental health and sub-stance abuse.

District of Columbia

For its Medicaid managed care program, the District of Columbia defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesCredentialing and utilization review are used by the District to assess quality of care. The

District also surveys Medicaid recipients one to two times annually, reviews submitted measuresand reports from managed care plans, tracks individual complaints and their resolution and per-forms focused studies. In addition, an EQRO performs medical chart reviews as well as reviews ofthe administrative systems of managed care plans to assess the quality of care provided. Medicalchart reviews of the quality of care that physicians provide are performed one to two times a year.

Florida

For its Medicaid managed care program, the state of Florida defines quality of care primarilyin terms of:


• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesFlorida examines preventative health care measures such as immunization rates, screening

rates and prenatal care, among others. In addition, utilization of various services and inpatientreadmission rates are reviewed. Florida conducts site visits, analyzes claims data, and monitorscomplaints and the grievance process. Every two years an independent evaluation of the state’sMediPass Program is performed in which consumer satisfaction surveys are conducted (for bothenrollee and provider satisfaction). Findings are reported in the independent evaluation.

Georgia

For its Medicaid managed care program, the state of Georgia defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Provision of preventative servicesGeorgia measures the quality of care Medicaid managed care enrollees receive through

random medical record reviews, disease-specific medical record reviews (e.g., asthma and diabe-tes), collection and analysis of claims and encounter data, site visits to managed care plans, andmonitoring of patient complaint patterns and trends. In addition, Florida surveys enrollees in itsPCCM program one to two times per year, and physicians that participate in the PCCM programare surveyed every two years. Each MCO is required to conduct periodic satisfaction surveys andto include information on patients’ rights in their member handbooks. Managed care plans alsomust distribute the information on patients’ rights to providers.

Hawaii

For its Medicaid managed care program, the state of Hawaii defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesHawaii collects information on various HEDIS measures from managed care plans and

conducts on-site reviews of medical records and logs of complaints, grievances and appeals fromconsumers and providers. The state also monitors managed care plans on 16 QARI standards toensure that quality care is provided and that patients’ rights are protected. In addition, the staterequires all managed care plans to have a quality improvement program and reviews the qualityimprovement programs of managed care plans to ensure that the programs are operational.Consumer satisfaction surveys are conducted one to two times a year and physicians are surveyedone to two times a year.


Idaho

For its Medicaid managed care program, the state of Idaho defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Patient access to careIdaho plans to review the quality of care Medicaid managed care enrollees receive through

a claims processing system. The state surveys Medicaid enrollees in managed care on the qualityof care they receive one to two times annually. In addition, the state Medicaid agency tries tomaintain an open dialogue with primary care providers on quality of care issues and provides ahotline for Medicaid recipient complaints.

Illinois

For its Medicaid managed care program, the state of Illinois defines quality of care primarilyin terms of:

• Patient health outcomes• Patient satisfaction with care• Patient access to care• Provision of preventative services Illinois has a voluntary Medicaid managed care program. The Department of Public Aid

and a quality assurance contractor monitor the ongoing quality of care patients receive as well asmanaged care plans’ implementation of their own quality assurance programs and compliancewith contract requirements. Illinois monitors preventative services (e.g., prenatal care, adult pre-ventative care, and EPSDT) and also collects information on certain indicators (e.g., HEDISmeasures, immunization status) and on utilization of services (e.g., ambulatory, sensitive hospital-izations). The quality assurance organization also reviews selected medical records. The statedoes not directly survey Medicaid managed care enrollees, but it does collect and address com-plaints it receives through its hotline on an ongoing basis. Annual customer satisfaction surveysare performed by the managed care plans. In addition, managed care plans survey reimbursedphysicians on an annual basis, in compliance with their contract and with the Physician IncentivePlan (PIP). In order to protect patient rights, managed care plans are required to publish patients’rights and responsibilities in compliance with state requirements.

Additional Survey Comments: In order to identify quality of care provided in the man-aged care environment and outcomes of ongoing quality improvement, length of enrollmentin the managed care organization must be taken into consideration and baseline data forcomparison for the fee-for-service delivery system must be established.

Indiana

For its Medicaid managed care program, the state of Indiana defines quality of care prima-rily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Patient access to care• Physician evaluations• Provision of preventative servicesIndiana uses focused studies and patient satisfaction surveys to measure the quality of care

provided by managed care plans. Indiana also tracks the number of patients who change plansdue to quality of care concerns. The state seeks to maintain open dialogue with stakeholders byholding monthly quality improvement committee meetings to discuss quality issues. Attendees


include MCOs, Medicaid agents, enrollment brokers, the state department of health, and anEQRO contractor. The state collects data on HEDIS and other quality indicators. Patient satisfac-tion surveys are conducted annually and physicians are surveyed annually. The state also receivesinformation, complaints and comments from enrollees through its toll-free helpline and throughMCO hotlines. Indiana reviews physician incentive plan reports, complaints and grievances andMCO reports quarterly. In addition, the state conducts on-site and desk review audits as part of areadiness review for new MCO contracts.

Iowa

For its Medicaid managed care program, the state of Iowa defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesIowa collects quality of care information in a number of ways, including through outcome

studies, recipient surveys, EPSDT/immunization reports, EQRO assessments, utilization reports,physician surveys and on-site HMO visits. The state surveys both managed care recipients andphysicians one to two times per year. In an effort to protect patients’ rights, Iowa reviews allcomplaints and grievances, requires all managed care plans to include patient rights and respon-sibilities in member handbooks and gives recipients the right to appeal decisions with the Depart-ment of Human Services.

Kansas

For its Medicaid managed care program, the state of Kansas defines quality of care primarilyin terms of:

• Patient health outcomes• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluationsKansas conducts surveys of Medicaid managed care participants one to two times per year.

In addition, the state performs site visits, surveys physicians, and seeks to maintain open dialoguewith managed care plans. Kansas will begin monitoring patient rights in 1999 using QISMCstandards which include CAHPS and HEDIS measures.

Kentucky

For its Medicaid managed care program, the state of Kentucky defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Physician evaluations• Provision of preventative servicesKentucky also uses HEDIS measures to assess quality and has adopted QISMC standards.

The state collects quality of care data through site visits, encounter data, regular plan reporting,and dialogue with managed care plans. In addition, Kentucky surveys both Medicaid recipients


and physicians annually. Kentucky requires plans to seek accreditation within three to five yearsand offers financial incentives to plans that achieve improvements in certain health outcomes. Toprotect patient rights, Kentucky conducts on-site reviews and monitors reporting as well as com-plaints and grievances. Kentucky also utilizes clinical studies and public health data to measurethe quality of care provided by managed care plans.

Additional Survey Comments: We have our HEDIS baselines (pre-managed care) andexpect to receive the reports from plans early in the year 2000.

Louisiana

For its Medicaid managed care program, the state of Louisiana defines quality of careprimarily in terms of:

• Patient health outcomes• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluationsIn addition, Louisiana monitors immunization status data, conducts utilization review, and

conducts focus studies of prenatal care, pediatric asthma, and screenings for breast and cervicalcancer. Louisiana collects data about quality through recipient satisfaction surveys, surveys ofphysicians, site visits, medical record reviews, rates of service provision and EPSDT participationreports. Recipients and physicians are surveyed every other year.

Maine

For its Medicaid managed care program, the state of Maine defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Patient access to care• Physician evaluations• Provision of preventative servicesMaine uses a Primary Care Provider Incentive Program (PC-PIP) that provides quarterly

incentives based on encounter data and claims. Maine’s PC-PIP program compares, for ex-ample, emergency room visits, EPSDT and well child visits for physicians within a specialty andscores them. The program is currently being validated by an EQRO. In addition, Maine reviewsand tracks complaints, conducts special studies of certain types of care (e.g., smoking cessationprograms, psychiatric in–patient stays, inappropriate emergency room visits), and has developedrecipient and provider surveys specific to the Maine Medicaid program. The state also reviewsmedical records, claims and encounter data and conducts site visits of primary care providers andpsychiatric care recipients under 21 years of age. Currently, Maine uses patient satisfactionsurveys only for specific types of care but is developing a general survey of Medicaid managedcare recipients. Maine currently surveys physicians in its PC-PIP program quarterly. To protectpatients’ rights, Maine relies on licensing agencies to review complaints about facilities and pro-viders. Maine’s Surveillance and Utilization Review program, although one of the smallest unitsnationwide, has recouped millions of dollars.

Additional Survey Comments: We are currently developing a credentialing and recre-dentialing program for all Maine Medicaid providers.

Maryland

For its Medicaid managed care program, the state of Maryland defines quality of care pri-marily in terms of:


• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesMaryland collects data on quality of care through medical record reviews, EQRO reviews,

on-site reviews, complaint line calls, and satisfaction surveys of patients and physicians. Mary-land administers the CAHPS survey one to two times annually to measure consumer satisfactionand surveys physicians annually as well.

Massachusetts

For its Medicaid managed care program, the state of Massachusetts defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Risk adjusted lengths of stay (in development)• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesMassachusetts collects HEDIS measures annually, conducts a survey of Medicaid managed

care members annually, holds a semi-annual contract status meeting to support goal measure-ment, provides profiles of providers, and analyzes cost and utilization data. In addition, Massa-chusetts seeks to maintain dialogue between the state and PCC providers through semi-annualsite visits and collection of encounter data. The state monitors service utilization and plan perfor-mance on selected goals. Massachusetts surveyed physicians approximately three years ago.Massachusetts also seeks to protect patients through its oversight of contracts with capitatedplans and providers.

Additional Survey Comments: Most quality of care measurement is driven by commer-cial needs (i.e., HEDIS). More attention must be paid to the unique/challenging health needsof Medicaid members.

Michigan

For its Medicaid managed care program, the state of Michigan defines quality of care pri-marily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Patient access to care• Physician evaluations• Provision of preventative servicesMichigan uses several methods to assess the quality of care in its Medicaid managed care

program, including external quality review, HEDIS data, monitoring of compliance and grievancedata, an encounter data system (under implementation), provider report cards, annual consumersurveys and quarterly utilization reports. Michigan collects data during site visits, external review,and through required reporting (e.g., EPSDT). In addition, Michigan has participated in focusedquality of care studies, for instance, in a demonstration project to assess and improve care to thedisabled. Michigan protects patients’ rights through the use of a hotline for recipients, review of


complaints and grievances and contract compliance monitoring.Additional Survey Comments: Valid and reliable measurements of quality of clinical

care continue to rely on medical record abstraction, which is labor intensive, costly andproduces data [only] at annual intervals. Michigan is working with Medicaid managed careplans to develop an encounter data system in order to evaluate the quality of care on acontinuous basis.

