Vernellia Randall, Sally Giess, Gabrielle Boller, Cornelia Tinkler, Shalonda Bayless, Andrew Romero, Stacey Henry and Charles Whipple, Section 1115 Medicaid Waivers: Critiquing the State Applications, 26 Seton Hall Law Review 1069 (1996) (Full Document)

 

 

I. Introduction 1070
A. Overview of Medicaid p. 1070
B. Overview of State Waivers p. 1074

II. Assuring Access to Care p. 1090
A. Medicaid and Access p. 1090
B. Financial Barriers to Health Care p. 1092
C. Nonfinancial Barriers to Health Care p. 1093
D. Critiquing State Waiver Applications p. 1096
E. Assuring Access to Care: Conclusion p. 1108

III. Quality Assurance p. 1110
A. Overview p. 1110
B. Section 1115 Medicaid Waivers and Managed Care p. 1115
C. Critiquing State Waiver Applications p. 1117
D. Assuring Quality Health Care: Conclusion p. 1128

IV. Protecting Patients from Cost Containment p. 1129
A. Overview p. 1130
B. Critiquing State Waiver Application p. 1134
C. Protecting Patients from Cost Containment: p. 1140

V. Conclusion p. 1140

 


  • 1070 I. Introduction

The terms “managed care” or “managed competition” refer to a health delivery system designed to cut cost by eliminating “unnecessary care.” Unless carefully designed, these systems potentially may have an adverse impact on quality of care and patient rights. Although state efforts to reform Medicaid through Section 1115 waivers may give the appearance of access, such efforts may not actually remove nonfinancial barriers. Without specific safeguards, the institutional racism that is prevalent in other aspects of the health care system may actually be encouraged through the use of cost containment efforts. The overall impact of Section 1115 Medicaid waivers depends upon how the waiver assures access, maintains a high quality of care, monitors the impact of cost containment efforts, protects patient rights, and discourages discrimination. Moreover, the impact of Section 1115 Medicaid waivers depends upon how well both the application and implementation meets the purpose and goals of Medicaid. This Article addresses three aspects of Medicaid waivers: access, quality and cost containment.

A. Overview of Medicaid

In 1965, Congress enacted Title XI of the Social Security Act (Medicaid) as an effort to improve access to health care for the poor and underserved. Medicaid was intended to provide coverage for eligible low-income people in the mainstream American health care system. Medicaid is a federal-state alliance funded jointly by both entities and administered by the states. [FN]1 It is, however, more appropriate to say that Medicaid represents fifty-six separate programs, not one. [FN]2

Under broad federal guidelines, each state designs and administers its own Medicaid program. The Health Care Financing Agency (HCFA) must approve the program for compliance with *1071 federal laws and regulations. A state is required, “as far as practicable under the conditions in such state,” to provide medical services to families with dependent children, and to blind, aged, or disabled individuals “whose income and resources are insufficient to meet the costs of necessary medical services.” [FN]3

The amount of federal funding ranges from 50-83%, depending upon the average per capita income of the state. [FN]4 As long as state efforts remain consistent with federal guidelines, states are free to structure their own Medicaid programs. Federal guidelines cover the amount, duration, and scope of services, [FN]5 eligibility, [FN]6 and payment structures. [FN]7 Because of the flexibility in the federal guidelines, the populations served and benefits provided vary across states. [FN]8 State flexibility has been limited, however, by the federal requirements of “comparability” [FN]9 and “freedom of choice.” [FN]10

  • 1072 Medicaid has been an expensive program. From 1988 to 1992, Medicaid spending doubled. [FN]11 This increase is partially due to an increase in the cost of providing health care and to the extension of Medicaid eligibility. [FN]12 Medicaid is a $131 billion program covering over thirty-three million low-income Americans. [FN]13 In 1994, federal spending was estimated at about $81 billion while state spending was estimated at $61 billion. [FN]14 In 1993, states spent 18% of their budgets on Medicaid. [FN]15 Since 1985, Medicaid costs have tripled and the number of beneficiaries has increased by over 50%. [FN]16 Current projections suggest that program costs will double over the next five to seven years. It is estimated that the federal share of the 1995 program's bill will be $100 billion. [FN]17



Although a primary goal of Medicaid is to provide access to services for the poor, many of the poor are not eligible for Medicaid. This lack of eligibility is primarily due to individuals not being able to meet the Aid for Dependent Children (AFDC) eligibility criteria. [FN]18 This problem has been aggravated because states have failed to lower income eligibility criteria to keep pace with inflation. [FN]19 Furthermore, many individuals on Medicaid have been unable to use the “mainstream” health care services. [FN]20

These problems--lack of access and skyrocketing costs--have *1073 lead states to seek alternatives in structuring their Medicaid programs. One alternative has been increased reliance on Section 1115 of the Medicaid Act, which provides that:

(1) the Secretary may waive compliance with any of the requirements of section 302, 602, 654, 1202, 1352, 1382, or 1396a of this title, as the case may be, to the extent and for the period he finds necessary to enable such State or States to carry out such project, and that the costs of such project which would not otherwise be included as expenditures under section 303, 603, 655, 1203, 1353, 1383 or 1396b of this title . . . shall, to the extent and for the period prescribed by the Secretary, be regarded as expenditures under the State plan. . . . [FN]21

Although applying for Section 1115 waivers is complicated, there has nevertheless been an increased reliance on them. [FN]22 By April 1995, six states had received waivers, seven applications were pending, and other proposals were being drafted. [FN]23 In light of efforts *1074 to save cost and increase access, most Section 1115 demonstration projects seek to control cost by requiring participants to enroll in managed care organizations while at the same time expanding Medicaid eligibility. [FN]24



B. Overview of State Waivers

Section 1115(a) of the Social Security Act delegates to the Secretary of Health and Human Services the authority to engage in any experimental projects which are likely to assist in promoting the objectives of the Medicaid program. [FN]25 Congress intended to permit projects that would help improve the programs for beneficiaries. [FN]26 Even when projects appear to have the potential to adversely affect recipients, however, courts have refused to interfere as long as the Secretary's findings indicate that the research will promote the objectives of the Act. [FN]27 As a safeguard, the Secretary is restrained from attempting federal demonstration programs that are beyond his or her authority. [FN]28 More importantly, Congress has specifically maintained that the Section 1115 waivers cannot be applied in a way that harms Medicaid beneficiaries or fails to promote the legitimate Medicaid objectives. [FN]29

The current waiver applications have addressed currently popular health care reform concepts including global budgeting, a standard benefit package, pooling of purchasing power, managed care, incentive for preventive care, elimination of inappropriate welfare incentives, cost sharing, quality control, and elimination of *1075 class distinctions. [FN]30 A basic premise of the waivers is the ability of states to assure cost neutrality for the federal government, reduce health care costs for the state, and increase services without reducing quality. State waivers have often been developed as a part of a larger state insurance reform. As a part of this reform, states have implemented enrollment caps and have required enrollment in Medicaid managed care.

This Article assesses seven state waivers--Florida, [FN]31 Hawaii, [FN]32 Illinois, [FN]33 Missouri, [FN]34 New York, [FN]35 Oregon, [FN]36 and Tennessee [FN]37--to *1076 determine whether, as far as minority communities are concerned, they promote the legitimate Medicaid objectives or whether they have the potential of harming beneficiaries. [FN]38

 

  1. Eligibility [FN]39



With few exceptions, Medicaid is available only to persons with very low incomes. Eligible recipients must be members of families with children, pregnant women, or persons who are aged, blind, or disabled. Overall, the state waivers add low income uninsured [FN]401077 and uninsurable persons, [FN]41 use preexisting condition exclusions, [FN]42 eliminate medically needy coverage, [FN]43 revise financial eligibility, [FN]44 change rules for deeming income, [FN]45 change from gross income to net income tests, [FN]46 eliminate asset tests, [FN]47 eliminate retroactive eligibility, [FN]48 provide for presumptive eligibility, [FN]49 or guarantee 1078 eligibility. [FN]50

 fn50Eligbility

 

 

 

Benefits [FN]51

Federal Medicaid law mandates certain benefits such as family planning services and EPSDT services for individuals under age twenty-one. Services include: inpatient and outpatient hospital services, physician services, family planning services, prescription drugs, laboratory, radiology, and other diagnostic services, preventative care, home health services, and both emergency and nonemergency transportation. [FN]52 In addition, emergency medical services must also be provided. [FN]53

Section 1115 Medicaid Waivers continue to offer basic benefit packages. The waiver benefit standards differ, however, from the traditional Medicaid benefits. For example, changes from traditional Medicaid benefits under New York's Partnership Plan include: mandatory referral of noncompliant tuberculosis patients, extended family planning benefits up to twenty-four months for women who would normally lose coverage sixty days postpartum, and early intervention services provided to children from birth to the age of three after the first two years of the demonstration. [FN]54

Some applications eliminate coverage for some services. [FN]55 Even where an application does not limit the type of services to be *1079 provided, the waivers grant greater responsibility to the managed care plan to determine whether a service furnished or proposed to be furnished is medically necessary for the diagnosis or treatment of illness/injury. [FN]56 The elimination of mandatory federally qualified health centers or regional health centers represents one of the most significant changes in the waivers. [FN]57

 

fn57benefits

 

 

Cost Sharing [FN]58


Cost sharing requirements represent a major difference between current Medicaid programs and the Section 1115 waivers. [FN]59 Cost sharing consists of premiums, deductibles, and copayments based on income. One significant issue is how a provider responds to a recipient who cannot pay the copayment. For instance, Missouri specifically provides that health plans cannot deny or reduce services based on a recipient's inability to pay the copayment amount. Individuals specifically exempted from cost sharing include persons under age eighteen, persons in foster care under age twenty-one, and individuals residing in nursing homes. [FN]60

 

 

  1. Treatment of Providers [FN]61



Some waivers fundamentally change the organization and financing of the health care delivery system for low-income and uninsured clients. [FN]62 Specifically, states have: (1) adopted a global budget for enrollees [FN]63 on which both enrollment and delivery of *1080 care are organized through the regional concept which underlies the Community Health Agency areas; [FN]64 (2) eliminated the cost-based federally qualified health center (FQHC) and rural health clinic (RHC) payment methodology for both traditional and demonstration eligibles; [FN]65 (3) limited the reimbursement of essential community providers as specified in the health care plan contract with the insured; [FN]66 (4) diverted funds for hospital disproportionate share programs, which reimburse hospitals for charity care; [FN]67 and (5) eliminated family planning freedom of choice. [FN]68 In addition, some programs have attempted to expand the availability of providers by including school health initiatives. [FN]69 

fn69Providers

 

 

  • 1081 5. Managed Care [FN]70



The most significant change brought about by the state waiver applications is mandating the use of managed care. [FN]71 Some state programs, such as Florida Health Security, do not actually mandate enrollment in managed care but, rather, provide incentives that would push recipients into those plans. [FN]72 Even in those states that do not mandate managed care, many of the traditional recipients are already participating in managed care through section 1915(b)(1) waivers. [FN]73 Evaluating the waivers involves determining whether the waivers use capitation and other financial risk shifting that involves the use of full risk, permits all Medicaid HMOs, permits financial risk by providers, or exempts certain populations from participating in the populations exempted.

