by W. Michael Reid and Katherine P. Mason
Managed care organizations (MCOs) are increasing their share of many local markets and are increasingly providing services to newly insured populations and all Medicaid eligibles. Local health departments (LHDs) in these markets must determine what strategies they wish to pursue in this new health care environment. Possible roles are identified (from public health services only to a full range of services). LHDs are encouraged to use their strategic advantages to contract with MCOs to serve geographic, socioeconomic, and cultural populations that differ from those that MCOs are accustomed to serve. Accreditation guidelines of the National Committee for Quality Assurance are summarized and their relationship to LHD activities discussed.
The future of public health continues to be an important topic of discussion.1,2 Changes in the Medicaid policies of many states, the growing market share of managed care organizations (MCOs), and changes in federal welfare policy have lent an urgency to the discussion not present in earlier periods. Although these changes will affect the assessment and policy development functions of local health departments (LHDs), the greatest impact will likely be on the assurance function.3 Many LHDs have been an important source of primary care services for Medicaid and low-income working populations. These populations are now being diverted to the private sector as states have adopted policies designed to enroll eligible Medicaid candidates into MCOs and have expanded Medicaid eligibility to include low-income workers. New financing arrangements, such as purchasing alliances, are also enabling low-income workers to enroll in private plans. Federal welfare reform may place added pressure on LHDs as the provider of last resort for the uninsured. In this turbulent era, LHDs are having to reconsider their missions and determine what their roles should be, including how best to perform their assurance functions.
This article will describe several potential roles for LHDs in the new health care environment. Several of them can involve a continued presence in the health care market through contracts with MCOs. The article will also describe the standards of the National Committee for Quality Assurance (NCQA), a major accrediting body for MCOs, and their implications for LHDs. Finally, the article will suggest operational considerations for agencies that will enable them to take advantage of opportunities to contract with MCOs to deliver services that the LHDs are particularly fitted to provide.
Assurance, as defined by the Institute of Medicine4, is making sure that necessary services are provided to reach agreed-upon goals, either by encouraging private sector action, by requiring it, or by providing services directly. Although some authorities have predicted that public health agencies will return to their traditional roles1, LHDs may in fact choose among several strategies to achieve satisfactory assurance. The strategies range from relying primarily on advocacy and oversight while providing traditional public health services to being a provider of most primary/personal health care services. The continuum of roles includes:
In choosing their roles and missions, LHDs must carefully consider how best to fulfill their assurance function. In the new environment, assurance is made more problematic because Medicaid beneficiaries and other vulnerable populations who become enrolled in MCOs, and especially in health maintenance organizations (HMOs), may not be accustomed
to the complicated procedures of health care bureaucracies; the MCOs are likely not adept at serving their special needs. Many members of these populations have personal characteristics and face barriers (such as poverty, level of education, fluctuations in Medicaid eligibility, the lack of availability of providers in areas in which they live, their health status, lack of transportation, culture, language, and difficulties of maintenance compliance with treatment regimens) that will challenge service providers without experience in serving this population.5-7
LHDs and MCOs may each have incentives to enter into contracts calling for LHDs to deliver services for the MCOs. LHD leadership should undertake strategic planning to review their missions, identify their agency's strategic advantages, and assess the environment in their service area.8 If they determine that the roles above relating to underserved areas, special populations, preventive services, a wide range of services, or assurance services are appropriate for the LHD, then contracting with MCOs can provide important sources of revenue as well as strengthen its assurance function and contribute to achieving its public health mission.
There are several incentives for MCOs to contract with LHDs. For many of the LHD roles described above, an MCO would essentially be deciding whether to "make or buy" the LHD services. A critical factor will be a benefit-to-cost ratio greater than one for contracting. The strategic advantage that MCOs have is the capacity to deliver medical care efficiently and effectively; it does not follow that they are prepared to be effective with all newly insured populations, such as Medicaid eligibles. MCOs may find that the costs of serving these groups are higher than for the populations they are accustomed to serve. MCOs may have to make substantial commitments of resources to achieve acceptable service rates for Medicaid and other low-income populations so that logistical, cultural, and language barriers can be overcome. Significant outreach and educational efforts may be necessary to ensure appropriate utilization of the programs. All of these activities will be costly and may not be fully reflected in the reimbursement rates set by the state Medicaid agency. The expertise that LHDs have developed in reaching and serving these populations may make them attractive contractual partners for HMOs. Even if the cost analysis produces a "make" conclusion, the MCO may decide not to commit its resources to those services, but rather to retain its strategic flexibility by contracting.