Minnesota

For its Medicaid managed care program, the state of Minnesota defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Provision of preventative servicesUnder its quality assurance and management program for Medicaid managed care, Minne-

sota requires annual consumer satisfaction surveys, HEDIS reporting, EQRO studies and enounterdata reporting. Minnesota also monitors complaints and grievances and conducts site visits tomaintain open dialogue with managed care plans. An interagency agreement between the De-partment of Human Services and the Department of Health allows collection of selected utiliza-tion, quality of care and access data as well as quality assurance and financial solvency audits.Minnesota seeks to protect patient rights by monitoring complaints and appeals and reportingproblems identified from telephone hotlines. Patient rights are monitored during quality assur-ance audits when access to specialists, continuity of care and disclosure of patient protectioninformation are reviewed.

Additional Survey Comments: Collection, analysis and reporting on selected HEDISperformance measures to verify quality improvement programs of managed care plans areoperational. Results of effectiveness of care measures are published for public distribution.

Mississippi

For its Medicaid managed care program, the state of Mississippi defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Risk adjusted mortality rates• Patient satisfaction with care• Patient access to care• Provision of preventative servicesMississippi collects data on quality of care through annual surveys of Medicaid managed

care recipients, site visits, surveys of physicians and analysis of encounter data.

Missouri

For its Medicaid managed care program, the state of Missouri defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations


• Provision of preventative servicesMissouri uses maternal, child and hospitalization data from the Department of Health, data

reported from health plans, annual consumer satisfaction surveys, focused studies by internalclinical staff and independent review to obtain quality of care information. In addition, Missouriconducts site visits, maintains an open dialogue with managed care plans, and conducts periodicsurveys of physicians to gather quality of care data. Medicaid managed care enrollees receiveinformation on their rights as patients in health plan member handbooks. The state also moni-tors consumer satisfaction through surveys and review of complaints and grievances.

Montana

For its Medicaid managed care program, the state of Montana defines quality of care prima-rily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Patient access to care• Provision of preventative servicesIn its Primary Care Case Management cases, Montana conducts quarterly grievance re-

views, analysis of field staff surveys, 24-hour access reports, recipient surveys, change of pro-vider reports, utilization of peer review committees and analysis of quality assurance activityreports. For its enrollees in HMO plans, Montana requires managed care organizations to con-duct a quarterly review of grievances and HEDIS measures (especially availability of primary careproviders and enrollment by payor) and to collect annually a report on thirteen HEDIS measures.Montana surveys Medicaid recipients quarterly regarding quality of care concerns and seeks tomaintain open communications with managed care plans.

Nebraska

For its Medicaid managed care program, the state of Nebraska defines quality of careprimarily in terms of:

• Patient health outcomes• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesNebraska collects data on quality of care from surveys of Medicaid recipients, surveys of

physicians, site visits, dialogue with managed care plans, external quality reviews and indepen-dent assessments. Nebraska surveys Medicaid recipients and physicians one to two times peryear. In addition, client participation is encouraged in quality improvement committees, focusgroups, administration of client surveys and other activities.

Nevada

For its Medicaid managed care program, the state of Nevada defines quality of care prima-rily in terms of:

• Comparative performance• Risk adjusted mortality rates• Risk adjusted lengths of stay• Patient satisfaction with care• Attention to patient rights• Patient access to care


• Provision of preventative servicesNevada collects information on the quality of care that Medicaid recipient receive through

surveys of Medicaid recipients, surveys of physicians, site visits and open dialogue between thestate and managed care plans. Nevada conducts surveys of Medicaid recipients one to two timesa year. In addition, Nevada seeks to protect patients through MCO grievance procedures and afair hearing process.

New Hampshire

For its Medicaid managed care program, the state of New Hampshire defines quality ofcare primarily in terms of:

• Patient health outcomes• Patient satisfaction with care• Patient access to care• Provision of preventative servicesNew Hampshire has a voluntary managed care program for Medicaid recipients. Two man-

aged care plans provide services to Medicaid recipients and the plans are required to have qualityimprovement programs. New Hampshire uses HEDIS indicators. It collects quality of care datathrough surveys and reports from managed care plans, monitoring disenrollment and providerchanges, process assessment and medical record reviews during on-site visits, and EQRO focusedquality studies. New Hampshire has used CAHPS to survey Medicaid recipients concerning quali-ty of care issues; surveys of Medicaid recipients occur one to two times a year. In addition, allvoluntary disenrollments are surveyed on reasons why they left the managed care plan. The stateis currently looking at provider survey tools for future development and use. New Hampshire alsorequires plans and providers to advise enrollees of their rights through marketing materials.

Additional Survey Comments: As New Hampshire moves forward with its objective totransition a major portion of its Medicaid population into managed care, an aggressive moni-toring strategy is being developed. Elements/tools of this plan will be performance-basedcontracting, site visits to evaluate and improve administrative and care processes, increasedconsumer input and an enhanced information system.

New Jersey

For its Medicaid managed care program, the state of New Jersey defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patients rights• Patient access to care• Physician evaluations• Provision of preventative servicesNew Jersey measures quality through review of managed care plans’ complaint investiga-

tion, site visits to review documentation of operational activities, annual assessments, analysis ofquarterly reports filed by plans (which include information on member enrollment/disenrollment,complaints, finances and loss ratios), member and provider satisfaction surveys, provider avail-ability checks, medical record reviews, and focused studies of services such as prenatal care,EPSDT, lead screenings and immunizations. New Jersey conducts satisfaction surveys of mem-bers and providers one to two times per year. In addition, New Jersey protects patients by itsevaluation of member surveys, investigation of complaints, review and approval of member hand-books and other marketing materials, as well as review of plans’ quality assurance meeting min-utes, agendas and attendance sheets. New Jersey is currently conducting a comparison of care ofMedicaid asthma patients under fee-for-service versus managed care arrangements.


New Mexico

For its Medicaid managed care program, the state of New Mexico defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesNew Mexico collects quality of care data through annual comprehensive on-site audits,

periodic on-site visits, HEDIS reporting, annual comprehensive member and provider satisfac-tion surveys, and encounter data as well as through quarterly reports on access, member services,grievances and utilization management denials.

New York

For its Medicaid managed care program, the state of New York defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesNew York conducts on-site reviews of managed care plans, collects encounter data, monitors

quality assurance reporting, requires reporting of utilization and access measures (based on HEDIS),and conducts clinical studies. The state surveys Medicaid recipients enrolled in managed careevery other year on their satisfaction with the care they receive. New York uses electronic sub-mission for managed care plan reporting. New York has developed regional Medicaid consumerguides and has initiated formal procedures to assist plans with quality improvement. In addition,New York has incorporated the results of quality reporting into the review tool that the department’ssurveyors use during on-site visits.

(See Chapter 3 for more information on New York’s quality assurance program.)

North Carolina

For its Medicaid managed care program, the state of North Carolina defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesNorth Carolina has developed a Quality Management Plan that includes various strategies

to measure quality such as focused care studies, patient satisfaction surveys, utilization monitor-ing, HEDIS reporting, complaint monitoring and contract compliance monitoring. Data on qual-ity of care is collected through surveys of Medicaid recipients and physicians, site visits andcontinual open communication with managed care plans. In 1999, North Carolina planned to


implement the CAPHS survey for Medicaid recipients and to repeat the survey every two years.North Carolina also plans to survey physicians every two years. In addition to the above

requirements, the state protects patients through written materials about patient rights.

North Dakota

For its Medicaid managed care program, the state of North Dakota defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesNorth Dakota collects data on quality of care through annual surveys of Medicaid recipients,

surveys of physicians, site visits, and quality reports from managed care plans. In addition thestate reviews immunization rates, well child check-ups, mammograms, pap smears, influenzaimmunizations, and focused clinical studies. Information on patients’ rights is included in MCOhandbooks.

Ohio

For its Medicaid managed care program, the state of Ohio defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Provision of preventative servicesOhio conducts certain quality of care clinical studies annually, identifies clinical perfor-

mance measures, analyzes encounter data and utilization reports, conducts satisfaction surveys,monitors complaints and grievances and monitors voluntary disenrollment figures. Data is col-lected through annual enrollee surveys, toll-free hotline calls, site visits, dialogue with managedcare plans, and reports submitted to the state by the managed care plans. Annual consumersatisfaction surveys are conducted by managed care plans. The state also performs its own con-sumer satisfaction survey using a CAHPS-like instrument. Ohio further protects patient rights bymonitoring MCO compliance with access to services, grievance and hearing procedures, mem-ber services, as well as other enrollee protection initiatives.

Additional Survey Comments: Ohio has comprehensive quality of care oversight of theMedicaid managed care program. The state continues to build on its experience, utilizes datafrom multiple sources, and takes active steps to improve and assure data integrity. StateMedicaid managed care programs are diverse and generally not comparable due to uniqueprogram differences and distinctive geographical, provider and population [characteristics].

Oklahoma

For its Medicaid managed care program, the state of Oklahoma defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights


• Patient access to care• Provision of preventative servicesOklahoma uses standards and data collection tools such as QARI/QISMC, HEDIS and

CAHPS to measure the quality of care under Medicaid managed care. In addition to the above,Oklahoma collects quality of care data through site visits and dialogue with managed care plans.Oklahoma surveys Medicaid managed care enrollees one to two times per year.

Additional Survey Comments: QARI, which has been replaced by QISMC, provides com-prehensive standards for monitoring quality of care for Medicaid and Medicare managedcare programs. CAHPS and HEDIS provide industry standards for collecting necessary in-formation or data to QARI/QISMC documentation.

Oregon

For its Medicaid managed care program, the state of Oregon defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesOregon uses functional status measures, quality auditing, site reviews, analysis of access

complaints, chart audits, plan reporting to the state, health status surveys and surveys of Medi-caid recipients to collect data on the quality of care in Medicaid managed care programs. Inaddition, an EQRO does focused studies. The state surveys of Medicaid recipients annually orbiennially depending on the population (disabled, children with special health needs, etc.), andplans also survey Medicaid recipients. In collaboration with health plans, Oregon completed aCAHPS survey in 1999. Oregon seeks to protect patient rights through analysis of patient com-plaints and hearings, evaluation of informational materials, and on-site review of plans.

Additional Survey Comments: [Oregon] has a joint project between dental and healthplans called Project: PREVENTION. It sponsors prevention projects and monitors theirprogress. In 1999, tobacco cessation is the statewide project and the focus will be to ask,advise, assist and arrange. Results will be “measured” through HEDIS performance measuresand chart reviews. Measuring quality is easier said than done. Tremendous investments intime and resources are required. We are trying to balance demands for measurement againstdirect patient care. The plans are increasingly upset by greater demands on their administra-tion from the state, HCFA, QISMC and NCQA. None of the standards is identical.

Pennsylvania

For its Medicaid managed care program, the state of Pennsylvania defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Risk adjusted lengths of stay• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesPennsylvania measures the quality of care provided by Medicaid managed care plans through

the use of an EQRO, mandatory HEDIS reporting, individualized focused studies, annual mem-


ber satisfaction surveys, site visits to plans, open communication with managed care plans, andmonitoring of member complaints and grievances. In addition, Pennsylvania seeks to protectpatients’ rights through monitoring of denial notices, grievances and appeals as well as throughreview of client rights statements.