 

 fn73ManagedCare

 

 

  • 1082 6. Treatment of Special Populations [FN]74



Special populations addressed by state plans include: permanently and totally disabled individuals eligible under Medicaid; individuals residing in a nursing home receiving cash to apply towards their care through the Medicaid program; individuals residing in a state mental institution or institutional care facility for the mentally retarded; any individual receiving Medicare part A and part B benefits; and those receiving Medicare under the Aid to the Blind and Blind Pension. [FN]75 Some states requested through their waivers to bring these special populations into mandatory managed care. [FN]76 Finally, some states have developed special projects for populations such as the noninstitutionalized disabled, the seriously mentally ill, and chronic substance abusers. [FN]77 

 

FN77Populations

 

  • 1083 7. Key Waivers Requested



a. Amount, Duration, and Scope of Covered Services

The Medicaid Act and its implementing regulations require that the amount, scope, and duration of services be equally available to all those within an eligibility category, and also be equally available to categorically eligible recipients and medically needy recipients. A state that plans to provide different services for demonstration eligibles than traditional eligibles will need to obtain a waiver of section 1902(a)(10)(B), and sections 440.230-.250 and 441.10-.62 of title 42 of the Code of Federal Regulations (Florida, Hawaii, Oregon, and Tennessee).

b. Categorical Eligibility

A waiver of sections 1902(a)(14) and 1902(a)(10)(A)(i)&(ii) is needed in order to exempt a state from current administrative procedures for reviewing the eligibility process. (Florida, Hawaii, New York, Oregon).

c. Upper Income Eligibility Limitations

Medicaid requires the state to establish upper income eligibility limits. States that plan to extend coverage to individuals who exceed the upper income requirements regardless of whether or not they satisfy the optional or mandatory categories for Medicaid eligibility will need a waiver of section 1902(a)(10)(A), and the implementing regulations at section 435 of title 42 of the Code of Federal Regulations (Florida, Hawaii, New York, Oregon, and Tennessee [FN]78).

d. Resource Limitations

Sections 1902(a)(10)(A)(ii)(1) and (ll), 1907(a)(17), and subparts G and H of title 42 of the Code of Federal Regulations require the states to take into account income or resources of individuals who are not receiving assistance under AFDC who might otherwise become eligible for assistance under AFDC. A waiver of the standards requiring a resource as part of the eligibility determination *1084 for federally financed Medical Assistance is needed (Florida, Hawaii, Oregon, and Tennessee).

A waiver of the standards requiring an asset test as part of the eligibility determination for federally financed medical assistance is also needed. The applicable sections to be waived are 1902(a)(10)(A)(ii)(I) and (II), 1902(a)(17), and subparts G and H of title 42 of the Code of Federal Regulations (Florida, Hawaii, Oregon, and Tennessee [FN]79).

e. Deeming of Income

A waiver of section 1902(a)(17), and sections 435.100 and 435.602-.823 of title 42 of the Code of Federal Regulations, is needed to enable the state to waive income deeming rules and base eligibility on a household family unit (Florida, Hawaii, and Oregon).

f. HMO Enrollment Composition

Sections 1903(m)(1)(A), (2)(A), and (2)(C), and section 434 of title 42 of the Code of Federal Regulations, prohibit payments to states that contract for comprehensive services in a prepaid or risk basis unless such contracts are with entities that maintain an enrollment composition of no more than 75% Medicare and Medicaid enrollees. A waiver is requested to allow states to operate the managed care entity without being restricted by the 75% enrollment composition (Florida, Hawaii, New York, and Oregon).

g. Hospice Treatment Limits

Under section 1902(a)(10)(A)(ii)(VII), states may offer coverage for hospice care provided to a terminally ill individual who has voluntarily elected to have payment made for such care in lieu of payment for other care.

h. Freedom of Choice

Section 1902.23, codified as section 1396a(23) of title 42 of the United States Code, requires that most traditional Medicaid eligible may obtain medical services from any institution, agency, community, pharmacy, or person qualified to perform the services provided. A waiver is required to allow the state to restrict a recipient's freedom-of-choice of providers. A restriction to a particular *1085 plan or a particular set of plans for a defined time limit requires a waiver of section 1902(a)(23) (Florida, Hawaii, New York, and Tennessee).

i. EPSDT Treatment Services

Under section 1902(a)(43)(A), a state is required to pay for services required to treat a condition identified through a child screening. A waiver of this section is needed since a benefit package may not include these services. Whenever all EPSDT services are not included, a waiver of section 1902(a)(43)(A) is requested (Florida and Oregon).

j. IMD Eligibility

Under section 1905(a)(14), a state may choose to provide services for individuals sixty-five or older in institutions for mental disease. Covered services include the diagnosis, treatment and care of individuals with mental disease. Care of these individuals includes medical care, nursing care, and related services.

k. Eligibility Determination Procedures

Section 1902(a)(10) and implementing regulations at section 435 of the Code of Federal Regulations specify the Medicaid eligibility process to be used by the states and grant authority to the states to set eligibility determination standards. A waiver of section 1902(a)(10) is needed in order to use a different eligibility determination process than that specified for Medicaid (Florida, Hawaii, and Oregon).

l. Retroactive Eligibility

To eliminate the three-month retroactive coverage provision, a waiver of sections 1902(a)(10)(A) and (a)(34), and sections 435.401 and 435.914 of title 42 of the Code of Federal Regulations, is requested (Florida, Hawaii, and Oregon).

m. Medically Needy Eligibility

Sections 435.811, 435.831, and 435.8456 of title 42 of the Code of Federal Regulations implement the medically needy program for individuals otherwise not eligible for Medicaid. When a state plans to cover under its waiver those previously covered under the medically needy program, the medically needy program will be *1086 phased out [FN]80 (Florida, Hawaii, Oregon, and Tennessee).

n. HMO Rules for Upper Payment Limits

Section 1902(a)(30), and section 447.361 of title 42 of the Code of Federal Regulations, prohibit payment to a contractor on a capitation basis. A waiver is required where regulations could limit the use of risk-sharing payment incentives (Florida, Hawaii, New York, and Oregon).

o. HMO Rules for Disenrollment

A waiver of section 1903(m)(2)(A)(ii) is needed in order to modify disenrollment requirements (Florida, Hawaii, and Oregon).

p. HMO Rules for Prior Contract Approval

Section 1903(m)(2)(iii), along with section 434.71 of title 42 of the Code of Federal Regulations, requires prior approval by HCFA of all comprehensive risk contracts in which payments exceed $100,000. A waiver of this section is requested to eliminate the need for prior approval (Florida, Hawaii, and Oregon).

q. HMO Rules for Medical Audits

Section 434.53 of title 42 of the Code of Federal Regulations requires a state to establish a system of audits to ensure that HMOs with Medicaid contracts provide accessible, quality care to enrollees. A waiver of these specific requirements is needed (Florida and Hawaii).

r. Federal/State Qualified HMO Status for Full Risk Contracts

A waiver of sections 903(m)(1)(A) and (2)(A)(i) is needed when the demonstration provides for contracts with full capitated health plans that include organizations that may not be state or federally qualified HMOs or federally qualified community health centers [FN]81 (Hawaii, Oregon, and Tennessee).

s. FQHC/RHC Coverage and Payment

A waiver of sections 1902(a)(10) and 1902(a)(13)(E) which mandate offering federally qualified health center (FQHC) and rural health clinic (RHC) services and Medicare payment for such *1087 services is required if the state proposes any changes in the FQHC/RHC services (Florida, Hawaii, New York, Oregon, and Tennessee). Section 1902(a)(10) requires a state to provide certain mandatory services listed in sections 1905(a)(1)-(5), (17), and (21) to Medicaid recipients who are categorically eligible. Services of RHCs and FQHCs are among the mandatory services. A waiver is needed when the states propose changes in their plans in FQHC/RHC services (Florida, Hawaii, New York, Oregon, and Tennessee).

t. Uniformity and Comparability

Section 1902(a)(1), and section 431.50 of title 42 of the Code of Federal Regulations, require that the state Medicaid plan be in effect for all services and all eligible recipients in all political subdivisions of the state. Comparability, under section 1902(a)(10)(B), requires that services available to any categorically or medically needy beneficiary in the state must generally be equal in amount, duration, and scope to those available to any other categorically or medically needy beneficiary in the state (Florida, Hawaii, New York, Oregon, and Tennessee). [FN]82

u. DSH Payments

A waiver of section 1902(a)(13) is needed to allow a state to reimburse hospitals for any disproportionate share costs through a premium paid to health plans and to transfer funds to the demonstration project based on the enrollment of charity care patients in the project (Florida and Hawaii). [FN]83

v. Boren Amendment

A waiver of section 1902(a)(13)(A) is needed to exempt states from the requirements of the Boren Amendment. The amendment requires the states to determine the reasonable and adequate reimbursement level to meet costs which must be incurred by efficiently and economically operated facilities (Florida).

w. Cost-Sharing Rules

Sections 1902(a)(14) and 1916 limit the circumstances by which a state may impose cost sharing, such as copayments, deductibles, and coinsurance, and limit the charges to normal amounts. *1088 When a waiver imposes coinsurance, deductibles, and copayments that are not within the limits set out in Medicaid, the state must request a waiver of cost-sharing rules (Florida & Hawaii).

x. Third-Party Liability

Sections 433.138-.140 of title 42 of the Code of Federal Regulations require the states to identify liability and seek reimbursement from third parties before paying claims. Section 1902(a)(25) requires the agency to make all reasonable efforts to ascertain the legal liability of third parties. A waiver from the specific requirements of these sections is requested when the managed care entity will be responsible for third-party liability (Florida, Hawaii, and New York).

y. Utilization and Quality Care Review

Under sections 1903(a)(26)(30)(31), 1903(g), and 1903(i), Medicaid imposes strict utilization and quality of care review procedures. To the extent that a state's demonstration plan differs from the federal Medicaid requirements, a waiver is needed (Florida). [FN]84

z. Erroneous Payments

Section 1903(u) permits HCFA to withhold federal financial participation for a state's erroneous excess payments for medical assistance. States request a waiver of this section when the demonstration plan provides benefits to uninsured persons who would otherwise not be eligible for Medicaid (Florida).

aa. Payments for Drugs

Section 1927 mandates a detailed program for manufacturer rebates and limitations on coverage of drugs under Medicaid in order to reduce costs and limit overutilization of prescription drugs. A waiver of this section is requested so states can demonstrate that the use of managed competition will reduce costs without specifying how managed care entities must purchase drugs (Florida and Tennessee). [FN]85

  • 1089 bb. Dual Eligibility



A request is made to amend the primary care case management waiver and section 1915(b)(1) to expand the population to include those eligible under SSI, including those eligible for Medicare (Florida).