Further, "report cards" are being developed to measure the quality of care and service provided by MCOs. Regulatory and quasi-regulatory quality oversight activities are using the Health Plan Employer Data and Information Set (HEDIS) as a performance measure. The NCQA has established accreditation standards relating to preventive services (see below) and has led a project to modify HEDIS to better reflect Medicaid needs. HEDIS process and outcome measures relate to several areas that might be favorable for contracts with LHDs, including maternity care, newborn care, prenatal care, childhood and adult immunization rates, and mammography screening rates.9
Finally, several states are imposing requirements on MCOs that serve Medicaid eligibles whose effects will be to increase incentives to contract with LHDs. In particular, state Medicaid programs, such as Florida's, are requiring that HMOs awarded Medicaid contracts must be accredited and serve both commercial and Medicaid populations. These requirements ensure that MCOs will provide many services that LHDs are skilled in delivering and serve populations that LHDs are skilled in serving.
Thus, both LHDs and MCOs may find mutual benefit in contractual relationships with each other. An understanding of NCQA standards by LHD officials and making operational adjustments to be consistent with them will facilitate reaching these agreements.
LHDs that have developed cost-effective and high quality services should find that they can be competitive in a variety of market situations and with different kinds of MCOs. Analysts have identified three stages in the evolution of MCO strategies.10 The first is "event-driven cost avoidance." At this stage, MCOs are competitive on the basis of price and focus their efforts on reducing their costs. In markets where MCOs are predominantly at this stage, LHDs can market themselves on the basis of the cost advantage to the MCO of contracting for the services. In the second stage, "value improvement," MCOs emphasize improved delivery processes, customer satisfaction, and controlling physician use. They approach these through such mechanisms as clinical pathways, monitoring outcomes, and patient-focused processes. LHDs under such conditions will be competitive on the basis of their strengths in working with members of special populations and their capacity to provide coordinated patient-centered services, as well as on the basis of cost.
The third evolutionary stage finds MCOs focusing on health improvement through risk appraisal, targeted interventions in families and communities, the use of interdisciplinary teams, and epidemiological approaches. This advanced stage of MCO evolution would clearly create market advantages for LHDs that are already skilled in these basically public health approaches. In this state, MCOs have achieved such savings that they are all roughly equal in price; the key market test will be whether the health of the plan members is improved.
Within the first two stages, LHD opportunities will depend on the extent to which MCOs have achieved market penetration and the extent of competition among MCOs. In addition, the age of potential MCO contractors, their size, and the extent of their contracts with state Medicaid agencies will affect LHD opportunities. These environmental factors will help to shape LHD strategies. NCQA standards will bear importantly on MCO contracting decisions at each stage in most markets.
The NCQA was founded in 1979 by HMO trade associations. In 1990, it was elevated to be an independent accrediting body through the support of the Robert Wood Johnson Foundation, the HMO industry, and business purchaser representatives.11 It promulgated its first accreditation standards in 1991.12 The standards are aimed at achieving continuous quality improvement in care and service through the use of objective and quantitative measures of performance. Accreditation by the NCQA is vigorously pursued by many HMOs (approximately 30 percent have been successful in gaining full accreditation) and such accreditation is viewed as a strong symbol of commitment to high quality of care and of service.13
The 1997 NCQA standards became effective on April 1, 1997.14 The discussion that follows summarize several aspects of the standards that are of importance to LHD leaders.
LHD directors who wish to subcontract with MCOs for preventive and primary care services must master the NCQA accreditation standards. The standards have implications for all organizations that contract with MCOs; LHDs that contract for services will be held to the same standards that the MCOs are. The NCQA has established standards in six areas:
Understanding the expectations that NCQA has for the MCOs and for those who contract with MCOs will allow the LHD to establish operational systems that will meet the NCQA standards. A brief discussion of each of the six standard areas follows. Table 1 may be helpful to LHDs in matching roles with capacities to meet NCQA standards.
Table 1
NCQA standards and roles of local health departments: A sample format
NCQA standards |
Public health services only |
Serve underserved areas |
Serve special populations |
Preventative services to special populations |
Full range of services |
Assurance services |
Quality management and improvement |
||||||
Utilization management |
||||||
Credentialing and recredentialing |
||||||
Members' rights and responsibilities |
||||||
Preventive health services |
||||||
Medical records |
LHD directors seeking contracts with MCOs will find several quality improvement (Ql) standards of importance. The QI standards require the MCO to ensure the availability of primary care practitioners and the accessibility of primary care services, including preventive services. They also require that:
In addition, the 1997 standards require the MCO to employ quality improvement interventions if it identifies areas for improvement in either the quality of care or the quality of service. They also require the MCO to evaluate the continuity and coordination of care across settings using appropriate data collection methods and to exercise strong oversight of any Ql activities that are delegated. The MCO is also expected to monitor utilization to identify potential underutilization as well as overutilization.