Puerto Rico

For its Medicaid managed care program, Puerto Rico defines quality of care primarily interms of:

• Comparative performance• Risk adjusted lengths of stay• Patient satisfaction with care• Physician evaluations• Provision of preventative servicesPuerto Rico monitors the availability of practitioners and access to care, as well as the

appropriateness, timeliness and cost of services. An EQRO conducts most of the quality reviewactivities required by Medicaid. Quality of care data is collected through site visits, dialogue withMCOs, and monthly and quarterly reports from MCOs. Puerto Rico contracts with another orga-nization to conduct annual surveys of Medicaid recipients. Puerto Rico also provides a toll-freehotline for beneficiaries and providers, monitors complaints and grievances, and conducts inves-tigations. A pilot project through the Robert Wood Johnson Foundation with the input of NCQAis underway to implement HEDIS and establish standardized quality and utilization measures forMCOs in Puerto Rico.

Rhode Island

For its Medicaid managed care program, the state of Rhode Island defines quality of careprimarily in terms of:

• Member health outcomes• Comparative performance• Member satisfaction with care• Attention to patient rights• Member access to care• Physician evaluations• Provision of preventative servicesRhode Island uses health plan encounter data as well as health plan data such as HEDIS and

other performance measures. Special focus studies are conducted by the state. In addition, thestate reviews studies conducted by managed care plans, surveys Medicaid recipients, conductssite visits, and maintains open dialogue with managed care plans. Member satisfaction surveysare conducted one to two times per year.

South Carolina

For its Medicaid managed care program, the state of South Carolina defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Provision of preventative servicesSouth Carolina collects encounter data, HEDIS measures and quality indicators. This data

is gathered through site visits, annual external reviews by a peer review organization, utilizationreports and quarterly quality indicator reports. The state also uses quality of care studies to


monitor quality. South Carolina does not currently survey Medicaid recipients on the quality ofcare they receive but the state plans to implement such a survey in the future.

South Dakota

For its Medicaid managed care program, the state of South Dakota defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Patient access to care• Physician evaluations• Provision of preventative servicesSouth Dakota uses reviews by peer review organizations, focused clinical studies, patient

satisfaction surveys, medical record reviews, provider profiles and grievance reviews to deter-mine the quality of care provided to Medicaid recipients in managed care. South Dakota surveysMedicaid recipients and providers one to two times per year.

Tennessee

For its Medicaid managed care program, the state of Tennessee defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Risk adjusted mortality rates• Patient satisfaction with care• Patient access to care• Physician evaluations• Provision of preventative servicesTennessee’s Quality Monitoring Program monitors and evaluates the quality of care mem-

bers receive through quality of care studies, EPSDT medical record reviews, surveys of Medicaidmanaged care recipients, site visits, continual open dialogue with managed care plans, and reviewof claims and encounter data. Surveys of Medicaid recipients are conducted one to two times per year.

Texas

For its Medicaid managed care program, the state of Texas defines quality of care primarilyin terms of:

• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesThe Texas Health Quality Alliance serves as a quality monitor for health care. It conducts

member and provider satisfaction surveys, conducts annual on-site visits with managed careplans, and analyzes MCO reports. Besides using member surveys, Texas seeks to protect patientrights by monitoring managed care plans compliance with QARI guidelines. Texas also receivesHEDIS reports from all HMOs in the state.

Utah

For its Medicaid managed care program, thestate of Utah defines quality of care primarilyin terms of:


• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Provision of preventative servicesTo measure the quality of care, Utah uses annual on-site reviews of plans’ documentation,

policies and procedures, program development, and education programs as well as HEDIS per-formance measure reports and annual Medicaid recipient surveys. In addition, Utah protectspatient rights through annual monitoring of enrollee rights and responsibilities and through on-going grievance reporting and review.

Vermont

For its Medicaid managed care program, the state of Vermont defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Provision of preventatives servicesRule 10, a state regulation, established Vermont’s reporting requirements. They include

HEDIS measures, CAHPS and some state-specific measures. Vermont conducts EQRO studiesof chronic pediatric asthma, diabetes, childhood immunizations, diagnosis and treatment of af-fective disorder, and high-risk pregnancy. Data on quality of care is collected through annualsurveys of Medicaid recipients, site visits, dialogue with managed care plans and analysis ofEQRO data.

Virginia

For its Medicaid managed care program, the state of Virginia defines quality of care primarilyin terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesVirginia compares MCO service delivery to fee-for-service and primary care case manage-

ment service delivery. The state monitors complaints, disenrollment figures, and plan charges. Inaddition, the state conducts annual client satisfaction surveys and independent assessment sur-veys of physicians for its 1915 waivers. Managed care plans in Virginia must have or be inpursuit of NCQA accreditation and are also required to obtain a certificate of quality from theDepartment of Health by July 2000. Both NCQA accreditation and Virginia’s certification con-tain standards for protection of patient rights.

(See Chapter 3 for more information on Virginia’s quality assurance program.)

Washington

For its Medicaid managed care program, the state of Washington defines quality of careprimarily in terms of:


• Patient health outcomes• Comparative performance• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesWashington monitors structural elements at the health plan level and examines the follow-

ing to determine the quality of care in Medicaid managed care: HEDIS measures reported byplans, external review of preventative health care provided to women and children, client surveysusing CAHPS and interview projects, site visits to plans and analysis of birth outcomes. Quality ofcare data is collected through surveys of Medicaid recipients and participating physicians, sitevisits, continual dialogue with managed care plans, chart reviews, HEDIS reports, requests forproposals prior to contracting, and a database of birth information. Washington conducts Medi-caid recipient surveys one to two times a year and, in conjunction with a pilot project with theUniversity of Minnesota, surveys physicians as well. Washington seeks to protect Medicaid pa-tients’ rights through pre-contracting arrangements, its request-for-proposal process and its qual-ity improvement standards which are modeled after NCQA’s standards.

Additional Survey Comments: Currently, we are working on reporting quality of careinformation to clients in order to support their choice of a health plan. We are working withOregon on how to report survey findings to clients with limited English speaking ability.

West Virginia

For its Medicaid managed care program, the state of West Virginia defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Patient satisfaction with care• Patient access to care• Physician evaluationsWest Virginia contracts with an EQRO to study the quality of care Medicaid beneficiaries

receive. The state surveys Medicaid recipients and participating physicians one to two timesannually, conducts site visits and maintains open communication with managed care plans todetermine the quality of care Medicaid managed care enrollees receive.

Wisconsin

For its Medicaid managed care program, the state of Wisconsin defines quality of careprimarily in terms of:

• Patient health outcomes• Comparative performance• Risk adjusted lengths of stay• Patient satisfaction with care• Attention to patient rights• Patient access to care• Physician evaluations• Provision of preventative servicesWisconsin measures the quality of care provided to Medicaid managed care enrollees through

annual enrollee satisfaction surveys, selected utilization indicators, monitoring of disenrollmentand the grievance process, clinical and nonclinical quality improvement focus studies, and pre-ventative care objectives reporting. Managed care plan performance is analyzed by region and iscompared with fee-for-service performance. Data is collected through site visits, MCO surveys of


Medicaid recipients, and MCO reports on specific data for performance-based contracting. Man-aged care plans survey Medicaid recipients one to two times annually. In addition to maintainingopen communication with managed care plans, the state also maintains a close working relation-ship with its contracted EQRO and data/reporting consultants.

Wisconsin seeks to protect patient rights by monitoring the grievance process and fairhearing processes, by requiring managed care plans to have an internal Medicaid advocate toassist enrollees, and by sponsoring an external state ombudsman to assist recipients with man-aged care concerns. Moreover, Wisconsin’s Medicaid managed care initiatives all include majorconsumer involvement through state-wide workgroups and a collaborative working relationshipbetween state government and participating managed care plans.

Additional Survey Comments: Wisconsin has operated a managed care system for theAFDC-related population since the 1980s. It has consistently demonstrated performanceimprovement and high-enrollee satisfaction as well as performance in health outcomes andaccess to care that are superior overall to fee-for-service.

(See Chapter 3 for more information on Wisconsin’s quality assurance program.)


The previous chapter provided general narrative descriptionsof the quality assurance programs for every state that has a Medicaidmanaged care program. The profiles included the many differentways that states try to assure quality care. This chapter, in turn,examines specific practices from four states’ quality assuranceprograms. One state from each of CSG’s four regions is profiled.

The practices described here are just a sampling of the manyinnovative methods that states have developed to assure that Medi-caid beneficiaries enrolled in managed care receive high qualitycare. Some of these program features have been around for sometime; others are more recent initiatives whose effectiveness hasyet to be evaluated. Altogether, however, these practices providea picture of ways that states are actively seeking to improve theirprograms over time.

In addition to the practices described below, there is a list of internet resources for thosewho want to explore further what Medicaid programs do in order to assure quality to theirbeneficiaries. These resources include information from other state Medicaid programs notdescribed below.

NEW YORK – PLAN-SPECIFIC QUALITY IMPROVEMENTSTRATEGIES

New York’s Department of Health began to collect a comprehen-sive set of performance measures from all managed care plans in 1993under a program known as Quality Assurance Reporting Requirements(QARR). The measures are based on the HEDIS data set, but certain measures have been addedthat address particularly important public health issues for policy-makers in New York. Thesemeasures aid quality of care monitoring of, for instance, lead screenings for children and HIVcounseling of adolescents. The collected data are reviewed by an independent auditor to ensureaccuracy and to assure that plans do not overreport performance measures. The results of theperformance measure collection and a data audit are compiled and released each year in aneasily comparable form for the use of health plans, policy-makers, and the public. Since theprogram began, the ability of plans to collect and report data in a valid manner has improved. Inaddition, plans have improved their performance according to a number of indicators sincereporting began.

New York’s data collection efforts have also moved from simply collecting and reportingdata to using the data to target and assist plans with poor performance to improve the quality ofcare provided to their members. The Department of Health meets with plans and uses the data toidentify areas for improvement. Plan and state officials develop strategies to improve plan perfor-mance in the areas identified as being sub-standard. The Department of Health then monitorsthe implementation of the quality improvement strategy. Only if a plan does not adequatelyaddress areas for improvement does the state move toward enforcement and discipline. Thedevelopment of plan-specific quality improvement strategies marks an important departure forquality assurance programs. Such programs move beyond merely providing a report card of planperformance and actively seek to address deficiencies and improve a plan’s quality of care.

Chapter 3: Promising Practices from Four States


VIRGINIA – HEALTH PLAN CERTIFICATION

In 1998, Virginia’s legislature enacted a number of consumer pro-tection provisions for managed care plans, including a certification pro-gram. The law requires all managed care plans to receive a license from

the Bureau of Insurance and a quality assurance certificate from the Department of Health. TheBureau of Insurance is charged with providing financial accountability standards for plans whilethe Department of Health is charged with developing minimum standards for quality health carethat all plans must meet in order to operate in Virginia. While the emphasis for the certificationprogram is on developing standards for commercial insurers, the certification process must alsobe completed by plans that serve Medicaid beneficiaries as well. Plans that have NCQA or otherapproved accreditation will have the certification process waived. Certification standards includeguarantees that managed care plans have an adequate network of providers, provide timelyaccess to care, address complaints and grievances in a timely and appropriate manner, haveestablished quality improvement systems, maintain adequate quality control over delegated ser-vices (e.g., in subcontracts for dental and vision care) and perform certain clinical studies of care.Plans must undergo an examination process that will include both on-site reviews and desk/administrative reviews of plan procedures, policies and reports. Overall the certification processwill focus on a systems approach to quality assurance/improvement by managed care plans. TheCenter for Quality Health Care Services and Consumer Protection within the Virginia Depart-ment of Health will be in charge of the program. Certification of plans is required by July, 2000.