 

fn85KeyWaivers

 


 

  • 1090 II. Assuring Access to Care



“Access” is defined as “[a]dmittance, admission, the way or means by which a thing may be approached, or the liberty to approach, come into or use.” [FN]86 In health care, access is the pathway by which necessary services are rendered to patients. Access involves much more than merely a pathway or approach to health care. It involves both the actual delivery of health care and the quality of health care received. Access to health care is meaningless, however, if the health care lacks quality, is inappropriate, or is unavailable. [FN]87 Congress instituted the Medicaid program as an effort to provide increased access to mainstream health care for the poor and underserved.



A. Medicaid and Access

A primary goal of Medicaid is to assure access to comprehensive, quality health care. Medicaid regulations attempt to assure that states meet goals requiring: (1) adequate provider fees; (2) statewideness; (3) comparability; and (4) sufficient services.

  1. Adequate Provider Fees



The Medicaid program reimburses physicians for the Medicaid patients that they treat. States are required to assure that health care services provided to Medicaid recipients are available in proportion to similar services provided to the general population in the same geographic region. [FN]88 Moreover, states must meet this obligation by paying reimbursement rates sufficient to enlist enough providers. [FN]89 When these reimbursement rates are not sufficient, access is negatively affected. In particular, physicians may decline to render those services. This may prove to be a crucial issue in section 1115 waivers which implement managed care systems because managed care systems are typically paid at a rate of 90-95% percent of the Medicaid fee-for-service rate. [FN]90

  1. Statewideness



Statewideness refers to the availability of services across the *1091 state. The Medicaid Act requires that a service accessible in one area of the state must be accessible in all areas of the state. This can be a particular problem where some services are simply not made available in an area. It poses even more problems when a recipient is restricted to a health maintenance organization or a preferred provider organization and cannot seek care elsewhere. For example, it was determined that in California, access to dental services varied statewide and some areas had no access at all. [FN]91 Under a section 1115 waiver, many states request a waiver from the statewideness requirement.

  1. Comparability



Federal law requires that services provided to any individual in a categorically or medically needy group must be equal in amount, duration, and scope for all individuals within that group. [FN]92 Comparability requirements may pose unique problems for section 1115 waiver systems. When utilization review decides that a service is not needed, managed care can restrict access to care that might otherwise be available. Yet, under comparability standards, states must not reduce access for individual managed care participants. [FN]93 Thus, without a section 1115 waiver of this requirement, states would fail to meet this requirement when managed care plans do not provide services that are covered for nonparticipant beneficiaries. [FN]94

For the most part, comparability has been evaluated based on whether a service is provided to nonparticipating beneficiaries. [FN]95 The real question, however, is whether the service is actually being provided. [FN]96 If the service in question is provided only in a limited amount and in a limited area, then it is not being provided to the general beneficiaries. This is critical in a managed care system where the participants have no other choice in seeking such treatment. In essence, the managed care system is depriving the individuals of treatment to which they would otherwise be entitled. [FN]97

 

  1. Sufficient Services



Federal law requires that each service “be sufficient in amount, *1092 duration, and scope to reasonably achieve its purpose.” [FN]98 Essentially, providers must conform to an acceptable medical standard of sufficient services. It is unclear whether that medical standard includes the cost containment constraints associated with managed care. Although states are free to limit care to that which is “medically necessary,” such limitation must apply equally to all beneficiaries. [FN]99 It may be, however, that “medically necessary” was never intended to be defined by a health care plan rather than a doctor.

A major selling point of section 1115 waivers has been demonstrating that statewide managed care plans can provide increased access to comprehensive quality health care services and save money. However, to effectively improve access in minority communities, section 1115 waivers will need to reduce both financial and nonfinancial barriers.

B. Financial Barriers to Health Care

Proportionally, minorities spend more of their disposable income on health care than whites. [FN]100 However, they constitute only a small portion of persons who are high medical expenditures. For instance, in 1980, African-Americans represented only 9.6% of persons in the top 1% of health care expenditures. [FN]101 Yet, a much larger percentage of minorities are covered by Medicaid--53.2% of African-Americans, 42.6% of Hispanics, and 33.8% of European-Americans. [FN]102 Nevertheless, financial access to health care services by minorities presents some special problems. A high percentage of African-Americans, Hispanics, and European-Americans are uninsured. [FN]103 For example, in 1987, 42.6% of Hispanics, 31.5% of European-Americans, and 31.3% of African-Americans had no insurance. [FN]104 Consequently, an expansion of Medicaid through section 1115 waivers could have a positive impact on access. [FN]105

  • 1093 Even where insurance is available, poverty can still inflict other financial restraints that limit access. For example, the working poor may be unable to afford missing work to seek medical care for themselves or their children. [FN]106 They may lack transportation and cannot afford the expense of child care needed when obtaining health care. [FN]107 Even more important, they could lack the financial resources for a copayment or a deductible. Thus, the positive impact experienced if lack of insurance was removed as a financial barrier could be counterbalanced by the imposition of other financial restraints.



C. Nonfinancial Barriers to Health Care

Meaningful access involves much more than financial access. In order to effectively remove barriers from health care, section 1115 waivers need to be designed to assure that services are provided in a culturally appropriate manner. Such services will take into consideration language needs, socio-cultural perspectives, and the availability of an adequate infrastructure.

  1. Language



Language is an essential component of effective access. Individuals who speak English as their primary language are more likely to seek health care. [FN]108 Language serves as a barrier not only in seeking services, but in carrying out medical orders as well. Instructions and medical orders conveyed in English are problematic when the patient population speaks another language; this clearly interferes with effective access. [FN]109 Yet, health care institutions have not been aggressive in providing instructions and medical orders in a language applicable to the population served.

  1. Socio-cultural Perspective


Effective access includes health care offered within the socio-cultural content of the patient. Although health care which is responsive to socio-cultural perspectives will strain physician staffing patterns and also increase the operating cost of the providers, it is a *1094 key component to meaningful access. [FN]110 For instance, health care systems serving the working poor will need to maintain nontraditional office hours--staying open in the evenings as well as on the weekends. Other inadequacies of the system which are particularly significant to minority communities include the lack of transportation to facilities and lack of multidisciplinary services, such as preventive medicine and outreach groups. [FN]111

Furthermore, Western health care itself is biased towards a medical/hospital delivery model of services. Thus, the more the person's cultural perspective differs from the norm, the less likely the patient will find accessible health care. This problem is illustrated by those seriously ill Mexican-Americans who choose to stay at home with their family instead of going to a hospital or nursing home. [FN]112 In fact, minority utilization of health care is very different from that of the white population. For example, half as many Hispanics visit doctors for general exams as whites. [FN]113 Certainly, difference in utilization may be due to financial issues but utilization is also affected by socio-cultural differences.

 

  1. Insufficient Health Care Resources


Another significant problem is the basic nonavailability of physicians, hospitals, and other providers in minority communities. [FN]114 Although some data indicate that the number of providers participating in Medicaid care delivery is quite high, it is important to remember that in accumulating the data, states include as participating physicians those who only provide one Medicaid service a *1095 year. [FN]115 In reality, about one-half of all physicians either fail to participate or severely restrict the number of Medicaid patients that they serve. [FN]116 Physicians maintain that Medicaid does not pay enough to cover their costs; indeed, studies show a direct correlation between reimbursement levels and provider participation. [FN]117

For instance, one study indicated that doubling Medicaid fees in a specific geographic area would increase physicians' services to Medicaid patients by 70%. [FN]118 The administration of the program, particularly claims processing, further contributes to the problem. [FN]119 One study found that, nationwide, 52.4% of pediatricians complained about the unpredictability of Medicaid payments. [FN]120 Finally, physicians also believe that Medicaid limits their professional autonomy. [FN]121 In particular, physicians view the prior authorization criteria as ill-defined and arbitrary. [FN]122 Notwithstanding these legitimate complaints, some physicians simply do not want to serve minority communities and poor patients. [FN]123

  1. Racism [FN]124 Racial barriers to hospital access are manifested in the adoption, administration, and implementation of policies that restrict admission; [FN]125 the closure, *1096 relocation, or privatization of hospitals that serve the minority communities; and the transfer of unwanted patients (known as “patient dumping”) by hospitals and institutions. [FN]126 This barrier to facilities has also been documented in other health institutions. For instance, nursing homes are considered the most segregated publicly licensed health care facilities in the United States. [FN]127



The shortage of minority professionals further affects health care availability not only by limiting the available resources but also by limiting minority input into the health care system. Although the control of health care distribution is ultimately in the hands of the individual physician, that control is influenced and limited by law, hospital practices and policies, and the medical organization of the physician's practice. With so few minority healthcare professionals, the control of the health care system lies almost exclusively in European-American hands.



