DECISIONS ON MANAGED CARE OPTIONS FOR AGED, BLIND, AND DISABLED POPULATION

Under enactments from the 79th Regular Session, the Health and Human Services Commission is directed to utilize cost-effective models to better manage the care of aged, blind, and disabled persons enrolled in Medicaid. House Bill 1771 establishes the Integrated Care Management (ICM) model as a non-capitated managed care approach to ensure proper utilization and integration of acute care and long-term care services and supports. The General Appropriations Act (Senate Bill 1, Article II Special Provisions, Sec. 49) reduces appropriations based on anticipated savings and establishes conditions upon the use of capitated managed care models. Under this provision, appropriations for the 2006-07 biennium are reduced by an estimated $277.5 million, including $109.5 million from general revenue, and the Commission is directed to equitably allocate the reductions among eight service delivery areas.

The S.B. 1 provision identifies various options for managed care that may be used: Primary Care Case Management (PCCM); ICM; or HMO carve-out. The HMO carve-out option can be broken out into three sub-options—“public hospital carve-out,” “disproportionate share hospital carve-out,” and “all hospital carve-out.” The provision authorizes the Commission to determine the model to be implemented in a service delivery area provided, however, that the ICM be implemented in Dallas County and that the STAR+PLUS model in Harris County be converted to a carve-out.

To assist in the determination of a model, the Health and Human Services Commission undertook an extensive effort that included analysis of actuarial projections and assumptions, consultations with county and hospital district officials in each service area, consultations with consumers and advocacy representatives and consultations with health plan executives. Additionally, the criteria below were applied to support the evaluation of the various options:

1. compliance with legislative conditions including the requirement to preserve existing opportunities for federal payments under UPL (upper payment limit) provisions;

2. ability to achieve mandated general revenue savings;

3. comparability to the preference expressed by local officials;

4. conformity within a consistent and rational framework for administering and delivering Medicaid services; and

5. expectations relating to approval of federal waiver(s).

Based on these considerations, the following determinations were made:

1. that the ICM model be implemented in both the Dallas and Tarrant service delivery areas;

2. that the HMO “All Hospital” carve-out be implemented in the other six service delivery areas; and

3. that targeted savings be allocated among the service areas through a methodology that recognizes that greater savings are expected for areas with higher costs and higher inpatient utilization relative to overall state averages.

The table below details the savings amount for each service area, the counties which comprise each service area and the projected caseload for each service area. Legislative provisions direct that the managed care models be implemented by September 1, 2006, or as soon thereafter as practicable. Considerable work still remains to be completed—full development of the ICM and HMO carve-out models, competitive procurement of services and obtaining federal waivers necessary for implementation. The Health and Human Services Commission will continue to pursue an aggressive schedule to move these models to an operational stage.

Managed Care for Aged, Blind, and Disabled Medicaid Population

* FY 2006, SSI Adults.

** Based on Harris contiguous counties.