WISCONSIN – ENCOUNTER DATA COLLECTION SYSTEM

Accurate and reliable data, especially encounter data, are essential to mea-suring the quality of care provided to Medicaid recipients. While other stateshave struggled to collect encounter data from plans, Wisconsin’s Department ofHealth and Family Services has successfully developed a 100 percent encounterdata collection system which is regularly audited and which is used to prepare public reports ofplan performance. Strong language regarding data collection and reporting was included in plancontracts from the outset. The system was developed over 18 months in collaboration withhealth plans. A technical advisory group made up of information systems staff and technicalrepresentatives from HMOs and contract administrators provided input on the development ofthe system. During the implementation process, state officials provided individualized on-siteassistance to HMO staff. The response and compliance by health plans with data collection andreporting requirements has been positive. In addition, the program has resulted in a comprehen-sive encounter data collection system with very low error rates.

ARIZONA – SATISFACTION SURVEYS OF PROVIDERS

In 1998 Arizona Health Care Cost Containment System (AHCCCS)staff conducted Arizona’s first comprehensive survey of physicians and of-fice managers who participate in the acute care portion of AHCCCS (thename of Arizona’s Medicaid program). AHCCCS staff constructed the sur-

vey instrument after receiving input from health plan executives, focus groupsof physicians and office staff, and professional associations. The survey asked

for responses on a range of topics including contracting, reimbursement, policies and proce-dures, utilization management, provider education and communication, quality management andclaims payment.

In order to boost response rates, AHCCCS staff sent an initial letter to physician officesregarding the project and then followed the letter with a telephone call regarding the best meansfor completing the survey, whether by phone or mail. Most offices preferred to provide re-sponses by mail. As a result of these efforts, more than 80 percent of physician offices that


participate in AHCCCS responded to the survey. In addition, more than 60 percent of primarycare physicians and office managers and more than 50 percent of specialists responded to thesurvey.

Survey responses assisted AHCCCS staff in evaluating a number of program features.Physicians were asked whether health plan actions affect the quality of care that they provide topatients. Approximately one-third of respondents answered negatively and another third an-swered positively. Close to one-quarter of respondents felt that health plan actions had little or noimpact on quality of care. Other responses in regard to the behavioral health program withinAHCCCS led to the formation of a workgroup of stakeholders on this issue. As a result, practiceguidelines were drafted for primary care providers to use for prescribing anti-depressants. Addi-tionally, physician requests for streamlining of administrative requirements resulted in the AHCCCSdrafting a standardized form and procedures manual for referrals for all health plans and provid-ers that participate in the program.

Arizona also has just completed a provider survey of dentists and plans to survey providersin its long-term care program.

WEB SITES FOR FURTHER INFORMATION

The following Web sites provide further information about state Medicaid managed careprograms and their quality assurance features.

❐ The Arizona Health Care Cost Containment System’s Fourth Quarter Quality Initia-tive Report contains a comprehensive overview of Arizona’s Quality Management System: http://170.68.21.47/content/resources/publications/qualinit/qual_toc.htm.

❐ Maryland’s Department of Health and Mental Hygiene Encounter Data Informationprovides information for managed care plans collection and reporting of encounter data to thestate:http://www.research.umbc.edu/chpdm/encounter.htm.

❐ MassHealth (Massachusetts’ Medicaid Managed Care Program) Annual Report con-tains information about the quality assurance program for Massachusetts’ Medicaid managedcare waiver: http://www.state.ma.us/dma/researchers/res_IDX.htm.

❐ Nebraska Medicaid’s Quality Improvement Program has information on subcommit-tees that were established with representation from the state, health plans, community, provid-ers, and consumers and that provide feedback on ways to improve the quality of care: http://www.hhs. state.ne.us/med/qi.htm.

❐ New York’s Quality Assurance Reporting Requirements is an annual publication thatcontains comparative information on health plan performance on selected health care qualityindicators for both private managed care plans and Medicaid managed care plans: http://www.health.state.ny.us/nysdoh/qarr97/main.htm. Also available on the New York Departmentof Health’s Web site is information on the qualification guidelines for Medicaid managed careorganizations: http://www.health.state.ny.us/nysdoh/mancare/mco/covlet.htm.

❐ Ohio’s Medicaid Managed Care Program contains an overview of Ohio’s program,including quality assurance and managed care plan performance information: http://www.state.oh.us/odhs/medicaid/managed.stm.


Within Medicaid managed care programs, as with othermanaged care arrangements, critics have argued that there aregreater incentives for providers to underutilize health services thanin fee-for-service arrangements, and these incentives may result inpoorer health outcomes. Whether underutilization actually occursand with what frequency is difficult to ascertain. Recognizing thepotential for underutilization to occur, states have put in place anumber of mechanisms to assess the quality of care that Medicaidrecipients receive. These requirements in many cases are morestringent than the requirements that commercial managed careplans must meet to operate in the states. State policymakers jus-tify this increased level of scrutiny because the Medicaid popula-tion is less educated about and less experienced in dealing withmanaged care than enrollees in commercial health care plans.

States also have had to implement enhanced quality assurance programs in order to meet federalgovernment waiver requirements.

ANALYSIS

From the responses to CSG’s survey of state efforts to measure the quality of Medicaidmanaged care as well as supplemental data from the U.S. Department of Health and HumanServices (DHHS) and the National Academy for State Health Policy (NASHP), a number ofpatterns emerge. In general, the most commonly used methods to measure and assure quality ofcare in Medicaid managed care are external quality reviews, performance measure reporting,consumer/member satisfaction surveys, and monitoring of complaints and grievances.

❐ Since 1986, annual external quality reviews have been required under federal Medicaidregulations for every risk-based Medicaid managed care program. According to a DHHS report,focused quality of care reviews are the most common type of quality of care activity that EQROsundertake.32

❐ States are increasingly turning to performance measures/quality indicators as a means tomeasure quality objectively. All 48 states with Medicaid managed care programs as well as theDistrict of Columbia and Puerto Rico collect performance measures for at least some portion oftheir Medicaid population. State quality assurance programs most often use their own internallydeveloped performance measures for plan reporting but also use QARI and NCQA’s HEDISmeasures frequently (see Table 2).33

❐ States are increasingly using consumer/member satisfaction surveys to gauge quality. All48 states, the District of Columbia and Puerto Rico now require consumer/member satisfactionsurveys to be conducted for Medicaid managed care programs. The frequency of the surveysvaries, however. Surveys may be performed either by managed care plans, by EQROs or otherindependent contractors, by the responsible state agency, or by more than one of the above. The

Chapter 4: Policy Options for State Officials

________________________32 See the Office of the Inspector General of the U.S. Department of Health and Human Services,

Lessons Learned from Medicaid’s Use of External Quality Review Organizations, (Boston, Mass.: Re-gional Office of the Inspector General), September 1998. New rules for external quality review organiza-tions were announced on December 1, 1999. See the Federal Register for the text of the new rules.

33 The National Academy for State Health Policy, Medicaid Managed Care: A Guide for States, 4th

Edition, Neva Kaye, Cynthia Pernice, and Helen Pelletier, eds. (Portland, Maine: NASHP, 1999), pp. I-112 and I-D-283-290.


Table 2: State Use of Quality Assurance Techniques

SurveysSurveysSurveysSurveysSurveys SurveysSurveysSurveysSurveysSurveys RequiresRequiresRequiresRequiresRequires RequiresRequiresRequiresRequiresRequires Uses CAHPSUses CAHPSUses CAHPSUses CAHPSUses CAHPSMedicaidMedicaidMedicaidMedicaidMedicaid ParticipatingParticipatingParticipatingParticipatingParticipating Ombudsman/Ombudsman/Ombudsman/Ombudsman/Ombudsman/ HEDIS DataHEDIS DataHEDIS DataHEDIS DataHEDIS Data for Satisfactionfor Satisfactionfor Satisfactionfor Satisfactionfor Satisfaction

StateStateStateStateState Recipients*Recipients*Recipients*Recipients*Recipients* PhysiciansPhysiciansPhysiciansPhysiciansPhysicians Consumer Advocate**Consumer Advocate**Consumer Advocate**Consumer Advocate**Consumer Advocate** Reporting***Reporting***Reporting***Reporting***Reporting*** Survey****Survey****Survey****Survey****Survey****Alabama ✰ ✓ ❍Arizona ✰ ✓ ✧ ❍Arkansas ✰ ✓ ❏California ✰ ✧ ❍ (a) ❏ (b)Colorado ✰ ✧ ❍ ❏

Connecticut ✰ ❍ (a) ❏ (c)Delaware ✰ ✧ ❍ ❏District of Columbia ✰ ✓ ✧ ❍ ❏Florida (c) ✰ (a) ✧ ❍Georgia ✰ ✓ ❍

Hawaii ✰ ✓ ❍Idaho ✰ ✓Illinois ✰ ✧ ❍Indiana ✰ ✓ ❍Iowa ✰ ✓ ✧ ❍ ❏

Kansas ✰ ✓ ❍ ❏Kentucky ✰ ✓ ✧ ❍Louisiana ✰ ✧Maine ✰ ✧ ❍Maryland ✰ ✓ ✧ ❍ ❏

Massachusetts ✰ ❍ ❏Michigan ✰ ✧ ❍ ❏Minnesota ✰ ✧ ❍ ❏Mississippi ✰ ❍ ❏Missouri ✰ ✓ ✧ ❍

Montana ✰ ✧ ❍Nebraska ✰ ✓ ✧ ❍ ❏Nevada ✰ ✓ ✧New Hampshire ✰ ❍ (c) ❏ (d)New Jersey ✰ ✓ ❍ ❏

New Mexico ✰ ✓ ❍ ❏New York ✰ ✧ ❍North Carolina ✰ ✓ ❍ ❏North Dakota ✰ ✓Ohio ✰ ❍ ❏

Oklahoma ✰ ❍ ❏Oregon ✰ ✧ ❍ ❏Pennsylvania ✰ ✓ ❍Puerto Rico ✰ ❍Rhode Island ✰ ✧ ❍ ❏

South Carolina (a) ✰ (a) ✧ ❍South Dakota ✰ ✓Tennessee ✰ ✓ ✧ ❍Texas ✰ ✓ ✧ ❍ ❏Utah ✰ ✧ ❍ ❏

Vermont ✰ ✧ ❏Virginia ✰ ✓Washington ✰ ✓ ✧ ❍ ❏West Virginia ✰ ✓ ✧Wisconsin ✰ ✓ ✧ ❍

* Surveys of Medicaid recipients may be performed either by plans, EQRO’s, or Medicaid agencies.** Ombudsman programs may be either internal to managed care plans or external to plans, i.e., they are part of a state agency.*** Information only applies to risk-based plans; PCCM programs that require HEDIS measures are not included in this table; HEDIS data may becollected only for certain populations in Medicaid managed care and not for all Medicaid managed care enrollees. **** CAHPS may be used for all enrollees or for only certain populations within a state Medicaid program; states may use other instruments toassess consumer/plan member satisfaction, but these states are not listed here.Notes: (a) Florida and South Carolina indicated on CSG’s survey that they do not survey Medicaid recipients; plans are required to do so,however; (b) California plans to use CAHPS in 1999; (c) Data from the NASHP did not indicate that Connecticut used CAHPS; but, Connecticut’sresponse on CSG’s survey indicated that it did; (d) New Hampshire has a CAHPS pilot, administered by contracted plans, underway.Alaska, Guam, the US Virgin Islands, and Wyoming are not included in this table because they do not have any Medicaid beneficiariesenrolled in managed care programs or plans.