D. Critiquing State Waiver Applications

To improve access to health care through Section 1115 waivers, states must do much more than expand coverage. [FN]128 They must provide: (1) mechanisms for recipients to maintain their existing patient-provider relationships; (2) standards by which health care plans will be evaluated to determine whether recipients have adequate access; (3) for the availability of “Culturally Competent” health care; (4) for adequate case management and continuity of care; (5) for adequate provider participation including providers of color; (6) for comprehensive health care services; and (7) allow for cost sharing which might be a financial barrier to health care. [FN]129 

 

 

  1. Does the Waiver Contain Guidelines Which Provide Protection for the Patient-Provider Relationships?


Mechanisms for patients to maintain existing patient-provider relationships are important to the quality of health care. Because the practice of health care is as much based on intuition as it is *1097 science, it is important that patients be able to maintain relationships with providers who know them and know their problems. It is also important to sustain the providers who are currently serving minority communities. If these relationships are not maintained, a state could find itself in a situation where providers who traditionally served minority communities are shut out of the community due to insufficient business and managed care agencies that choose not to replace those providers with new ones.

To protect the provider-patient relationship, a waiver, at a minimum, must have guidelines or standards which assures the participation in the waiver of the traditional Medicaid providers, including minority providers, allows mechanisms for patients to continue with their established providers, and includes the participation of alternative health care providers. Florida is the one state that appeared to have an overall positive waiver in this area.

Only Florida, Illinois, and Missouri had guidelines which provided mechanisms for traditional Medicaid providers to continue serving minority communities, [FN]130 thus recognizing the importance of allowing patients to continue with their established providers. [FN]131 For example, the Missouri Medicaid Managed Care Program states that members shall have freedom of choice in selecting a primary care provider. [FN]132 The process of selecting a primary care provider must include the preference of continuing with a current physician and plan choices which include that specific physician. [FN]133 When a member does not select a primary care provider within fifteen days of enrollment, an automatic assignment is made. The assignment must be made with consideration of such known factors as current provider relationships, language needs, and area of residence.

Florida and Illinois were unclear, however, on specific standards related to providers of color. Missouri, as well as Hawaii, Oregon and Tennessee had no standards addressing the participation of providers of color; [FN]134 Oregon and Tennessee further failed to protect the provider-patient relationship.

New York, Florida, and Missouri had guidelines which allowed *1098 for the participation of alternative health care providers (that is, nurse practitioners and other nontraditional providers). [FN]135 New York State's proposed Partnership Plan expects accepted providers to utilize alternative health care providers such as nurse practitioners, midwives, and physician assistants. Although, the inclusion of alternative health care providers is not mandated by the plan. [FN]136  

FN136ProviderPatient

 

 

 

Does the Waiver Provide Guidelines to Assure Adequate Provider Participation?



The most significant indirect impact on availability of health care is physicians' availability. An unacceptable queue of patients will develop if the number of providers is insufficient. Thus, the waiver should establish standards for the number of full-time equivalent physician per enrollees, the number of specialists, the number of pediatricians, and the number of primary care/family practice physicians. [FN]137 Three states (Missouri, New York, and Tennessee) had guidelines requiring a minimum number of physicians per enrollee. [FN]138 For example, the Missouri Medicaid Managed Care Program states that Obstetric/Gynecologic physicians should have caseloads of no more than 350 pregnant women under the Program. [FN]139

In addition to guaranteeing a minimum number of providers, the waiver should have steps, such as a phase-in of the new enrollees, to assure availability of adequate providers. [FN]140 Missouri, New York, and Oregon provided such guidelines. [FN]141 The New York *1099 Waiver Application has tried to address the disproportionate distribution of health care providers throughout the state. To remedy the problem of underserved rural counties, the waiver contemplates redistributing primary care physicians to rural areas through the Primary Care Initiative and the State Health Care Department's Physician Placement Plan. [FN]142

Missouri and New York had overall positive waivers setting standards for adequate provider participation, while Florida and Hawaii had no standards; Oregon and Tennessee were ambiguous in addressing standards for adequate provider participation.

fn142ProviderParticipation 

 

  1. Does the Waiver Provide Guidelines Which Assure the Availability of Comprehensive Health Care Services?


The waiver should assure that both the traditionally eligible and the demonstration eligible receive the basic Medicaid benefits. This includes the following: chiropractors, community mental health centers, substance abuse treatment centers, nursing home care, EPSDT screening services, early intervention services for children, family planning centers, FQHCs, home and community-based services for disabled persons at risk for institutionalization, home health care for those homebound and medically in need, hospice care for the terminally ill. [FN]143 Four states (Florida, Hawaii, Illinois, and New York) had provisions which assured the basic Medicaid benefit package. [FN]144

The services available should be comprehensive and there should not be fewer services to compensate for the expanded eligibility. [FN]145 Unless a waiver is granted, the application should have mechanisms to assure that services are available statewide. [FN]146 Florida *1100 and Hawaii requested waivers from statewideness; [FN]147 Missouri's demonstration project is limited to Franklin, Jefferson City, St. Charles, and St. Louis counties and St. Louis City [FN]148; and Illinois, New York, Oregon, and Tennessee had guidelines to assure statewideness. [FN]149

The services to be acquired by the recipients in the demonstration project should be comparable to those not on Medicaid or in the project. [FN]150 Florida requested waivers from comparability; [FN]151 Hawaii, Illinois, Oregon, and Tennessee had guidelines to assure comparability; Missouri's demonstration project is limited to Franklin, Jefferson City, St. Charles, and St. Louis counties and St. Louis City [FN]152; and New York's waiver was ambiguous in this area.

Managed care standards potentially reflect managed care's philosophy of saving money with the potential outcome of offering inferior services. The waiver application should prohibit managed care from substituting its lower standards for Medicaid. Only one state (Hawaii) specifically prohibited managed care plans from substituting their own standards for that of Medicaid. [FN]153 Oregon was the only state to have no guidelines related to this criteria. [FN]154

As indicated below, the services should include not only non-Western health care but also particular services important to communities of color (i.e., prenatal care, drug and alcohol treatment, and violence prevention). [FN]155 Four states (Florida, Illinois, New York, and Oregon) had guidelines related to assuring services important to the community. [FN]156 For example, Florida Health Security Plan would make services available that are important to communities of color through the Basic Benefit Standard. [FN]157 Extensive mental health and substance abuse benefits, inpatient rehabilitation, and organ transplants are included in the Basic Benefit Standard. [FN]158*1101 Missouri has no guidelines. [FN]159

Finally, managed care plans should be required to conduct prevention program which address motivational, attitudinal, and client behavioral issues. [FN]160 Only Oregon provided clear guidelines. [FN]161 Three states (Hawaii, Illinois, and Missouri) did not. [FN]162 In summary, all of the states, except Missouri, offered ambiguous information on whether their waivers provided sufficient guidelines to assure the availability of comprehensive health care services. Missouri did not address this issue at all.

 fn146Comprehensive

 

 

  1. Does the Waiver Require the Provision of Culturally Competent Health Care?


The traditional health care system, including managed care plans, has been structured around delivering care to middle-class patients. As discussed earlier, access to care means much more than merely having insurance or having a provider. Meaningful health care must address a person's social and cultural needs as well. Thus access is rendered meaningless if socio-cultural barriers prevent a person from obtaining health care services.

Culturally competent care starts with the provision of health care in the language of the patient. Interpreter services should pertain not only to oral communication, but to information provided via written materials. Furthermore, to assure the quality of interpreting services, the state plan should provide for the certification of interpreters. [FN]163 Five states (Illinois, Missouri, New York, Oregon, and Tennessee) have standards requiring the provision of *1102 health care services in languages other than English. [FN]164 For example, Oregon's Medicaid Demonstration Project requires the prepaid health plan to have qualified interpreters for each substantial population of non-English-speaking members, as well as written information in the primary language of these populations. [FN]165

A culturally competent health care system must be designed to go beyond the assurance of culturally appropriate language services. The waiver must recognize that the traditional health care systems has been designed around the needs of the middle class. As a result, certain essential services for low-income individuals are generally not available, i.e., transportation assistance and telephone assistance. [FN]166 Only Illinois, Missouri, and Oregon have guidelines requiring managed care plans to provide transportation and telephone assistance. [FN]167 Under the Missouri plan, emergency and nonemergency transportation must be provided to members with nonemergency transportation provided to those individuals who do not have the ability to provide their own transportation. Missouri has also included an established procedure for telephone reminders of, and follow-ups to, appointments and telephone outreach to members. [FN]168

Furthermore, many patients' health problems are directly impacted by their social conditions. If the health care status of poor individuals is to be improved, it is important to have social services support and outreach services. [FN]169 Four states (Florida, Illinois, Oregon, and Tennessee) had guidelines regarding the provision of outreach services. [FN]170 Only two states (Florida and Illinois) had guidelines regarding the provision of social services. [FN]171 In Illinois, MediPlan Plus will provide social service support and outreach *1103 services as part of its case management services. One role of the social service worker is to inform clients of upcoming health screening and vaccinations. [FN]172

The waiver should require managed care plans to make available nonmedical health care treatment. [FN]173 For instance, acupuncture and midwifery are two proven health care practices that any health care plan serving diverse communities ought to have available. No state had clear guidelines regarding non-Western health care services.

It is not enough, however, to have standards related to the provision of culturally appropriate care; managed care plans must be required to train their health care providers to give culturally appropriate care. [FN]174 That training should include: (1) the use of nonmedical trained providers and interpreters; (2) the importance of patients' belief patterns and support systems to ensure adherence to treatment, and the identification and treatment of illnesses not found frequently in the “white middle class male” patient population. [FN]175 Two states (Florida and Illinois) had provisions regarding provider orientation and training. [FN]176

Finally, all the standards related to the provision of “culturally competent care” will be for naught without administrative support systems and procedures. This includes: (1) computerized tracking system for preventive health screening; (2) cultural responsive appointment making and advice nurse system; (3) ombudsman responsible for addressing special difficulties of culturally distinct minorities; and (4) computerized information system capable of generating patient profiles. [FN]177 Although four states (Florida, Illinois, Oregon, and Tennessee) had guidelines regarding administrative support, the support was not targeted toward the assurance of culturally competent care. [FN]178 For example, Florida Health Security is required to have marketing materials and applications available in such languages as may be reasonable required to meet applicant's needs; the plan will also assure sufficient numbers of intake workers who can address the special needs of diverse populations. [FN]179*1104 Only Illinois had overall positive guidelines. Hawaii had no guidelines at all and, at best, the other states were ambiguous.

