reports

Outcomes of care for South Carolina Medicaid managed care enrollees, state fiscal year 2007

Final report to the South Carolina Department of Health and Human Services. Columbia, SC, USA: University of South Carolina.

University of South Carolina, Columbia, SC, USA

The SC Department of Health and Human Services funded this program evaluation, in response to the South Carolina legislative Proviso 8.41, “DHHS: Medicaid Cost and Quality Effectiveness.” Proviso 8.41 requires that the “Department of Health and Human Services (DHHS) shall establish a procedure to assess the various forms of managed care (Health Maintenance Organizations and Medical Home Networks, and any other forms authorized by the department) to measure cost effectiveness and quality.”

Several realities drive the need to evaluate the managed care initiatives. The early history of Medicaid and Medicaid managed care is as complex as the people it serves. Medicaid managed care creates unique challenges given its public nature and given the complexity of program models, state administrative expertise, and local health plan and market characteristics. Complexity, however, may mask the opportunities afforded by this shift from fee‐for‐service to managed care.

Since the early 1990s, when the federal government eased rules allowing state Medicaid programs to adopt managed care, almost all states have moved some or all of their Medicaid beneficiaries into Medicaid managed care (MMC). South Carolina has recently experienced a rapid growth in MMC. In a period of three years, enrollment in Medicaid managed care has increased from 8.3 to 27.4 percent of all Medicaid recipients. In a voluntary and competitive environment, this increase allows consumer choice between six providers delivering Medicaid managed care services and the traditional fee‐for‐service program. The most rapid growth has been among medical home entities serving recipients with medically complex conditions within less urban centers.

Consumers and providers have worried about quality of care in MMC since its inception and have argued vigorously for aggressive quality management and oversight by state Medicaid agencies. Proponents of managed care countered that state Medicaid agencies, as large‐scale purchasers of care, would pursue “value‐based purchasing” by selectively contracting with competing health plans and that this would lead to improved quality of care for beneficiaries. The goal of value‐based purchasing is to restructure the market so that plans compete for contracts based on quality and cost. South Carolina is in the early stages of documenting the impact of value‐based purchasing on quality and cost associated with MMC versus traditional fee‐for‐service Medicaid. Nationally, publicly financed managed care programs have emerged as the predominant health care delivery system for low‐income populations and people with chronic illnesses and disabilities.

The Center for Medicaid and Medicare Services (CMS) has been actively promoting a quality management agenda for states. The federal government developed the Quality Improvement System for Managed Care (QISMC) program in 1996 as a guide to quality management oversight for federal and state health care purchasers. QISMC is required of health plans participating in Medicare, and it served as a voluntary guide for state Medicaid programs. Subsequently, the Balanced Budget Act (BBA) of 1997 included a comprehensive revision of the federal statutes governing Medicaid managed care. The CMS issued a final rule in 2002 to implement BBA provisions that defined how quality measurement and performance improvement programs should be applied to MMC. These provisions espoused and updated the approach outlined in QISMC and specified that Medicaid programs develop and implement a comprehensive quality assessment and improvement process in both clinical and nonclinical areas and that states conduct an annual external quality review of MMC organizations. Thus, through these and other activities, federal policymakers have promoted the active involvement of state agencies in health plans’ quality assurance and improvement activities, and a value‐based purchasing agenda. Since the inception of MMC, the South Carolina Medicaid Program has worked to develop a system by which to evaluate quality and cost within the program. This effort includes requiring MMC providers to meet contractual quality standards, use of nationally certified measures, and input from recipients and providers within MMC and fee‐for‐service on satisfaction.

In addressing quality and costs, Proviso 8.41 further requires that SCDHHS collect all measures conducted by December 15 of each year. It states “in addition to the cost effectiveness calculations, HMOs and MHNs must conduct annual patient and provider satisfaction surveys equivalent to those sanctioned by nationally recognized managed care accrediting organizations. Cost effectiveness shall be determined in an actuarially sound manner and data must be aggregated in a manner to be determined by a third party actuary in order to adequately compare cost effectiveness of the different managed care programs. The program measures must use a case‐mix adjustment that encourages the managed care organizations to enroll and manage all beneficiaries.” Keeping with the spirit of the proviso, the SC Medicaid Program has exceeded these requirements by independently conducting analyses of consumers and providers using nationally certified instruments allowing for a future comparison with other MMC programs in the region and nationally. These efforts include the use of statistical sampling methods allowing for valid comparisons between MMC plans.