Source: Data on surveys of recipients and physicians are from original data collected by The Council of State Governments;Ombudsman, HEDIS and CAHPS data are from the National Academy for State Health Policy


National Academy for State Health Policy data indicate that only 27 states surveyed Medicaidenrollees in 1996.34 Consumer Assessment of Health Plan Satisfaction (CAHPS) is the mostcommonly used survey instrument to assess Medicaid recipient satisfaction.

❐ According to survey responses, the most common method states use to protect patientrights is monitoring and investigating complaints and grievances. States mentioned plan educa-tional materials as a means to educate Medicaid managed care enrollees about their rights. Statesalso use consumer protection measures such as requiring consumer representation on plan boards(20 states), an ombudsman either internal or external to plans (28 states), or the use of consumerhotlines (44 states).35

Despite state efforts to assure quality in Medicaid managed care, the question remainswhether Medicaid managed care has improved the quality of care, if it has served to erodequality, or if quality has remained essentially the same as under fee-for-service. An analysis by theKaiser Commission on Medicaid and the Uninsured of a number of studies of Medicaid managedcare programs found that, in general, Medicaid managed care programs have provided compa-rable quality of care to fee-for-service arrangements. In addition, there has not been an appre-ciable decrease in patient satisfaction under Medicaid managed care in most states; beneficiariesseem to be satisfied on the whole with the care and services they receive.36

A number of factors, however, suggest that states should not relax their oversight effortsjust yet. First, researchers acknowledge that the best studies on quality are on stable populationsover longer periods of time. Medicaid coverage is notoriously prone to disruptions and highturnover rates. These tendencies influence the validity of studies of satisfaction with care and onperformance measures. It also affects the ability of state and federal agencies to monitor accuratelythe quality of care provided. For example, for HEDIS data, plan members should be enrolledcontinuously for 12 months. This requirement makes Medicaid data particularly suspect due tothe numbers of enrollees that drop off the rolls at any given time.

Second, although most states are adopting procedures for data collection and analysis toassess the quality of care provided to Medicaid recipients, there is still no nationwide standard forquality among Medicaid managed care programs and plans. HEDIS measures notwithstanding,there is no nationally accepted standardized set of performance measures and no uniform datacollection procedures which allow policy-makers to compare plan performance effectively. Anumber of states have implemented “report cards” for plans that participate in Medicaid man-aged care using standardized data collection and reporting requirements for certain performancemeasures. These report cards provide information about satisfaction with care, performance oncertain quality measures, etc., in a user-friendly format for Medicaid recipients to use in selectingplans. While these initiatives are important strides toward comparability within states, the major-ity of states still do not use such measures and report cards cannot be used to compare planperformance across boundaries. Adding to the comparability problem is the lack of risk adjust-ment for much of the data that is reported. Risk adjustment controls for differences in healthstatus in a pool of enrollees and is important for accurately representing plan performance. Untiluniform data measurement standards are developed and differences in risk are taken into ac-count, it will remain difficult to compare plan performance between plans and between states.

The need for national benchmarks to determine the level of quality in Medicaid managedcare programs is especially important now for two reasons. The exit of commercial plans fromthe Medicaid managed care market may affect quality adversely. Some analysts fear that withoutthe robust participation of commercial plans in Medicaid managed care to maintain a competitivemarket, states may set the bar for performance too low. Furthermore, with health care costs onthe rise, the continued use of low capitation and reimbursement rates to contain costs provides

________________________34 The 1996 data only includes information from states with risk programs (38 states). Ibid.35 Ibid. Numbers include the District of Columbia but not Puerto Rico.36 These findings were reported in Diane Rowland, Sara Rosenbaum, Lois Simon, Elizabeth Chait,

Medicaid and Managed Care: Lessons from the Literature (Washington, DC: Kaiser Commission on theFuture of Medicaid, 1995), and in Hudman, et. al., pp. 165-166.


added impetus for managed care plans to cut costs, possibly at the expense of access to care andquality. Because Medicaid populations tend to include a larger proportion of individuals withcomplicated health problems, Medicaid programs require more, not fewer, resources to adequatelytreat beneficiaries’ health needs. Rising health care costs and continued pressure to downsizegovernment will test the commitment of policy-makers and voters to provide quality care to thosewho do not have the resources to pay for care themselves. Without national standards, stateofficials may find it more difficult to determine whether plans are maintaining quality and to holdplans accountable for meeting quality of care standards.

Several new initiatives may help to address these comparability problems. First, HEDIS andFACCT measures continue to be adopted by Medicaid agencies and managed care plans, andnew measures are being developed to improve the ability of policy-makers to determine thequality of care provided to Medicaid recipients. Secondly, the American Public Human ServicesAssociation plans to develop a national quality database for Medicaid managed care plans thatwill gather HEDIS results from all states that collect this data. Finally, the federal government is inthe process of developing and implementing the provisions of the 1997 Balanced Budget Actand the QISMC system. All of these initiatives will further develop standards for states to use forquality assessment and improvement.37

THE DEBATE OVER QUALITY

In the debate over quality, the camps for and against greater quality measurement andmonitoring fall along predictable lines. On the one hand, some health plans and providers arguethat quality of care reporting requirements, whether required by government or by private ac-crediting organizations, inhibit competition and innovation and increase health care costs.38 Inaddition, plans complain that they are answerable to various entities with differing requirementswhich makes reporting burdensome. Such administrative burdens, coupled with low reimburse-ment rates, may have contributed to the exodus of commercial plans from Medicaid managedcare in some areas in the Northeast.39 Managed care advocates are quick to point out that thegovernment never expected such high standards from fee-for-service insurers as they do frommanaged care plans. Consumer and advocacy groups, on the other hand, argue that societycannot afford to pay for low-quality care and its concomitant costs. Moreover, the incentivestructure of managed care is quite different from fee-for-service, which placed care decisions inthe hands of providers with less plan oversight and second-guessing of provider decisions regard-ing care. Quality of care standards and monitoring are essential to ensuring that the poor receiveappropriate and necessary care and are not exploited or unduly denied care by managed careorganizations.

In light of the differing views of the optimal level of monitoring for managed care, stateofficials should consider some qualifications regarding state efforts. “Measuring” something asintangible as quality is indeed difficult. Quality assurance programs and monitoring health planperformance are relatively new areas and are continually developing. There is a danger that theemphasis on collecting performance measure data may either lead policy-makers down the wrongpath or give recipients and policy-makers a false sense of security. Just because a state qualityassurance program collects HEDIS measures for its Medicaid managed care population does notmean that is monitoring quality well. Among experts in the field of quality, there is a healthyamount of skepticism about the ability of performance measures to really capture the intangible

________________________37 For more information on these initiatives, see the report An Overview of Medicaid Managed

Care Provisions in the Balanced Budget Act of 1997 (Washington, D.C.: Kaiser Commission on theFuture of Medicaid, 1998).

38 Gosfeld.39 Michael Bailit, Christine Kokenesi, and Laurie Burgess, Purchasing in a Turbulent Market: An

Assessment of Medicaid Managed Care in the Mid-Atlantic States (Princeton, N.J.: Center for HealthCare Strategies, 1999).


and difficult-to-measure aspects of quality care.A recent article in the New England Journal of Medicine even posited that the emphasis

on performance measures may reduce the quality of care in some instances.40 After the maxim,“What gets measured gets done,” the very process of measuring one aspect of care over anotherskews the incentive structure away from the unreported measure to that which will be reported.41

Policy-makers involved in decisions regarding what quality of care data to collect and report mustrecognize the “unintended consequences” of their decisions to measure one aspect of care in-stead of another.

In addition, there is always the danger that a measure will be selected not so much for itsscientific soundness and evaluative significance but for its ability to be measured. As one writerremarked, “All too often the selection of measures is determined by the availability of automateddata rather than by the importance of the measure.”42 For instance, the stress placed on perfor-mance measures may have overshadowed another issue that is equally important in determiningquality of care — reducing medical errors and increasing the safety of health care systems.43

While these considerations are important cautions to state action, policy-makers also can-not simply wait for researchers and academics to come to an unreserved determination (possiblyyears from now) on which measures are completely effective in measuring quality.44 Governmentofficials must use the tools they have at their disposal now to protect the health of the poor andthe disabled.

RECOMMENDATIONS FOR STATE GOVERNMENT

This report has focused on the impact of managed care plan activity on the quality of careMedicaid recipients receive. It is also important to recognize that quality is the purview of manyindividuals and organizations in the health care system, including practitioners and institutions, aswell as insurers. The boundaries between providers and health plans in assuring quality are oftenambiguous. Therefore, the state assumes the responsibility for monitoring both plans and provid-ers. As a large purchaser within the market as well as a regulator of the various entities within thehealth care system, states can play a unique role in setting quality standards for the health caresystem.

For state officials seeking to enhance the quality of the care provided to Medicaid recipientsin managed care, there are a number of policy options. Adopting one or more of the followingrecommendations could improve the quality of care for Medicaid recipients enrolled in managedcare:

❐ Current Medicaid eligibility requirements in many states make it difficult for beneficiariesto maintain the continuity of care. In order to increase the quality of care to low income popula-tions, states should consider adopting 12-month continuous eligibility for Medicaid enrollees.

❐ In light of problems with health literacy and the greater complexity of health problems inthe Medicaid population, policy-makers should ensure that state agencies and health plans pro-vide a multitude of educational materials to Medicaid beneficiaries. States need to provide user-friendly, easily accessible guides on plan performance and provider qualifications for Medicaid

________________________40 Dr. Lawrence Casalino, “The Unintended Consequences of Measuring Quality on the Quality of

Medical Care,” New England Journal of Medicine, October 7, 1999, Vol. 341, No. 15, pp. 1147-1150.41 McGlynn, p. 15. ff.42 Ibid.43 For a discussion of health care safety and ways to reduce medical errors, see the newly released

report by the Institute of Medicine’s Committee on the Quality of Health Care in America, To Err isHuman: Building a Safer Health System, Linda Kohn, Janet Corrigan, and Molla Donaldson, eds. (Wash-ington, D.C.: National Academy Press, 2000). See also the report from the President’s Advisory Commis-sion on Consumer Protection and Quality in the Health Care Industry, Quality First: Better Health Carefor All Americans (Washington, D.C.: Government Printing Office, 1998).