 

Fn179Culture

 

  1. Does the Waiver Provide Clear and Adequate Access Standards to Evaluate Managed Care Plans?


No waiver can be adequate without clear standards by which managed care plans can measure access. Ultimately, access should be measured by improved health status of communities of color. However, in the interim, accessibility can be measured by such things as: (1) how long a patient has to wait for an appointment (appointment waiting times); (2) how far a person has to travel or how long it takes a patient to get to the provider (travel and distance times); and (3) how well maintained the patients' ability is to choose a provider who does not meet travel/distance standards but who meet other needs and the availability of emergency and urgent care. [FN]180

These standards must be as specific as possible. For instance, the appointment waiting times will need to vary based on whether the appointment is for primary care, specialty care, dental care, mental health care, or hospitalization. [FN]181 Four states (Illinois, Missouri, Oregon, and Tennessee) had specific guidelines with regard to appointment waiting times. [FN]182 For example, in Tennessee, the TennCare contract requires under “Availability and Accessibility of Services,” that services, service locations, and service sites are made available and accessible in terms of timeliness, amount, duration, *1105 and personnel, sufficient to provide covered services. Emergency medical services must be available twenty-four hours a day, seven days a week. [FN]183

Similarly, travel times and distance should be as detailed as appointment waiting times, and guidelines should also include travel times and distance to pharmacies. [FN]184 Three states (Missouri, Florida, and Tennessee) had specific standards on travel times and distance. [FN]185 Under TennCare, the following standards are provided: (1) primary care physicians must be within thirty miles or thirty minutes; (2) the time to hospital cannot exceed forty-five minutes; 3) general dental services must be within thirty miles or forty-five minutes. [FN]186

Although waivers should have travel time and distance standards, a waiver should not restrict recipients to providers who fall within a travel and distance standards. [FN]187 There many reasons why a patient my choose a provider outside the standards. For example, a provider who the patient feels comfortable with, or has confidence in, may live outside the distance standard. Whatever the reason, a patient should be assured the ability to choose a provider that does not practice within the travel/distance standards. Only Missouri, Tennessee, and Florida provide such guidelines. [FN]188 For example, it can be inferred that Florida would meet this criteria. After defining access to care according to travel time, FHS states that the definition is not intended to limit an Accountable Health Partnership's utilization of specialty care providers and centers of excellence.

Another measure of access can be the availability of emergency and urgent care. [FN]189 Consequently, the state waiver should establish minimum standards assuring that managed care plans will provide patients with emergency medical care, dental care and mental health care. Five of the seven states (Florida, Illinois, Missouri, *1106 Oregon and Tennessee) had specific guidelines related to the delivery of emergency and urgent care. [FN]190 The Missouri Managed Care Program requires emergency services to be available at all times and urgent care appointments to be available within three days of referral to the provider. [FN]191

The worst state by far was Hawaii, which had absolutely no standards or guidelines related to standards for access. [FN]192 On the other hand, Missouri and Tennessee had detailed access standards. [FN]193 The other states (Florida, Illinois, New York, and Oregon) were ambiguous in establishing clear and adequate access standards. [FN]194

fn194AccessStandards 

 

  1. Does the Waiver Provide for Case Management and Continuity of Care?



Case Management services are essential to the provision of care. The waiver should have a clear definition of case management and should include services for both children and adults. [FN]195 Four states (Florida, Illinois, Missouri, and Oregon) had clear definitions. [FN]196 Oregon's demonstration waiver provides for a “Primary Care Case Management Group” which will monitor the care of each covered individual through the coordination and management efforts of a designated primary care provider. The case manager's *1107 responsibilities include provision of routine care services, referral of enrollees to specialists with follow-up on the referral, and maintenance of enrollees' medical records. [FN]197 Two states (Hawaii and Tennessee) inadequately addressed this issue. [FN]198 For example, under Hawaii's Health Quest plan, patients have a primary care physician but there are no provisions for case management services. [FN]199

To assure continuity of care, the waiver should require that each plan appoints one single provider who ensures “continuity of care,” by assuring that all necessary referrals are made, maintaining medical records, and ensuring that appropriate personnel receive medical files. [FN]200 Two states (Hawaii and Missouri) had such provisions. [FN]201 For example, under the plans of both Missouri and Hawaii, the primary care physician ensures continuity of care by assuring that the patient has access to specialists and other needed services. [FN]202

It is important that the case management services and the gatekeeper role be done by those who are appropriately qualified. Generally, a primary care or family practice physician, or a pediatrician for children, may be a sufficient case manager. However, the waiver should require the managed care plans to allow a specialist to be the gatekeeper where necessary, such as a specialist for chronically ill or disabled persons. [FN]203 Two states (Illinois and Oregon) made such provisions. [FN]204 The other states' applications were ambiguous.

Finally, the waiver should include standards which set clear time limits after enrollment within which managed care plans must assign a gatekeeper and conduct initial assessments. [FN]205 Two states (Illinois and Oregon) had appropriate guidelines. [FN]206 Three states *1108 (Florida, Hawaii, and Missouri) had inadequate guidelines. [FN]207 Two states (Illinois and Oregon) have adequately outlined standards for case management and continuity of care. Hawaii and Tennessee had inadequate outline standards; and Florida, Missouri, and New York were ambiguous in how they addressed this issue.

 fn207CaseManagement

 

 

 

 

 

  1. Does the Waiver Have Mechanisms to Assure the Affordability of Cost-sharing Arrangements?



Managed care plans shift part of the financial risk to the patients through copayments, premiums, and deductibles. The plans need to have mechanisms to assure that these risk-shifting behaviors remain affordable for even those with the lowest income. [FN]208 Three states (Hawaii, Illinois, and Oregon) have guidelines addressing the affordability of cost-sharing arrangements. [FN]209 For example, the Illinois MediPlan Plus plan will hold yearly client copayments to $150 and monthly copayments to $15. [FN]210 Florida did not address this issue. [FN]211

 

fn211CostSharing



 

 

 

 

E. Assuring Access to Care: Conclusion

Section 1115 waivers are supposed to improve access to care. They do so by relying on managed care plans. If managed care is not carefully controlled, however, it could become a place where the uninsured, the indigent, and persons of color, are systematically *1109 relegated to the lowest tier of health care. As Professor Reinhardt argues, “the best the champions of the poor can hope for under managed care is a three-tiered system”. [FN]212 The waivers show questionable ability to prove Professor Reinhardt wrong.

All of the waivers except Hawaii are ambiguous, at best, in articulating their ability to assure access. Hawaii's waiver fails entirely. One problem is the failure of the waivers to account for lack of providers in minority communities. At the same time, the waivers provide little protection of the traditional providers for minority communities and little assurance that minority physicians will be included in the managed care structure. Thus, there is a real possibility that physicians who have developed caring relationships with patients will be severed from the care of those patients.

This can be a particular problem for the traditional Medicaid patients who are more likely to be handicapped, disabled, or have chronic illness, and need a caregiver who is culturally understanding with the ability to manage their long-term care. [FN]213 Further, these patients require intense care, often at higher costs. [FN]214 None of the waivers seems to recognize that the culture of the medical professions (and physicians' attitudes towards serving the poor or uninsured) varies markedly among different communities. [FN]215

Thus, there is a significant possibility that the waivers will erode access to traditional providers without replacing them with sufficient *1110 other providers. To the extent that the waivers result in long-term erosion of safety net provider capacity, communities of color will be further disadvantaged in gaining access to adequate medical care.

 

fn215Access

 

 




III. Quality Assurance



A. Overview

Quality assurance is an essential component of the triangular relationship in health care involving cost and access. [FN]216 As states undertake efforts to control cost and increase access simultaneously, it is important that they do so without reducing quality. [FN]217 Although much discussion has focused on cost containment, the vulnerability of the poor and minorities make it absolutely essential that the system provide “reasonable quality of care” at an affordable price for all Americans, rather than offer low-quality care at cheaper prices to the poor. [FN]218

The most significant issue is determining the quality of health care. This determination cannot be measured merely on the quantity of care given since more is not necessarily better. [FN]219 Unfortunately, there is no single method of defining quality care. [FN]220 In fact, quality health care may be defined in a variety of ways. Furthermore, in defining quality, it is important to remember that quality health care involves both interpersonal skills and technical care. [FN]221

Quality care, as defined by Brook and Kosscoff, is the “ ‘performance of specific activities in a manner that either increases or *1111 at least prevents the deterioration of health status that would have occurred as a function of a disease or condition.”’ [FN]222 According to the Council on Medical Service for the AMA (the AMA Council), quality health care “ ‘consistently contributes to improvement or maintenance of the quality and/or duration of life.”’ [FN]223 Yet another definition of quality health care is “the ‘component of the difference between efficacy and effectiveness that can be attributed to care providers, taking into account the environment in which they work.”’ [FN]224 Thus, quality of care involves not only the selection of the right activity, task, or combination of activities, but also the actual performance of those activities in a manner that produce the best outcome. [FN]225

An approach to defining quality care would be the “unexamined practice” rather than the mistake. In the unexamined practice, the focus is on “direct monitoring beyond the detection of fraud and gross incompetence and toward redirecting ‘the practice of honest practitioners into more strictly appropriate channels.”’ [FN]226 The AMA Council recognizes several factors in the determination of quality: (1) the production of optimum improvement in the patient's physical condition and comfort; (2) the promotion of prevention and early detection of disease; (3) the cooperation and participation of the patient; (4) skilled use of necessary professional and technological resources; (5) concern for the patients' welfare; (6) efficient use of resources; and (7) sufficient documentation of medical records to ensure continued care for evaluation of the care by peer review. [FN]227

What these definitions ultimately have in common is the need to assess health care in terms of structure, process, and outcome. [FN]228 Assessment of structure involves the evaluation of the setting in which health care is provided. It involves, for instance, an assessment of “the qualifications of medical personnel, the adequacy of equipment and facilities, the administrative structures, and the operation *1112 of programs providing care.” [FN]229

The assessment of process involves “the manner in which patients are treated and evaluates the performance of [health care] personnel.” [FN]230 As Furrow notes, however, a process approach has “disadvantages when community practice--standard of diagnosis or treatment against which physician deviance is measured--is itself unexamined.” [FN]231

Outcome measures involve examining whether health care improves the health of the patient and are the most significant way to assure quality. On the other hand, it presents several problems, including the need to isolate factors extraneous to treatment that may affect the patient's condition, [FN]232 the difficulty in measuring some outcomes, [FN]233 the variation that can occur in outcomes based solely on the timing of the assessment, [FN]234 the expense involved in aggregating data, [FN]235 and the difficulty in determining outcomes that will “reveal deficiencies in treatment to which a harmful outcome might be traced.” [FN]236

In many ways, the issue of quality in the provision of health care services is no different than discussing quality in other consumer areas. Purchasers of health care services expect to receive the best quality product for their money. But in health care, the stakes are much higher: A malfunctioning toaster can result in burned toast, but poor medical service can result in permanent and serious damage.

