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Managing Care without Managed Care

North Carolina is achieving big savings with a very different approach.

As states struggle to contain health care costs, many are doubling down on Medicaid managed care. Their hope is that such plans will be able to provide better care to recipients with complex chronic diseases, saving money in the process. 

But doubts have emerged in some states about the wisdom of this approach. Former Massachusetts Medicaid director Dr. Bob Master has expressed reservations about whether these plans could address that challenge. Recently, Connecticut announced that it was dropping the use of private Medicaid managed care.

This month, I spoke with the executive director of one of the longest-running experiments in large-scale case management, Community Care of North Carolina. Tork Wade talked about how his program had helped North Carolina avoid more than $1 billion in health expenditures. I asked him about the program's achievements and challenges in this edited transcript.

What is Community Care of North Carolina and how did it get started?

Community Care is a medical home-care management system that's been built mainly for Medicaid recipients in North Carolina. It started around 1992 as a basic, early version of the medical home, where Medicaid recipients were linked to a primary care practice [which] provided the care and arranged for referrals and after-hours coverage.

Then in the late 1990s, the decision was made to expand the program to community-based case managers who could provide wraparound support for patients, particularly patients with chronic illnesses. That happened in 1998. Today, we have around 4,500 primary care physicians participating in the program statewide and these physicians and their patients are assisted locally by 600 care managers, 26 pharmacists and 14 psychiatrists.

Let's talk more about wraparound community support. How is that provided?

There are 14 community networks around the state. They're comprised of primary care practices, local hospitals, the local health department, and social services, and, in some cases, other providers like mental health agencies. Each network takes responsibility for the Medicaid population in their area. Each network has care managers who work with medical directors, pharmacists, behavioral health specialists, and others to provide support to the primary care physicians and their chronic-care patients in managing the care they need on a timely basis.

How much does it cost to provide case managers for this population? Are providers paid a fee to participate in this program as well?

Yes, physicians are paid to participate. How much depends on the eligibility category. If they're serving women and children, they're paid $2.50 per member per month. If they're serving the aged, blind and disabled, they receive $5 per member per month. Those patients tend to be much more complex. The networks then receive approximately $3 per member per month for women and children enrollees and $10 per member per month for aged, blind and disabled enrollees. The networks use these resources to hire local care managers, pharmacists, medical directors, psychiatrists and other network staff.

Are these state government employees?

No, these are all nonprofit organizations that contract with the state to provide these services. So these are all independent organizations. They vary a fair bit in size. They're not state designated, so they form locally. The largest covers around 26 counties and the smallest is actually just one urban county. So there's a fair bit of range.

Most states have sought to manage care for Medicaid patients by contracting with Medicaid managed care programs. Why did North Carolina take such a different approach?

North Carolina has elected to work with its providers to build its own system on the belief that you've got one set of physicians and health providers out there. And if we can engage them and get them investing in improving the care process, that's a far more productive and lasting way to drive improvement than trying to set up a competitive system where few plans can even have enough patients to get providers to pay attention. The push toward patient-centered medical homes and restructuring the health-care system is what we're all about. To have this statewide, locally-based infrastructure in place, which we can continually build, add and revise to drive improvement is a great opportunity. The reforms coming out of Washington are really [helping] push and improve our ability to strengthen our system.

Before we talk about what's coming out of Washington, I'd like to talk about your results. Most assessments of disease management programs and case management have found fairly negligible cost savings. The estimates of costs avoided by Community Care of North Carolina are huge -- $1.5 billion in costs avoided between 2007 and 2009, according to Treo Solution. Where are these savings coming from?

It's an accumulation of things, but the key element is having the patient linked to a medical home. That piece is huge. Then, because we have all the claims data for Medicaid, we have an analytic team here that's able to go in, analyze the data and identify those patients who are at risk and who may be not getting the care they need. With our networks and their support resources, we then have the ability and tools to intervene and support improvements in care for target populations. It's that combination that makes savings possible.

So local networks are able to look and see who in their area is the Medicaid recipient who's going to the hospital every two weeks with an asthma attack?

Yes, they're able to do that and they're actually able to get real-time hospital data. Every patient, every enrollee who went to the emergency room or who was admitted to the hospital, they know that [information] within 24 hours. It's real-time data that the networks then can act on, have their care manager follow up and visit the patient in the hospital. Many of our care managers are now embedded in hospitals to be able to reach the patient as early as possible, making sure they get their medications, and that they get connected back to their primary care practice as quickly as possible. By having the data and those resources locally, you can make these things happen.

Are there other distinct features of the Community Care program that you think have allowed you to achieve greater successes with these types of programs than we've seen in smaller settings in the private sector?

Well, in addition to what I just described, we have a rich primary care system in North Carolina, which makes it a lot easier to get people enrolled. Also, North Carolina pays fairly well: Medicaid reimbursement rates are 95 percent of Medicare reimbursement rates. We have 94 percent of North Carolina primary care docs participating in the Community Care program. So that's a huge commitment not only by safety net providers, but by private providers throughout the state.