44 Trish Riley. “The Role of States in Accountability for Quality,” Health Affairs, May/June 1997,Vol. 16, No. 1.


beneficiaries to use in plan and primary care provider selection. Funds should also be providedfor translation of educational materials for non-English speakers. Plans also need to provide user-friendly, culturally sensitive information on accessing care and on patient rights.

❐ States should assure that an ombudsman/advocate and/or a well-publicized multiple-language hotline is available to assist Medicaid beneficiaries with questions regarding selection ofproviders, access to care, negotiating managed care arrangements and the resolution of com-plaints and grievances.

❐ States must address issues of adequate funding, recruitment of staff and competitive payfor quality assurance programs. Without sufficient funding for information systems, state agencystaff and use of independent auditors necessary for quality of care data collection efforts, statesare too reliant on plans reporting accurately the data that is required of them. State qualityassurance programs must have the resources and staffing necessary if policy-makers, analystsand consumers are to have accurate, reliable and valid measures of plan performance.

❐ Having collected information on plan performance, states should use that information toprepare consumer-friendly and easy-to-understand comparative reports of plan quality and dis-seminate the information broadly.

❐ Because recruitment and retention of providers to care for Medicaid beneficiaries is noto-riously difficult, states should conduct periodic objective assessments of why some providers donot participate in Medicaid managed care programs as well as how satisfied participating provid-ers are with the programs. Provider assessments should take into consideration the differentneeds of individual versus institutional providers (i.e., physicians versus hospitals). Based on theoutcome of the assessments, states should take aggressive steps to address provider concerns.

❐ State officials need to carefully scrutinize the causes of commercial plan exits from theMedicaid market. Some commercial plans may have had unreasonable expectations of profit inthe Medicaid managed care market, or states may have had unreasonable expectations for sav-ings. Low plan participation rates may indicate that payments are too low or administrativerequirements too burdensome. States may need to seek broader participation of plans and/oradjust payments or other program features to ensure a competitive Medicaid managed caremarket.

❐ States should review the capitated payments to providers and plans and increase pay-ments where necessary to maintain provider and plan participation, program competitivenessand quality of care.

❐ When all is said and done, if plans and providers do not meet acceptable levels of qualityand are reluctant, for whatever reason, to address poor performance in a timely manner, statesmust have the means and the will to enforce of standards of quality. States must have establishedprocedures and personnel to investigate complaints promptly. When a pattern of poor qualitycare appears, states must take appropriate and prompt action to protect Medicaid recipients.Too often state agencies lack the investigative personnel or the collective will to address instancesor patterns of poor quality care as aggressively as complaints may warrant.

CONCLUSION

There are many great challenges on the road to ensuring better quality care in the healthcare system in general and in Medicaid managed care in particular. Managed care has sparked anational debate over how best to balance cost and quality in the health care system. As Medicaidprograms have adopted managed care techniques to control costs, they have not been insulatedfrom the debate that is occurring in the larger health care marketplace.

Especially in their initial stages of implementation, Medicaid managed care programs expe-rienced problems with access and disruptions to care, with finding a sufficient pool of providersand plans, and with providing adequate quality care for enrollees. Although these problems areby no means “fixed,” many states have made significant strides in the years since their Medicaidmanaged care programs began. Recognizing the potential for disruptions and delivery of sub-


standard care, state officials are to be applauded for their efforts to protect and ensure qualitycare to Medicaid recipients, even while they have had to control the costs of the program.

Yet, as cost concerns have begun to reassert their primacy in the health care marketplace,policy-makers must not allow cost concerns to sideline the real advances that Medicaid programshave made in assuring that recipients receive quality care. It is incumbent upon everyone con-cerned with the evaluation of Medicaid managed care that quality be stressed equally. The healthof the most vulnerable among us depends upon it.


Bailit, Michael, Christine Kokenesi, and Laurie Burgess. Purchasing in a Turbulent Mar-ket: An Assessment of Medicaid Managed Care in the Mid-Atlantic States. Princeton, N.J.:Center for Health Care Strategies, 1999.

Booth, Maureen, and Anya Rader. Quality Oversight in Managed Care: The Role ofInteragency Coordination. Portland, MAINE: National Academy for State Health Policy, 1999.

Casalino, Lawrence, M.D. “The Unintended Consequences of Measuring Quality on theQuality of Medical Care.” New England Journal of Medicine. 341 (October 7, 1999): 1147-1150.

Chavkin, David, and Anne Treseder. “California’s Prepaid Health Plan Program: Can thePatient Be Saved?” Hastings Law Journal. 28 ( January 1977): 685-760.

Crooks, Glenna, Jack Meyer, and Nancy Bagby. Quality Health Care for Children inSCHIP: A Guide for State Legislators. Washington, D.C.: New Directions for Policy, 1999.

Daniels, Mark R. “Introduction.” Medicaid Reform and the American States: Case Stud-ies on the Politics of Managed Care. Westport, Conn.: Auburn House, 1998.

Donabedian, Avedis. Explorations in Quality Assessment and Monitoring, Vol. I-III. AnnArbor, Michigan: Health Administration Press, 1980.

Felt-Lisk, Suzanne. The Changing Medicaid Managed Care Market: Trends in Commer-cial Plans’ Participation. Washington, D.C.: Kaiser Commission on Medicaid and the Unin-sured, 1999.

Felt-Lisk, Suzanne, and Robert St. Peter. The Quality Assurance Reform Initiative (QARI)Demonstration for Medicaid Managed Care Final Evaluation Report. Washington, D.C.: HenryJ. Kaiser Family Foundation, 1996.

Freudenheim, Milt. “Big HMO to Give Decisions on Care Back to Doctors.” The New YorkTimes. November 9, 1999.

Gosfield, Alice. “Who Is Holding Whom Accountable for Quality?” Health Affairs. 16(May/June 1997): 26-40.

Health Care Financing Administration. Medicaid Statistics: Fiscal Year 1996. Washing-ton, D.C.: HCFA, 1998.

Health Insurance Association of America. Source Book of Health Insurance Data. Wash-ington, D.C.: HIAA, 1998.

Institute of Medicine, Committee on the Quality of Health Care in America. To Err isHuman: Building a Safer Health System. Linda Kohn, Janet Corrigan, and Molla Donaldson,ed. Washington, D.C.: National Academy Press, 2000.

Institute of Medicine. Measuring the Quality of Health Care: A Statement by the Na-tional Roundtable on Health Care Quality. Molla Donaldsen, ed. Washington, D.C.: NationalAcademy Press, 1999.

———. Medicare: A Strategy for Quality Assurance, Volumes I-II. Kathleen N. Lohr, ed.Washington, D.C.: National Academy Press, 1990.

Marsha Lillie-Blanton, et al., ed. Access to Health Care: Promises and Prospects for Low-Income Americans. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured, 1999.

McGlynn, Elizabeth. “Six Challenges in Measuring the Quality of Health Care.” HealthAffairs. 16 (May/June 1997): 7-21.

Mitchell, Elizabeth, Alicia Fagan, and Trish Riley. Consumer Protection and Quality Over-sight in Managed Care: How Are States Meeting the Challenge? Portland, Maine: NationalAcademy for State Health Policy, 1998.

References


National Academy for State Health Policy. Medicaid Managed Care: A Guide for States,4th Edition. Neva Kaye, Cynthia Pernice, and Helen Pelletier, eds. Portland, Maine: NationalAcademy for State Health Policy, 1999.

Office of the Inspector General, U.S. Department of Health and Human Services. LessonsLearned from Medicaid’s Use of External Quality Review Organizations. Boston, Mass.: Re-gional Office of the Inspector General, Department of Health and Human Services. September1998.

President’s Advisory Commission on Consumer Protection and Quality in the Health CareIndustry. Quality First: Better Health Care for All Americans. Washington, D.C.: GovernmentPrinting Office, 1998.

Reforming States Group and the Milbank Memorial Fund. Tracking Oversight of ManagedCare. New York: Milbank Memorial Fund, 1999.

Regenstein, Marsha, and Christy Schroer. Medicaid Managed Care for Persons with Dis-abilities: State Profiles. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured,1998.

Riley, Trish. “The Role of States in Accountability for Quality.” Health Affairs. 16(May/June 1997): 41.

Rowland, Diane and Kristina Hanson. “Medicaid: Moving to Managed Care.” Health Af-fairs. 15 (Fall 1996):150-152.

Rowland, Diane, Sara Rosenbaum, Lois Simon, and Elizabeth Chait. Medicaid and Man-aged Care: Lessons from the Literature. Washington, D.C.: Kaiser Commission on the Futureof Medicaid, 1995.

U.S. General Accounting Office. Medicaid: States Turn to Managed Care to ImproveAccess and Control Costs. Washington, D.C.: U.S. General Accounting Office, 1993.

Welch, W. Pete, and Martia Wade. “Relative Cost of Medicaid Enrollees and the Commer-cially Insured in HMOs.” Health Affairs. 14 (Summer 1995): 212-224.

An Overview of Medicaid Managed Care Provisions in the Balanced Budget Act of1997 Washington, DC: Kaiser Commission on the Future of Medicaid, 1998.