The approaches to assuring quality vary. They include: (1) performance report cards; (2) Total Quality Management; (3) practice guidelines; and (4) peer review. Performance report cards have been used to show how well a health care plan performed. [FN]237*1113 These report cards generally define the quality measures in terms of preventive care, prenatal care, mental health care, chronic disease management, access to care, and member satisfaction. [FN]238 Performance report cards, however, present a number of problems. First, the science of quality management is still too new to be applied on a national or even a state basis. [FN]239 Second, in an era where the primary concern is cost containment, the costs of implementing report card proposals might be prohibitive. [FN]240 Third, most health care institutions are not equipped to produce the kinds of data required for a report card. [FN]241 Finally, even if the other problems are overcome, there is still a significant likelihood that data will be “de-emphasized, overemphasized, or ignored.” [FN]242

Total Quality Management (TQM) [FN]243 has frequently been used in manufacturing facilities. [FN]244 One basic step in the process of implementing TQM is an agreed-upon set of principles and measures. [FN]245 Health care is an art, not a manufacturing facility. As a result, providers, policy makers, and quality experts have a difficult time agreeing on principles and a core set of measures. One problem is assuring that measures used are not solely geared to the white, middle-class, insured urban populace. Another problem *1114 may be the inability or unwillingness of providers to conceive of the poor and minorities as customers to whom they are accountable. [FN]246

Clinical practice guidelines were developed in an effort to standardize some aspects of health care practice. [FN]247 Practice guidelines were developed as an educational resource to support physicians in clinical patient care management [FN]248 and thus improve quality, assure appropriate utilization, and reduce costs. [FN]249 Use of practice guidelines present several problems. First, developers have failed to use a “coherent, standardized vocabulary” in creating practice guidelines. This failure results in uncertainty and ambiguity when applying the parameters to specific clinical problems. [FN]250 Another significant issue has been the development of practice guidelines in a chaotic way. This has included using clinical research subject to statistical manipulation, doing superficial analysis of the literature, and injudiciously using anecdotal information. [FN]251

Furthermore, practice guidelines may be flawed because they are subject to bias. In fact, publication bias, bias in the selection of study patients, the continuous evolution of medical knowledge, and methodological inadequacies undermine the validity of studies on which many practice guidelines are based. [FN]252 When considering guidelines, it is important to take into consideration the economic self-interest that may have impacted the development of certain practice guidelines.

The traditional view of quality is on peer review with a focus *1115 on physician mistakes or “errors.” [FN]253 The benefit of such a focus has been a clear definition of “bad medicine.” [FN]254 The problem with such a focus is that it overlooks too many other causes of poor quality health care besides individual responsibility. [FN]255 For instance, assuring quality care will require identifying and correcting systemic failures, poor administrative design for review of health care, inadequacies in training of health care providers, and inappropriate practice incentives. [FN]256

Each model has acknowledged strengths and weaknesses, but managed care must establish at the outset what the measure of quality shall and will be so that the people receiving the care can share in their assessment of the service.

B. Section 1115 Medicaid Waivers and Managed Care

Utilization review and financial risk-shift guidelines, which delineate quality, are incorporated into managed care plans, but so are financial incentives. Utilization review involves the use of an independent reviewer to evaluate the physicians' treatment decisions to determine if the treatment is necessary and if it will be delivered in the most cost-effective manner. [FN]257 These two forces may work in such a way that a patient may be unaware that care decisions are given or withheld based on price rather than the welfare of the patient. [FN]258 In this situation, the need for quality assurance is apparent. Furthermore, for disenfranchised patients such as the poor and minorities, it is essential. [FN]259

To obtain quality health care through the legal system, a patient must become a “complaining patient.” [FN]260 Many disenfranchised people have learned to be silent before administrative power. When quality guidelines are vapid, when patients are ill, or *1116 when patients are accustomed to being burdened or bewildered by the bureaucracy, there is a greater hesitation to complain.

Traditional quality assurance focuses on what a well-trained and well-regarded health care professional customarily does in treating patients. [FN]261 Now, however, the meaning has been clouded by cost containment. Under managed care what is measured first is the cost of the care given within the parameters of the managed care plan and only then is the quality of care assessed. Even then the quality of care given by a well-trained and well-regarded physician is not assessed, but instead the amount of care allowed is measured. Thus, the physicians are required to not only be caregivers, but also cost managers. [FN]262 Under some of the Medicaid managed care systems, there is an incentive for the physician to deliver less care than may be necessary. [FN]263

Medicaid was established to prevent a dual-track health care system. [FN]264 Health care in the United States was not intended to be two systems: one with good quality and access for those who can pay and another for the poor with low quality and little access. [FN]265 State-supported managed care plans arguably provide lower quality of care. With the newly eligible patients getting minimum care, the current Medicaid recipients are forced to bare the loss of benefits while the rest of the community is insulated from sharing in this cost. [FN]266 The rationing that has been established by some plans will greatly affect the quality of health care for those recipients in the region. The incentive of managed care is to provide less care to the recipient in order for the HMOs to retain, as profits, much of the capitation rate. Commentators argue that this will more directly affect the Medicaid recipients because they statistically fall in categories which are currently under served and already have higher health risks than the general population. [FN]267



Implementing a managed care system for Medicaid recipients through section 1115 waivers creates many quality health care issues. Many of these waivers, including Hawaii's, allow for health care plans comprised solely of Medicaid patients. Will this plan be as quality oriented as a plan which services the private sector? Under managed care, a patient loses the right, to some extent, to *1117 choose his or her own doctor and to switch doctors at will. Patients are forced to go through a gatekeeper doctor before they can see specialists. Due to the capitation payment system, it is in the managed care organizer's best interest to limit access to specialists. These are just a few of many issues facing Medicaid patients in a managed care organization.

Because Medicaid's fiscal and administrative structure contains no checks on state incentives to compromise the federal interest in cost-efficient quality health care, the HFCA has in the past employed stringent waiver review procedures as a method to ensure against the risk of poor quality care to minorities and the poor. [FN]268 The increased use of Section 1115 Waivers allows State Medicaid programs to shift widespread and exclusive use of managed care may have a significant impact on the delivery of quality care to poor and minority communities.

The Medicaid population includes a disproportionate number of vulnerable individuals. There has been a longstanding problem with the delivery of quality care to minority communities. Furthermore, many of the state programs are based on structurally unproven managed care designs. [FN]269 Although research has demonstrated that quality in Medicaid managed care can be equal to or better than fee-for service, the performance is uneven, and significant problems arise when the plans lack regulatory oversight. [FN]270 Providing quality assurance is essential. Universal access to health care means little if it is not quality health care. Ensuring both quality and access while implementing cost containing measures is a necessity.

C. Critiquing State Waiver Applications

Section 1115 waivers that have the potential of assuring quality are waiver applications which (1) set out sufficient quality goals, (2) provide for essential data collection,(3) have sufficient mechanisms to monitor and enforce the goals, (4) allow for mainstreaming*1118 and (5) promotes consumers' role in oversight. [FN]271

 

  1. Does the Waiver Set Out Sufficient Quality Goals?



In terms of assuring quality, data collection is meaningless without some clear goals by which managed care plans performance will be measured. [FN]272 Two states, Tennessee and Oregon, outlined clear health status goals. [FN]273 For example, Tennessee has an extensive list of goals either in the plan itself or in the handbook that is distributed by the MCOs. [FN]274 These goals range from targeting issues of low birth weight, treatment of otitis media, childhood asthma, and breast cancer to the percentage of children completely immunized at age two, number of emergency room visits, number of drugs dispensed, and mortality. The clinical areas of concern range from childhood immunization, pregnancy, pap smears and lead toxicity to hip fractures and dental screenings. [FN]275 Even though Tennessee outlines quality goals, they remain general, nonspecific, and are not quantified. [FN]276 Oregon's goals, although specific, are also nonquantifiable. [FN]277

On the other hand, Missouri did not set out quality goals. [FN]278*1119 Florida's waiver application does not have easily discernible quality goals or standards on which managed care plans will be evaluated. [FN]279 Hawaii structures its goals in the form of hypotheses which are nonspecific and vague. [FN]280 The New York waiver does not state clear quality goals by which the managed care plans will be measured. [FN]281

In addition to outlining clear health status goals, waivers need to outline reductions in the disparities in the health status between minority vs. nonminority. [FN]282 No waiver application addressed this issue. [FN]283

Does the waiver set out sufficient quality goals? Missouri was the only state that did not address this issue. [FN]284 Primarily because they did not address the health status difference between minorities and nonminorities as a goal, the other states (Florida, Hawaii, *1120 Illinois, New York, Oregon, and Tennessee) were ambiguous, at best, in addressing this issue. [FN]285

fn284QualityGoals

 

 

 

 

 

Does the Waiver Provide for Essential Data Collection?


Individual claims data is essential to being able to assure uniform data. Individual claims data allows a better assessment of health plan risk and health plan behavior including discriminatory practices. [FN]286 New York's waiver does not address data collection. [FN]287 The other six states (Florida, Hawaii, Illinois, Missouri, Oregon, and Tennessee) have ambiguous approaches regarding individual data collection. [FN]288

For example, notwithstanding the importance of claims data, Florida will not collect 100% encounter level data. [FN]289 It argues that collecting patient encounter data would be too costly. [FN]290 Both Florida and Hawaii propose to monitor quality by obtaining information from new and existing databases, [FN]291 surveys, [FN]292 medical *1121 records analysis, [FN]293 interviews, [FN]294 and case studies. [FN]295 However, while Hawaii indicates that it will be collecting encounter data, it is unclear whether that data will be collected based on each individual encounter or claim. [FN]296 New York appears to have established data collection systems that closely resemble the collection of individual claims data. [FN]297

Oregon proposes to collect not only medical claims data but *1122 dummy claims data as a method of evaluating quality. [FN]298 Finally, Tennessee requires each managed care organization to provide detailed information on provider and recipient activity, including encounter data, type of care provided, levels of care provided, outcomes of care, and use of preventive services. [FN]299 Furthermore, Tennessee asserts that it will employ an external contractor for monitoring who will use the Quality Assurance Reform Initiative prepared by the HCFA and the Kaiser Family Foundation as the standards for monitoring. [FN]300 In fact, Tennessee devotes eighty-five pages of its waiver to quality control monitoring. [FN]301

However, the primary problem with the waiver applications is the near total failure to require the monitoring of quality of care with regard to race. Florida is the only state that even mentions monitoring quality goals based on demographics. For example, Florida's data will specifically focus on vulnerable groups. [FN]302 Because it fails to define vulnerable groups, however, it cannot be assumed that they will target the collection of data based on race. [FN]303 Hawaii does not require that data be broken down by race, *1123 income level, or gender, but it does require comparisons between providers and counties. [FN]304 New York suggests that the data will be broken down by a number of categories, but it will not be collecting data based on race or ethnic background. [FN]305 Finally, Oregon's proposal does not specifically identify the data by race or ethnicity. The forms used for the survey are very basic and do not ask for identifying data. [FN]306


Does the waiver provide for essential data collection? New York's waiver does not address data collection. [FN]307 The other six states (Florida, Hawaii, Illinois, Missouri, Oregon, and Tennessee) have ambiguous approaches regarding individual data collection [FN]308 and do not require the collection of data based on race.

fn308DataCollection

 

 

  1. Does the Waiver Application Outline Sufficient Mechanisms to Monitor Managed Care Plans and Enforce the State's Quality Assurance Standards?