To meet NCQA standards, an MCO must have a program that describes its delegated and nondelegated utilization management (UM) activities. The MCO must have documented oversight and evaluation of any contracted or delegated UM activities. All UM structures, processes, and utilization review decision criteria must be defined in writing. Member satisfaction, largely determined by surveys, is an important element in an MCO's evaluation of its UM program and the MCO must respond to detected consumer dissatisfaction. Several of the standards relating to Ql and members' rights also involve use of member surveys.
The MCO must have a rigorous credentialing and recredentialing process. There must be a site visit to the offices of all potential primary care practitioners and obstetricians /gynecologists that includes a structured review of the site and an evaluation of the medical record-keeping practices against the MCO's standards. The MCO must have written policies and procedures for assessing the quality of organizational providers with which it may wish to contract. Providers are required to be in good standing with state and federal regulatory bodies and to have been approved by an accrediting body. If an organizational provider has not been accredited, it will have to meet standards set by the MCO. The MCO will do its own assessment that may include site visits and interviews with key personnel, including senior management and nursing staff. The MCO must perform careful oversight of delegated credentialing functions and retains the right to approve new practitioners and terminate or suspend existing providers. Recredentialing of primary care practitioners will involve several kinds of monitoring information, including member complaints, Ql and UM activities, member satisfaction, medical record reviews, and the findings from site visits. The credentialing and recredentialing standards also apply to "licensed independent practitioners" other than physicians, dentists, podiatrists, and chiropractors. LHDs that rely on such practitioners (e.g., nurse practitioners) for service delivery will be affected by these standards.
The NCQA standards require a strong MCO policy on members' rights, including receiving information about the MCO's services and providers, having their dignity and privacy respected, protecting confidentiality, participating in decisions regarding their health care, and having rights to complain about both care and service and to appeal decisions. MCO members, in turn, have the responsibility to provide information needed to care for them and to follow plans of care. The standards also require information for MCO members to be in readable language that is easily understood and, for major population groups served, in the Languages of those groups. The MCO must closely oversee any delegated member services activities. The MCO must also ensure that new enrollees, especially Medicaid beneficiaries, understand how the plan operates and have mechanisms to assess how well they understand.
The NCQA standards in this area offer perhaps the strongest basis for LHDs to contract with MCOs to serve special populations. They contain high expectations regarding preventive services. A critical requirement is for the MCO to have adopted and distributed practice guidelines for prevention and early detection of illness and disease. The guidelines are to cover preventive care for infants, children and adolescents, adults and the elderly, and prenatal/perinatal care. They are to contain descriptions of the interventions, the recommended frequencies, and the scientific basis for the guidelines. The standards also apply to delegated activities that must be monitored by the MCO.
The preventive health standards require the MCO to encourage all its members to use the preventive services as well as to target particular risk groups. Further, the standards require the MCO annually to evaluate four prevention or early intervention services listed in eight broad areas to determine compliance with the guidelines. The eight areas include childhood immunizations, adult immunizations, coronary heart disease risk factor screening or counseling, smoking, cancer screening, prenatal care, and others (e.g., lead toxicity screening, sexually, transmitted diseases and HIV screening and prevention, prevention of unintended pregnancy, and substance abuse screening and prevention). Monitoring and evaluation of the four areas should be done on a population basis and the MCO must adopt measures in at least two of the four areas studied to improve performance. Given the experience, tradition, and mission of many LHDs, this area may be especially attractive for subcontracts with MCOs.
The NCQA requires that an MCO's primary care physicians have access to thorough and current medical records for each member they serve. The medical records must be detailed and organized. The MCO must systematically review medical records for their conformity to standards. Among the items covered by medical record reviews are completed immunizations for children; notations regarding the use of cigarettes, alcohol, and substances; and offerings of appropriate screening, and preventive services. The NCQA standards are explicit with respect to the necessity for maintaining the confidentiality of member information.