AlabamaMary TimmermanAssociate DirectorManaged Care/ Quality AssuranceAlabama Medicaid Agency501 Dexter AvenueMontgomery, AL 36103

Ray ShererDirectorDivision of Managed Care ComplianceAlabama Department of Public HealthP.O. Box 303017Montgomery, AL 36130-3017

AlaskaBob LabbeDirectorDivision of Medical AssistanceAlaska Office BuildingJuneau, AK 99801

ArizonaJuman Abujbara, M.B., B.Ch., M.P.H.Administrator, Acute Care UnitArizona Health Care Cost Containment Sys-tem (AHCCCS)701 E. Jefferson, MD 7300Phoenix, AZ 85034

ArkansasRoy JeffusAssistant DirectorArkansas Division of Medical ServicesP.O. Box 1437Little Rock, AR 72203

CaliforniaMary Fermazin, M.D., M.P.A.Chief, Office of Clinical Standards and

QualityState Department of Health Services714 P Street, Room 650Sacramento, CA 95814

ColoradoLisa M. EsgarManager, Quality Assurance SectionColorado Department of Health Care Policy and

Financing1575 Sherman Street, 5th FloorDenver, CO 80203

Appendix A: State Medicaid Managed Care QualityAssurance Program Contacts

ConnecticutJames LinnaneManager, Benefit Design Program AnalysisDepartment of Social Services25 Sigourney StreetHartford, CT 06106

DelawareKay E. HolmesChief AdministratorDivision of Social Services1901 N. DuPont HighwayLewis BuildingNew Castle, DE 19720

District of Columbia ContactJane ThompsonChief, Office of Managed CareMedical Assistance Administration2100 Martin Luther King Avenue, SEWashington, DC 20020

FloridaTracy B. TangMedical/Health Care Program AnalystAgency for Health Care AdministrationMedicaid Program Development2727 Mahan Drive, Bldg. 3, Room 2239Tallahassee, FL 32308

GeorgiaLouise BrydeDirector, Division of Managed Care ProgramsGeorgia Department of Medical Assistance2 Peachtree Street, NWAtlanta, GA 30303-3159

GuamDennis G. RodriguezDirectorDepartment of Public Health and Social

ServicesP.O. Box 2816Agana, Guam 96932

HawaiiCharles C. DuarteAdministratorDepartment of Human Services, Med-QUEST

DivisionP.O. Box 339Honolulu, HI 96809-0339


IdahoPam MasonMedicaid Managed Care Program Development

ManagerDepartment of Health & Welfare, Division

of MedicaidAmericana TerraceP.O. Box 83720Boise, ID 83720-0036

IllinoisNelly RyanChief, Bureau of Managed CareIllinois Department of Public Aid201 South Grand Avenue, EastSpringfield, IL 62763-0001

IndianaSharon Steadman, Managed Care DirectorFamily and Social Services AdministrationOffice of Medicaid Policy and Planning402 W. Washington Street, Room W382Indianapolis, IN 46204

IowaDennis JanssenMHC Program ManagerDepartment of Human ServicesHoover State Office BuildingDes Moines, IA 50319

KansasDebra BachmanProgram ManagerAdult & Medical Services915 SW Harrison Street, Room 651-SouthTopeka, KS 66612

KentuckyRichard T. Heine, Ph.D.Director, Division of Quality ImprovementDepartment for Medicaid ServicesCabinet for Health Services275 E. Main StreetFrankfort, KY 40621-0001

LouisianaHelene RobinsonActing Executive Director, Division of Research

and DevelopmentDeparment of Health and HospitalsP.O. Box 2870Baton Rouge, LA 70821-2870

MaineMary Ellen Austin-Reitchel, R.N.Health Service Supervisor – Quality ManagementState of Maine, Bureau of Medical Services11 State House Station, 249 Western AvenueAugusta, Maine 04333

MarylandBrenda FalconeActing Division Chief, Division of Managed CareMedical Care Policy AdministrationDepartment of Health and Mental Hygiene201 W. Preston Street, Room 133Baltimore, MD 21201

MassachusettsMarcy Karcher GhiardiQuality Manager, MCO ProgramDivision of Medical Assistance600 Washington StreetBoston, MA 02111

Tony AsciuttoDirector, QM PCC PlanDivision of Medical Assistance600 Washington StreetBoston, MA 02111

MichiganJulie GriffithDirector, Managed Care Quality Assessment &Improvement DivisionMichigan Department of Community Health3423 N. Martin Luther King Jr. BoulevardP.O. Box 30195Lansing, MI 48909

MinnesotaDebra StensethSupervisor, Performance Measurement and

Quality ImprovementMinnesota Department of Human Services444 Lafayette Road NorthSt. Paul, MN 55155-3865

MississippiAnna Marie BarnesExecutive DirectorDivision of Medicaid239 N. LaMarJackson, MS 39201

MissouriMyrna M. BruningDeputy DirectorMissouri Division of Medical ServicesP.O. Box 6500Jefferson City, MO 65102-6500

MontanaWilda McGrawQuality Assurance SpecialistDepartment of Public Health and Human

Services, Medicaid ProgramP.O. Box 202951Helena, MT 59620-2951


NebraskaGaylene R. JeffriesQuality Improvement ManagerNebraska Medicaid301 Centennial Mall SouthLincoln, NE 68509-9529

NevadaLaurie EnglandChief, Managed CareDivision of Health Care Finance and Policy1100 E. William Street, Suite 204Carson City, NV 89701

New HampshireDianne LubyDirector, Office of Community and Public HealthDepartment of Health and Human Services6 Hazen DriveConcord, NH 03301

New JerseySusan Welsh, R.N., B.S., C.P.H.Q.Associate Director, Bureau of Managed

Care MonitoringOffice of Health Services Administration,

Division of Medical AssistanceP.O. Box 712Trenton, NJ 08625

New MexicoCharles MilliganDirector, Medical Assistance DivisionHuman Services DepartmentP.O. Box 2348Santa Fe, NM 87504

New YorkJacqueline M. ButchDirector, Quality Management GroupOffice of Managed CareNew York State Department of HealthEmpire State Plaza, Corning Tower, Room 1864Albany, NY 12237-0066

North CarolinaAnne B. Rogers, R.N.Quality Management ManagerManaged CareDivision of Medical Assistance2516 Mail Service CenterRaleigh, NC 27699-2516

North DakotaPatricia A. Kramer, R.O.L.Director, Utilization ManagementMedical Services, Department of Human Services600 E. Boulevard Avenue, Department 325Bismarck, ND 58505-0261

Tom SulbergAdministrator, Managed CareMedical Services, Department of Human

Services600 E. Boulevard Avenue, Department 325Bismarck, ND 58505-0261

OhioMichael WilsonChief, Performance Monitoring SectionOhio Department of Human ServicesBureau of Managed Care30 East Broad Street, 31st FloorColumbus, OH 43266-0423

OklahomaDarendia McCauleyDirector of Quality AssuranceOklahoma Health Care Authority4545 N. Lincoln Boulevard, Suite 124Oklahoma City, OK 73105

OregonNancy ClarkManaged Care CoordinatorOregon Health Division800 NE Oregon Street, Suite 730Portland, OR 97232

Joan KapowichManager, Analysis and Evaluation UnitOffice of Medical Assistance Programs500 Summer Street, NE, 3rd FloorSalem, OR 97306

PennsylvaniaDebra RollingsDirector of Managed Care Quality AssessmentDPW, Office of Medical DirectorP.O. Box 2675Harrisburg, PA 17105-2675

Puerto RicoGuillermo Silva JanerExecutive DirectorPuerto Rico Health Insurance AdministrationP.O. Box 9024264San Juan, PR 00902-4264

Rhode IslandMurray BrownRhode Island Department of Human ServicesCenter for Child and Family Health600 New London AvenueCranston, RI 02920


South CarolinaSheila Rivers, M.P.HDepartment Head, Department of Managed CareDepartment of Health and Human ServicesP.O. Box 8206Columbia, SC 29202-8206

South DakotaScott BesharaProgram SpecialistDepartment of Social Services, Office of

Medical Services700 Governors DrivePierre, SD 57501

TennesseeBureau of TennCareDirector of Quality Oversight729 Church StreetNashville, TN 37247

TexasTrish O’DayDirector, Quality/Health ServicesTexas Department of Health1100 W. 49th StreetAustin, TX 78756

UtahMarilyn TuckerProgram Manager, Medicaid Quality AssuranceBureau of Managed CareUtah Department of Health288 North 1480 WestBox 143108Salt Lake City, UT 84114-3108

VermontJane BairdManaged Care AdministratorOffice of Vermont Health Access103 S. Main StreetWaterbury, VT 05671-1201

VirginiaMichael H. LupierQuality CoordinatorDepartment of Medical Assistance Services600 E. Broad Street, Suite 1300Richmond, VA 23219

WashingtonAlice LindSection Manager, Quality ManagementMedical Assistance AdministrationP.O. Box 45506Olympia, WA 98504-5506

West VirginiaRandy MyersDirector, Office of Medicaid Managed CareBureau for Medical Services, Dept. of Health and

Human ResourcesState Capitol ComplexBuilding 6Charleston, WV 25305

WisconsinAngela DombrowickiDirector, BMHCPDivision of Health Care Financing1 W. Wilson Street, Room 237Madison, WI 53701-0309

WyomingIris OleskeState Medicaid Agent, Health Planning and

Implementation DivisionHathaway Building, 1st Floor North2300 Capitol AvenueCheyenne, WY 82002


Accreditation: Official recognition of anorganization as having met certain established stan-dards for quality and achievement. Organizationsmust submit to a process of review and evaluationof their administrative operations and service deliv-ery in order to be considered for accreditation andthen must be found to have met the standards ofthe accrediting entity. In health care, JACHO andNCQA are two well-known accrediting organizations.

Certification: Issuance of a certificate thattestifies that an individual or organization has metcertain minimum qualifications for practice oroperation.

Consumer Assessment of Health PlansSurvey (CAHPS): A tool to measure consumersatisfaction with care, developed as a demonstra-tion project for the Agency for Healthcare Researchand Quality (AHRQ). The CAHPS survey asks re-spondents to rate variables including access to andavailability of care, interpersonal skills of providers,wellness advice and patient involvement in decisionmaking.

Capitation: A fixed fee or rate per planmember received by a health plan or paid out toproviders. This fee is paid without regard for theamount of services actually used by the planmember.

Carve-out: A particular set of services, suchas mental health services or treatment for chronicconditions, that is provided through special arrange-ments between providers and plans. Services arecalled carve-outs because payment for services ishandled differently from other health care servicescovered in the managed care contract.

Case management: The direction and co-ordination of medical care, usually by a primary carephysician, for members of a managed care plan,especially those members with chronic conditionsthat require extensive use of health services.

Claims data: Data regarding health careservices used, derived from paid insurance claimsor billing information.

Co-insurance: A cost-sharing provision ofhealth insurance that requires health plan membersto pay a certain percentage amount out of pocketfor medical services. For instance, a health plan maypay 80 percent of the charges for a physician of-fice visit; the plan member is then responsible forthe remaining 20 percent. The amount the mem-ber pays is referred to as co-insurance.

Copayment (Co-pay): A cost-sharing pro-vision of health insurance that specifies an amountthat health plan members must pay each time they

Appendix B: Glossary of Medicaid, Managed Care andQuality Assurance Terms

use a service or make a visit to a provider. For ex-ample, a $5 or $10 “co-pay” is often required byhealth plans for prescriptions and physician officevisits.

Credentialing: Obtaining and reviewingdocumentation regarding, among other things, aprovider’s education, training, licensure, certifica-tions evidence of malpractice insurance, and/ormalpractice history to ensure that a provider meetsminimum qualifications.

Deductible: The amount a plan membermust pay up front in a given benefit period (usuallya year) before an insurance plan will begin to coverthe costs of health care services.

Early and Periodic Screening and Diag-nostic Testing (EPSDT): A federally mandatedprogram for screening and testing Medicaid recipi-ents under the age of 21. EPSDT includes a seriesof health care services designed to provide a com-prehensive health history, identify disabilities earlyin a child’s life, inform recipients of the benefits forwhich they are eligible and assist recipients withreceiving necessary and appropriate medical care.Services mandated include preventative health ser-vices, such as immunizations and physicals, labora-tory tests and dental, hearing, and vision screening.

Encounter data: Information regarding apatient’s access to and use of health care servicesduring a given visit or episode related to a medicalcondition or need.