Managed care organizations have a profit incentive. They are motivated to increase their profit margin over the profit margin of the previous year. This incentive is a “moral hazard.” It may operate to cause a managed care organization to deny care and to restrict access so as to increase profit. This power must be checked in order to assure access to quality care. [FN]309 Thus, any waiver must include sufficient resources for the state to monitor and enforce their plans' contractual obligation to provide quality care. [FN]310

  • 1124 Five states (Hawaii, Illinois, New York, Oregon, and Tennessee) had standards in their waiver application which addressed resource allocation to monitor and enforce quality assurance goals. [FN]311 For example, Oregon's requirements include written policy and procedures for an internal quality assurance plan, a medical record-keeping system that conforms with professional medical practice, and written procedures for handling client complaints and grievances.


In order for a waiver to have sufficient mechanisms to monitor and enforce quality goals, the waiver should require that managed care organizations have corrective action plans which would be enforceable by the state or the recipients. Oregon is the only state that had such standards in its waivers. [FN]312

Finally, the waiver application should include penalties that can be used when enforcing the requirements of the waiver. These penalties should include a range of graduated enforcement tools, such as monetary fines, enrollment restrictions, and revocation of contract. [FN]313 Without such graduated tools, states are likely to be reluctant to enforce the contract since the only option would be revocation. [FN]314 Only two state waivers (Florida and Oregon) had penalties in the waiver that could be used when enforcing the requirements of the waiver. [FN]315 For example, Florida provides for the imposition of significant financial penalties to the participating health plans for failure to perform the functions specified in the contract.

Did the waiver application outline sufficient mechanisms to monitor managed care plans and enforce its quality assurance standards? The answer to that question for Oregon and Illinois is in the affirmative. [FN]316 Only one state (Florida) did not address monitoring or enforcement issues. [FN]317 However, the other states were ambiguous in their approach to this issue. [FN]318

 

FN318Mechanism

 

  • 1125 4. Does the Waiver Application Provide for the Recipients to Have the Choice to Participate in a Managed Care Plan That is Mainstreaming?



For social, racial, and economic reasons, attempts to mainstream has not been an overwhelming success. [FN]319 Nevertheless, mainstreaming is an important concept which is essential to quality control. Managed care plans comprised solely of Medicaid patients have the potential of becoming “Medicaid mills.” [FN]320 Because “mainstream” managed care plans are regulated by an agency other than the state Medicaid agency, the outside agency could provide a check on the state Medicaid agency, cutting cost from the managed care contracts. [FN]321 At a minimum, the state waiver application should require that recipients have the choice of at least one managed care plan that sees non-Medicaid recipients. Only three states (Missouri, New York, and Oregon) contained such provisions. [FN]322 The other states (Florida, Hawaii, Illinois, and Tennessee) had no such provisions. [FN]323

Recognizing that mainstreaming by itself is not enough, the managed care plans must be able to provide comprehensive services to the Medicaid population. Thus, the waiver should require that the states assess the ability and desire of mainstream plans to serve the client population comprehensively, including enabling services. Only three states' waivers (Florida, Oregon, and Tennessee) *1126 have such provisions. [FN]324 Finally, recognizing that ability and desire do not always translate into fact, waivers should provide that states will frequently assess client satisfaction. Five of the seven waivers (Florida, Illinois, New York, Oregon, and Tennessee) have such provisions. [FN]325

For example, Oregon keeps track of client satisfaction and complaints by requiring managed care providers to report written grievances from clients on a quarterly basis. Satisfaction surveys have been conducted since 1986. In addition, in 1990, Oregon established a survey to elicit responses from clients who disenrolled from a managed care plan. Also in 1991, a series of client hearings were sponsored throughout Oregon. It plans to follow up on these complaints and has considered establishing regional workshops, client councils, and focus groups.

Did the waiver application provide recipients with a choice to participate in a managed care plan that is mainstreaming? As to mainstreaming, all the states but one (Oregon) were ambiguous in their provision.

FN325Mainstreaming

 

 

  1. Does the Waiver Assure Recipients' Ability to Impact Quality of Care Provided to Them Individually and Collectively?



An important aspect of quality assurance is assuring that patients have the ability to impact the kind of quality they receive. Three ways that waivers can provide for patients to impact quality is to (1) assure the patient's ability to “vote with their feet”; (2) require the establishment of formal consumer boards and require the inclusion of minority patients on the board; and (3) establish *1127 mechanisms for reporting of complaints and advocacy. [FN]326

If consumers have the freedom to change managed care plans when they are dissatisfied, then the plans are likely to respond to their needs. [FN]327 To be able to vote with their feet, patients must have some choice and mobility. Preferably, the waivers would not authorize mandatory enrollment unless there are at least three plans from which a person could make a choice. [FN]328 Furthermore, consumers should be allowed to disenroll from any plan for any reason, at least within an open enrollment period of every six months. [FN]329 Finally, consumers should have the right to change providers within any plan at any time. [FN]330 Only one state waiver (Oregon) required minimal patient choice as a component of their demonstration project. [FN]331 However, seven states (Florida, Hawaii, Illinois, Missouri, New York, Oregon, and Tennessee) provide for a disenrollment period. [FN]332

For example, after an enrollee selects a plan in New York, the enrollee has thirty days in which he or she may switch to another plan. Only Missouri provided recipients with the right to change providers within in the plan at anytime. [FN]333

Another way of assuring a consumer's ability to impact quality is to assure that they (or their advocates) have a role in the governing boards and advisory. [FN]334 In addition, there should be a formal consumer advisory board that provides input and support to the consumers' representative and to the governing board. [FN]335 Any formal board must include representation by minority consumers. Four states (Illinois, Missouri, New York, and Oregon) required a formal consumer advisory board. [FN]336 No state clearly provided for the inclusion of minority consumers on the board. However, just *1128 allowing consumer representation on boards will be insufficient if there is not the provision of resources necessary for consumers to participate in the boards. [FN]337 Those resources include transportation, educational materials and services, child care, and translation services.

Both the state and the plans have financial interests which may color the ability to accurately assess problems related to access and quality. Thus, the waiver should establish a mechanism (such as an Ombudsprogram) to monitor access and quality of care. [FN]338 In fact, an Ombudsprogram could provide direct assistance to recipients, legal advocacy, access to and review of financial and medical audits, and client education. [FN]339 States should also provides a toll-free enrollee hotline to provide immediate assistance to recipients and to channel concerns appropriately. [FN]340

Does the waiver assure recipients the ability to impact the quality of care provided to them individually and collectively? No state had an overall positive waiver application. Three states (Illinois, Missouri, and Oregon) were ambiguous in their provisions. [FN]341

 

fn341Recipient


D. Assuring Quality Health Care: Conclusion

Assuring quality health care is extremely important in the *1129 managed care environment. Managed care actually operates under inverse incentive, where the providers make more money and the third party payers spend less as they reduce services. This incentive may encourage plans to cut services, particularly to vulnerable populations, which are marginally necessary. It is not enough for the states to increase access to health care; they must also assure the quality of the care given.

Although no waiver completely ignored this area, none of them was positive overall in the treatment of this criteria. The most striking feature about all of the states was the lack of detail with which they addressed this issue. This is particularly true with regard to standards to assure quality of health care to minority patients.

 Fn342Conclusion







IV. Protecting Patients from Cost Containment [FN]342



For the states seeking section 1115 waivers, the driving force behind the move is not quality of care. It is not access. Rather, it is a desire to control costs. States look to managed care to help them contain the rising cost of health care.

The managed care (payer-driven) system can be mistaken for the provider-driven system. In the payer-driven system, the physician is obligated to act in the patient's best interest and the third-party payer is contractually obligated to pay for services rendered by the physician. However, in the provider-driven system, the physician has an additional obligation to provide services under the *1130 guidelines and standards set by third-party payers if the physician wishes to be fully compensated for services rendered. The physician manages the patient's health care for the payer--hence, the term “managed-care products.” The physicians' new responsibility requires them to balance the needs of the patient with the cost-containment needs of the third-party payers.



A. Overview

With utilization review, third-party payers determine whether they believe the medical services ordered (or received) are appropriate and necessary. [FN]343 If they decide that the service is “unnecessary,” they will either refuse to pay the provider's charges (retrospective [FN]344) or refuse to authorize the provision of the service (concurrent and prospective [FN]345). Retrospective utilization management programs analyze data on hospital admissions, patterns of treatment, and utilization of certain procedures. Under a prospective review system, most nonemergency hospital admissions must receive prior approval and an initial approved length of stay is assigned.

When analyzing utilization review, it is essential to remember that a prospective decision has a fundamentally different impact on the patient than a retrospective decision. Theoretically, patients know what treatments will be paid for under either system plan. However, the different systems have significantly different impacts on patient behavior. In the retrospective system, a patient makes a decision about medical care and receives the medical care with a potential risk of disallowance. Thus, a person who needs a service will be more likely to receive the service even though there is a likelihood that the provider or the patient will not be reimbursed. Consequently, the potential for the person of color to be injured because of an erroneous decision by the third-party payer's utilization review process is lower than the prospective system.