Last year, the Legislature directed Community Care of North Carolina to realize an extremely ambitious $90 million in additional savings. It suggested that the way the program might do that would be by extending the program to an additional 160,000 elderly, blind, disabled, high-expense Medicaid recipients. Could you talk about the challenges of trying to reach that population?

Yes, the challenges are huge. A lot of these patients are in a variety of settings. Some are in adult-care homes, some are in ICF/MRs [intensive care facilities for the mentally retarded]. A lot of these folks are frail and are very hard to reach. It's been a daunting task. North Carolina's Medicaid agency (Division of Medical Assistance) has been handling this enrollment effort. We are probably not going to reach the full 160,000 by the end of this year, but I think we'll be coming pretty close.

It's my understanding that everyone was hoping to avoid rate cuts, but when last I had checked, there had been something of a standoff between the administration of Gov. Bev Perdue and her legislative counterparts. Where do matters currently stand?

I think there's a general consensus across parties that they do not want to cut rates and they do not want to cut optional services. So there is a push, through improved efficiencies, in getting unenrolled Medicaid recipients enrolled in Community Care and in implementing initiatives to improve the utilization of services to save funds. These efforts have certainly narrowed the budget shortfall. We don't know if other cuts will be needed. I think everyone's committed to try to work toward that goal because the reality is, if you start going the other way, you're going to lose provider participation and people are going to go without important services. So I think everybody's aligned to try to avoid that.

Community Care of North Carolina has been in existence for over a decade. What have you learned?

I think there have been three main changes. One, when we first started, we were dealing with moms and children. Then, in the mid 2000s, we were asked by our General Assembly to bring our system to the aged, blind and disabled population, those patients with multiple chronic problems and a lot of mental health issues. That's still underway, and that obviously brings a whole different set of issues and challenges. Systems of care for the elderly and disabled are much more fragmented, much more difficult to work with.

Early on, when we were caring for moms and children, we were primarily dealing with single diseases. We worked on asthma, we worked on diabetes, we worked on other single diseases. With the aged, blind, and disabled population, who have multiple chronic conditions and often behavioral conditions, we had to take a much more broad-based approach, where care managers are really working with the individual, as opposed to focusing on a single disease. That's led us to have to retool a lot of our local-care management support. That's been a difficult transition. I think it's going well now, but it's taken a while.

The next biggest change is really taking on new populations. Medicaid has been our core population since the beginning, and now we've got Medicare patients under a Medicare 646 Quality Demonstration waiver. We're starting to work with the State Employees Health Plan and with private employers too. The first private employer is GlaxoSmithKline. They're giving their employees the option to join our medical home- and community-based care system. The employees are enrolling with physicians in our Community Care networks and our networks are working with those practices and the enrollees. One big challenge with the new populations is the data. With Medicaid, we have had access to all the claims data, plus current pharmacy, hospital and lab data. With Medicare and the other payers, obtaining the data you need to help manage care has been a challenge. It is slow going, but progress is being made.

Where does Community Care of North Carolina fit into the Accountable Care Organization (ACO) framework of national health reform?

We don't see ourselves as becoming an Accountable Care Organization per se. We're not an insurer. We're not a provider of direct services. But we do believe that our statewide medical home, community-based care management system and our information and analytics capabilities infrastructure can be an important foundation for ACO-type development. We want to work with our community partners as they explore building accountable systems.

At a time when states are deepening their commitment to managed care, North Carolina is taking a different path. Are there parts of the North Carolina experience that you think are applicable elsewhere?

I think that the medical home piece is very applicable, no matter whether it's a fee for service system or a managed care system. That, to us, is really the cornerstone of our effort, and it should be the cornerstone of any effort. We also think that having care support locally based and increasingly embedded within practices is critical to improving care and care outcomes.

Finally, one of our great strengths is the information we are able to capture. We not only capture all of the claims payment information on the whole population, we also get lab data; we get pharmacy data; we also have a case manager information system that captures the data from all the care managers. There's a huge, rich database that is absolutely essential to managing care.


Kaiser's 50-state health survey of Medicaid and CHIP enrollment is out! Among its many interesting findings is news that half the states are engaged in significant efforts to modernize eligibility and enrollment processes.

A new analysis by the Agency for Healthcare Research and Quality found that in 2009, one percent of the population accounted for 21.8 percent of total health spending. According to estimates from the Centers for Medicare & Medicaid Services published in the January issue of Health Affairs, health spending increased by 3.9 percent in 2010, the second consecutive year in which health spending as a share of gross domestic product has stayed flat.

A notable policy innovation: Maryland officials announced plans to create "health enterprise zones" where practitioners could target areas with health disparities, potentially receiving financial incentives to do so. Speaking of financial incentives, could disincentives work? Columbia University professor Claire Wang and her colleagues argue in Health Affairs that a penny tax on sugar-sweetened beverages would be a potent tool against diabetes, decreasing consumption by 15 percent.

Tina Trenkner is the Deputy Editor for She edits the Technology and Health newsletters.
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