External quality review organization(EQRO): An organization under contract to a gov-ernment agency to review medical charts, conducton-site visits of health care providers or managedcare plans in order to determine whether patientsreceive needed care and if providers and plans arecomplying with accepted standards of care and withstate regulations and other measures.

Fee-for-service (FFS): The traditionalhealth care financing system in which insurancecompanies and patients reimburse physicians, hos-pitals and other health care providers for each indi-vidual health service provided.

Foundation for Accountability (FACCT):A non-profit organization that has developed quali-ty indicators of health plan performance. FACCTcollects comprehensive data for certain conditionsand also provides a comparison between fee-for-service and managed care plans.

Gatekeeper physician: A primary carephysician under contract to a managed care plan,who determines if patients should be referred forspecialty care or should receive certain services.


Health insuring organization (HIO): Ahealth plan that covers and arranges for a compre-hensive set of health care services for plan mem-bers on a fixed, pre-paid, per- member basis. Un-like HMOs (see below), an HIO is organizationallydistinct from health care providers.

Health maintenance organization(HMO): A health plan that provides or covers acomprehensive set of health services for plan mem-bers for a fixed, pre-paid, per-member fee. An HMOusually weds some or all of the functions of insurersand providers into one company. There are threebasic types of HMOs: the staff model, group model,and independent practice association model.

• Staff model HMOs employ physicians andother health professionals who provide care solelyfor members of one HMO and who receive a salaryfrom the HMO.

• Group model HMOs contract with a multiple-specialty physician group or groups to provide co-ordinated care for HMO patients for a fixed, per-member fee. The physicians are not employees ofthe HMO, as in the staff model, but are employedby the group. The group decides how to distributecapitated payments to the providers in the group.

• Independent practice association (IPA)model HMOs contract with groups of independentphysicians who work and provide care for HMOpatients in their own offices. These independentpractitioners receive a capitated payment from theHMO to provide a full range of health services forthe HMO’s members, but they also see patients fromother health plans.

Health outcomes: The results in terms ofpatient health status and satisfaction with care fromcertain medical interventions and health care services.

Health plan: An insurance entity that con-tracts with and charges premiums to plan mem-bers, employers and/or other organizations to covera predetermined range of health services for planmembers. “Health plan” usually refers to a man-aged care entity rather than a fee-for-service insurer.

Health Plan Employer Data InformationSet (HEDIS): A set of performance measures forboth private and public health plans developed bythe National Committee for Quality Assurance(NCQA). The data set is designed to give employersand other organizations a means to evaluate and com-pare managed care plan performance. The data setincludes over 70 quality improvement, credentialing,member satisfaction and preventative health mea-sures, including child immunization rates, variousscreening rates for cancer, waiting time for appoint-ments with primary care providers and membersatisfaction measures.

Indemnity: A form of insurance coverage thatreimburses a member or client for covered servicesor loss based on claims filed after the service is ren-dered or loss is incurred.

Joint Commission on Accreditation of

Healthcare Organizations (JACHO): A non-profit organization that has established quality ofcare criteria for health care organizations and thatuses those standards to accredit hospitals and healthcare organizations as well as managed careorganizations.

Managed care organization (MCO): 1)A general term meaning an organization that usesvarious methods, such as capitation, utilization re-view, prior authorization, case management andother techniques, to influence the cost and use ofhealth services by patients and providers. 2) Thename used by the Health Care Financing Adminis-tration, the agency which oversees Medicaid, forfully-integrated, full-risk plans that participate inMedicaid managed care programs.

Medicaid: A health insurance program forlow income Americans who meet certain eligibilitycriteria. It is jointly funded by federal and state gov-ernments and is operated by states; it was createdunder Title XIX of the federal Social Security Act in1965.

Medicare: A federal health insurance pro-gram for older Americans and the disabled.

National Committee for Quality Assur-ance (NCQA): A non-profit organization that de-velops quality indicators and data reporting toolssuch as HEDIS and which accredits managed careplans

Network: A group of physicians, clinics,health centers, medical group practices, hospitalsand other providers with which a managed careorganization contracts to provide care for its mem-bers. The providers and facilities agree to acceptthe plan’s terms and payment rates and in returnreceive a guaranteed pool of patients. Plan mem-bers may usually only use approved providers andfacilities for health care in order for the cost of healthcare services to be fully covered by the plan.

Ombudsman: A person who is authorizedto investigate complaints and to serve as an advo-cate for consumer interests within an organizationor system.

Performance measure: (also known asquality indicator) An accepted empirical standardfor assessing the quality of health care. Performancemeasures may include measures of access to care(e.g., waiting time before seeing a physician), ofclinical care (screening for breast cancer), of satis-faction with care, and of service utilization, amongothers. Performance measures are used to comparethe quality of care across health plans, health careorganizations or providers.

Point of service (POS): An arrangementby which managed care plan members are permit-ted to receive services outside the provider networkestablished by the MCO without referral or authori-zation. For out-of-network care, members may berequired to pay deductibles and higher co-payments,


much like traditional health insurance coverage.

Practice guidelines: Standards for providersthat utilize evidence-based parameters for treatinga disease or condition.

Preferred provider organization (PPO):A network of physicians and hospitals that contractwith a health plan to provide care at agreed uponrates to members of the health plan. PPO mem-bers incur lower costs for care and receive greaterbenefits when they see a preferred provider, andpay higher out of pocket costs when they receivecare outside the PPO network.

Preventative care: Health care servicesdesigned to prevent, detect and treat disease earlyand most effectively. Preventative care includes ser-vices such as immunizations and screenings like Papsmears and cholesterol checks.

Prior authorization: The requirement thatplan members or providers obtain authorization fora specified health care service from a managed careplan before it is performed. Most plans require priorauthorization, for instance, for outpatient surgeryand hospitalization.

Primary care case management (PCCM):The use of primary care providers by managed careplans to serve as gatekeepers and coordinators ofcare for plan members. Under primary care casemanagement, for instance, a physician would de-termine if referral to a specialist is necessary for agiven health condition or may monitor whether achild has received all appropriate immunizations,etc. In this way, plans reduce their payments forunnecessary and more expensive specialty care andensure that plan members have received necessarypreventative care.

Primary care physician (PCP): A physi-cian, usually a general practitioner or family physi-cian, devoted to providing general medical care forpatients. Many managed care organizations requiremembers to choose a primary care physician toprovide preventative and acute care and to coordi-nate care and referrals to specialists.

Provider: Any health care organization,hospital, physician, or other health care practitionerthat provides health care services to patients.

Quality assurance: A set of activities de-signed to assess and assure the quality of servicesdelivered; in health care, quality assurance includesassessing the quality of care as well as the adminis-trative and support services that are provided topatients

Quality Assurance Reform Initiative(QARI): A program started in 1991 by the HealthCare Financing Administration as a tool for statesto use in assessing the quality of care in Medicaidmanaged care programs. QARI outlined four areasof assessment: 1) a framework of responsibilities

for all of the actors in Medicaid managed care pro-grams, 2) quality assurance standards for plans, 3)investigations of detailed focused studies of clinicalcare, and 4) external review standards. Three statesserved as the pilot states for the project initially butmany other states adopted the guidelines in QARI.

Quality improvement: A process designedto identify problems, develop solutions, and con-tinually improve a system’s performance.

Quality Improvement System in Man-aged Care (QISMC): A comprehensive, coordi-nated oversight and quality improvement system forMedicaid and Medicare managed care programsdeveloped by the Health Care Financing Adminis-tration in 1996.

QISMC is the successor to QARI guidelinesand emphasizes managed care plan improvementover time. The QISMC system will be mandatoryonly for Medicare managed care plans, but HCFAis encouraging states to adopt QISMC standardsfor Medicaid programs, as well.

Quality indicator: see performance measure.

Referral: A process whereby a providertransfers care for a health plan member to a spe-cialist or other health care service provider. Manymanaged care organizations require members to getreferrals from their primary care doctors before re-ceiving specialty care, undergoing certain tests orbefore being hospitalized.

Risk contract: An arrangement throughwhich a health care provider agrees to provide arange of medical services to a set population ofpatients for a pre-paid sum of money. The physi-cian is responsible for managing the care of thesepatients and risks losing money if total expensesexceed the capitated payment established.

Specialist: A physician or other health pro-fessional who has received additional specializedtraining in a specific area of medicine, such as car-diology or internal medicine. Most MCOs requiremembers to get a referral from their primary carephysician before seeing a specialist.

Utilization review (UR): The evaluation ofthe necessity and appropriateness of a recom-mended health care service, procedure or test. Ifthe care is determined to be unnecessary or inap-propriate, a managed care plan may deny coverage,that is, refuse to pay, for the procedure or treat-ment. Plans may perform utilization review concur-rently (as services are performed) and/or retrospec-tively (after they are performed).

Waiver: Authorization from the U.S. Depart-ment of Health and Human Services that releases astate Medicaid agency from certain requirementsof the Medicaid program without jeopardizing thestate receiving matching funds from the federalgovernment.

Development

Dr. Keon S. ChiSenior Fellow(859) [email protected] HarbersonManager, National Institute for

State Conflict Management(859) [email protected] CunninghamLogistics and Development

Assistant(859) [email protected] HembreeExecutive Director, NationalEmergency Management

Association(859) [email protected] HensleyAdministrative Secretary, NationalEmergency Management

Association(859) [email protected]

CSG establishes the Center forLeadership, Innovation & Policy

To expand quality programs and services into the 21st century, The Council of StateGovernments proudly announces the establishment of the Center for Leadership, Innovation& Policy. CLIP will serve the state government community by promoting policy developmentand leadership training and by recognizing innovative state programs. With CSG’smultibranch membership and regional leadership conferences as a foundation, CLIP isuniquely positioned to develop and execute critical state problem-solving initiatives withintergovernmental, philanthropic and corporate partners.

CLIP now houses the national Innovations Awards Program, the Henry Toll FellowshipProgram and CSG’s national policy research activities. Through the center’s four policygroups — Corrections & Public Safety, Environmental Policy, Health Capacity and StateTrends — CLIP seeks to maximize public and private resources to assist state officials indeveloping and implementing effective policies, practices and programs. To enhance CSG’scurrent state programs and services, CLIP will focus on developing new products to benefitstate officials.

For more information, please visit our Web site at www.csg.org/clip.

Robert SilvanikDirector(859) [email protected]

Catherine McKinneyDevelopment Officer(859) [email protected]

CLIP Staff Policy

Cindy J. LackeySenior Policy Analyst(859) [email protected] MarshallSenior Policy Analyst(859) [email protected] MatthewsHealth Policy Analyst(859) [email protected] McAlisterEnvironmental Policy Analyst(859) [email protected] MookPolicy Analyst(859) [email protected] J. MountjoyRegional Coordinator(859) [email protected]

Leadership &Innovation

Debbie PowellProgram Planning Coordinator(859) [email protected]

The Council of State GovernmentsP.O. Box 11910Lexington, KY 40578-1910(859) 244-8000

An Introduction to State Efforts · 2018-01-26 · the Medicaid population was enrolled in some...

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