A final aspect of the 1997 NCQA standards that indicates the potential for contracting between MCOs and LHDs is the inclusion of several "monitoring" standards. These standards will be monitored and evaluated until April 1, 1998. One of these standards calls for an MCO's Ql program to contain a description of the MCO's "strategy for integrating, public health goals."14(p.41) "The MCO's Ql program should recognize public health goals and where possible "help to facilitate the achievement of public health goals and initiatives" 14(p.44) Another Ql monitoring standard requires the MCO to consider the "linguistic and cultural needs and preferences 14(p.52) of its member population in establishing its access plan. An essential aspect of this is convenient location of primary care providers to serve the member population. These monitoring standards indicate likely binding, expectations in 1998 and suggest important opportunities for LHDs wishing to contract with MCOs to help achieve public health goals and serve vulnerable populations.
The above summary of selected NCQA standards suggests several areas that must be addressed by LHD codirectors who wish to contract to provide services to MCO plan members. Perhaps the foremost step to be taken is to be certain that the costs of services that might be covered by a contract are fully and accurately understood. A strong financial management system will be necessary to support the delivery of services on a contractual basis to avoid the danger of underpricing. Closely related is the necessity of being sure the contract language is clear regarding the responsibilities of the LHD with respect to services, prices, and the issues raised above relating to NCQA standards.
In addition to financial and legal expertise, the LHD director must be certain of having an accurate assessment of the capability of the LHD's staff and processes to support the contract. A variety of issues are important here, including the LHD's organizational structure, legal restrictions on LHD activity, degree of flexibility available for staff assignments, the organizational culture, the capabilities of key staff, and the ability to manage the flow of funds to ensure stability.
Another consideration is the nature of the LHD's decision support system and its capability to provide timely and accurate data relating to services provided. An effective information system will be able to generate administrative and clinical data (as well as financial information) so that the LHD can participate in the MCO's QI and UM programs.
As MCOs adopt practice guidelines that relate to preventive health services, those LHD directors who can demonstrate that their agencies can generate relevant data to support the use of the guidelines will be more attractive as contractual partners. The MCOs will be more likely to contract with LHDs that are capable of measuring conformity to their practice guidelines or that are using guidelines for preventive health services that the MCO itself can adopt.
Another Ql and UM expectation in NCQA standards is that MCO members will be satisfied with their service and care and that the MCOs will systematically collect information that will demonstrate whether they are satisfied. LHDs may not be especially strong in this area and may not have established methods for determining the level of client satisfaction and for responding to identified areas in need of improvement. Those that do measure client satisfaction should review their methods to be assured that they produce reliable and valid information. LHDs that have this capability will be better able to ensure MCOs that they can help the MCO to meet NCQA standards.
The quality of the LHD's decision support system will also relate to the MCO's ability to meet NCQA standards relating to medical records. The NCQA evaluates MCOs on the quality and comprehensiveness of their care and service; services provided outside the MCO network will have to be fully and accurately documented. LHDs that contract with MCOs must provide accurate and complete records of services to the MCO's members. These will then become part of the complete MCO medical record. Assurance of confidentiality is an essential part of any such information system. LHDs may have to take extra precautions in this area, especially if they are not accustomed to sharing information with private organizations or if they are implementing new or more complex information systems.
The NCQA standards on credentialing expect that any organizational provider that contracts to deliver services for the MCO will themselves be accredited and be in compliance with state and federal regulations. Few LHDs are accredited; thus, those that wish to contract with MCOs for services should be prepared for the possibility of an on-site assessment by the MCO staff prior to entering into a contract.
Finally, it is essential that staff assigned to any contract with an MCO be well-qualified. Essential qualifications will include understanding the importance of providing accurate data, being able to utilize the information system effectively, understanding and using any UM methods that MCOs are likely to use, conforming to practice guidelines, and providing high quality care that will produce high levels of consumer satisfaction.
LHDs are reconsidering their roles in the changing how to carry out their essential function of assurance. Significant opportunities may exist for establishing contractual relationships with MCOs that would create new revenue streams, strengthen the assurance function, and achieve LHD missions. LHD leaders should recognize that their agencies have areas of service excellence that will give them a strategic advantage in many marketplaces, and they should seriously consider marketing those advantages to MCOS. Despite their popularity and their capacity to deliver medical care efficiently and effectively, MCOs are not well suited to provide primary care and preventive services to many populations that differ from commercially insured populations in geographic, cultural, and socioeconomic characteristics. Local health departments have experience and tradition in serving those populations. Those LHDs that seek MCO contracts will be attractive partners for MCOs if their agency operations are aligned with the standards that the NCQA demands of MCOS. The strategies suggested above will be helpful in achieving this.
References
Roles of Local Health Departments Case Study last updated July 06, 2006 (csong)