In a prospective system, a patient knows in advance that the insurer will not pay for the recommended treatment. The patient's only chance of recovering the cost of the recommended treatment is in a challenge to the insurer's decision. Some argue that the *1131 patient can still obtain the care if she is willing to pay for it. What this argument fails to recognize is that many individuals lack economic ability to pay for the service outside any insurance plan. This is as true for middle-class individuals as it is for poor individuals. A person of color who needs services which are denied through prospective utilization review will, more likely than not, fail to receive the services. [FN]346 Consequently, the potential for persons of color to be injured because of an erroneous prospective review decision is higher than in a retrospective decision.

Financial risk-shifting mechanisms cause the provider (physician) to change his or her pattern of practice from overutilization to “appropriate utilization” at best and “underutilization” at worst. Historically, the risk of loss from providing unnecessary care was on the paying patient and the uncompensated doctor. Insurance removed the risk of loss from these parties and shifted the risk to third-party payers. Managed care products, through financial risk-shifting, shifts at least part of the risk of loss back to the providers.

Various arrangements produce financial risk shifting: ownership interest, joint venture, or a “bonus” arrangement. In these arrangements, the third-party payer shares the surplus from “cost-effective” care with the provider. [FN]347 The risk-shifting occurs in various forms of rewards, [FN]348 penalties, [FN]349 or both. [FN]350

  • 1132 The degree of risk assumed by the provider varies with the type of payment arrangement. Traditional fee-for-service practices are at one end (no risk-shifting) and traditional HMOs at the other end (full risk-shifting). [FN]351 Preferred provider organizations (and other managed care products) fall somewhere in the middle.



The most common means used by third-party payers to spread financial risk to physicians [FN]352 are capitation, [FN]353 withholding, [FN]354 discounted fee for service, [FN]355 per diem payments, [FN]356 and surplus (profit) sharing. The most frequently used means of shifting the risk to hospitals include case mechanisms [FN]357 and capitated payments per patient. [FN]358 Although the form may vary, the penalties *1133 and rewards have similar effects. Current cost-containment efforts shift the risk of financial loss, in whole or in part, to the providers of that care. [FN]359 Providers (physicians in particular) are offered economic incentives to act as the third-party payer's agent--the “gatekeeper” to health care services. [FN]360 The gatekeeping role is not new to physicians. They have used their position in several ways. For instance, physicians have used their authority as health care gatekeepers to resist hospitals' and insurers' efforts to influence medical treatment. Furthermore, they have generally used their role to obtain more services for the patient, not less. Now, however, they use their position to “save” money for third-party payers by ordering less services. Thus, the fundamental change in the basic ethical concern of the system has evolved from the “best interest of the patient” to “cost containment.”

As gatekeepers, physicians are concerned with limiting access to health care services so third-party payers do not find excessive utilization. If a payer determines that a physician practiced within the payer's guidelines, the payer financially rewards the physician. If a payer determines that a physician has ordered too many services, the payer financially penalizes the physician. Consequently, physicians are motivated to order services for patients within third-party payer guidelines and standards. Thus, gatekeeping shifts the focus of the health care system from the doctor-patient relationship to the doctor-payer relationship. Ultimately, the doctor and payer determine not only the quantity of services received by the patient but the quality of care as well. [FN]361 Some physicians will respond to the risk-shifting incentives by cutting not only “unnecessary” services and “marginally necessary” services, but also “medically necessary care.”

The shift of focus in financial risk-shifting has serious implications for persons of color. First, given that utilization review standards can be culturally insensitive, the physician will be under the greatest pressure to deny or modify services to the population not represented in the standards. The minority population requires the most services and is more likely to fall outside the standards. Furthermore, persons of color and the poor often find it difficult to advocate for themselves in a hierarchal, culturally different, male-dominated, European-American tailored health care system. *1134 As managed care creates a conflict of interest by increasingly influencing physicians to place their pecuniary self-interest before the patient's self-interest, it will be persons of color and the poor to whom physicians will find it easer to deny or withhold services. Physicians may believe, consciously or subconsciously, that these groups are less likely to deserve the services and/or less likely to complain. “As [managed care products] continue to grow and as more physicians continue to sign contracts with them, these concerns will intensify.” [FN]362

Second, physicians already order less services (quantity and quality) for persons of color. This difference in service is based on factors other than ability to pay. It is based, at least in part, on racism. A system focused on cost containment and financial risk-shifting will allow physicians to continue, if not increase, the practice of providing disparate treatment.



B. Critiquing State Waiver Application

 

  1. Does the Waiver Application Provide Adequate Standards Relating to Utilization Review?



Traditionally, the determination of what is “medically necessary” has been determined by the patient's physician. Under managed care the third-party payer defines “medically necessary.” To the extent that managed care organizations have incentives not to provide services, they could abuse their power and actually restrict patients from necessary care. It is important that the waiver application establishes guidelines to monitor managed care plans. Those guidelines should include: (1) a definition of “medically necessary” which provides limitations on the ability of a managed care plan to limit the care; (2) specific standards for setting up appropriate utilization review; and (3) utilization review by third parties independent from the managed care plans.

Only two states (Missouri and Tennessee) had some definition of “medically necessary” in the waiver application. [FN]363 According to the Bureau of TennCare, “medically necessary” means services or supplies provided by an institution, physician, or other provider that are required to identify or treat a TennCare enrollee's illness or injury which are consistent with the symptoms or diagnosis and treatment of the enrollee's condition, disease, ailment, or injury; *1135 with appropriate regard to standards of good medical practice, not solely for the convenience of an enrollee, physician, institution, or other provider; and at the most appropriate supply or level of services which can safely be provided to the enrollee. If the services are supplied to an inpatient it further means that services for the enrollee's medical symptoms or condition require that the services cannot be safely provided to the enrollee as an outpatient.

Missouri defines “medically necessary” as services furnished or proposed to be furnished which are reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the function of a malformed body part, in accordance with accepted standards of practice in the medical community of the area in which the health services are rendered; and services could not have been omitted without adversely affecting the member's condition or the quality of medical care rendered; and services are furnished in the most appropriate setting.

As to specific standards for utilization review, all the states but Hawaii addressed the issue; only New York's waiver was ambiguous. [FN]364 Furthermore, all the states but Florida and Hawaii required the utilization review to be conducted by an independent third party. [FN]365


However, another aspect of evaluating the waivers is assessing how well the waivers addressed issues relevant to communities of color. There are different forms of utilization review, but they all rely on statistical norms, practice parameters, and other population data to decide whether a service is necessary. The problem with utilization review is that standards and decisions are made (and will continued to be made) from data drawn from a largely European-American, middle-class, male subgroup. Such data is inadequate and unreliable when applied to minorities. [FN]366

First, persons of color have a backlog of illnesses that have gone untreated or inadequately treated. [FN]367 Because they have gone untreated or inadequately treated for so long, the history of the illness will fall outside the normal course, requiring more intense treatment over a longer period. Second, even for illnesses developed after enrollment in a managed care product, the course of the illness is likely to be longer and more severe. Without access to *1136 adequate housing, food, and clothing, the poor will not only have more illnesses, but the illnesses they do have will take a more severe course. But even middle-class minorities will have different “health status” than middle-class European-Americans. Besides the availability of current necessities (i.e., food and housing), health status is also related to the health status of the parents and health care received during childhood. Many middle-class minorities did not receive adequate health care during childhood and neither did their parents. This lack of health care has a generational or multi-generational effect on health status and the need for health care. [FN]368 If managed care products do not take this generational effect into consideration when developing protocols or practice guidelines, minorities will continue to receive inadequate health care.

Third, the data on which utilization review bases its protocol comes from research that has been largely European-American, middle-class, and male. It has only been in the last several years that there has been a concerted effort to include women and minorities in trial studies of drugs and other treatment protocols. [FN]369 Even so, health providers have failed to recognize that race can affect how a disease needs to be treated and how the disease responds to treatment. For instance, despite the fact that hypertension is a leading health problem for African-Americans, it was only recently that a study concluded that the hypertension medications being prescribed were not as effective in controlling hypertension for African-Americans as they were for European-Americans. Yet, it is likely that managed care products' utilization review protocols will not recognize these differences.

Finally, providers hired by third-party payers to do utilization review lack the culturally relevant background to factor the patients' status with regard to poverty, race, class, and prior health care into their recommendation regarding services. Unfortunately, many of the providers that traditionally served person of color are not being contracted with for managed care products. In fact, persons of color are finding that the traditional providers are moving out of their communities. Furthermore, persons-of-color are finding the doors to managed care products closed to them *1137 both as owners and provider-employees. Without providers who understand the need to take race, class, and poverty into consideration, even culturally relevant protocols will be misapplied.

Thus, to adequately serve communities of color waivers must require the managed care plans to: (1) factor the health status of population group into the utilization review process; (2) address cultural bias of protocols; (3) train providers and utilization review personnel with regard to culturally competent care; and (4) collect utilization review data based on race.

The plans were amazingly silent with regard to these standards. Only Illinois required the plans to factor in the health status of different population groups into their utilization review standards. [FN]370 Furthermore, only Illinois had even questionable standards which might have required the plans to train providers and utilization review personnel with regard to cultural competent care. [FN]371 All the other state waiver applications were silent or mostly silent on these issues [FN]372

Does the waiver application provide adequate standards relating to utilization review? The answer is questionable at best for three of the states (Illinois, Missouri, and Tennessee) [FN]373 and no for all others. The failure of the plans to specifically address issues related to communities of color is a major problem that cannot be overlooked. Intricate details outlining the utilization review process which do not address race essentially buries the impact of cost containment on communities of color.

Nevertheless, utilization review alone is not the major culprit. With utilization review alone, the patient knows what is not being authorized and, at least on a very theoretical level, can protest any denial of services. Thus, the utilization review process might have limited effectiveness in controlling costs where providers continue to order or prescribe “unnecessary services.”

 

FN372UR

 

 

Does the Waiver Application Provide Adequate Standards Relating to Financial Risk-Shifting?



Waivers should limit particular risk arrangements allowed including restricting plans from risk-shifting based on individual four states (Florida, Hawaii, Illinois and Tennessee) limited the particular risk arrangements allowed by managed care plans; [FN]374 however, only Florida specifically restricted plans from risk-shifting based on individual provider behavior.

A significant issue related to risk-shifting is the level of the captation rates. If the capitation rates are too low, managed care plans may shift more of the risk of loss to providers in order to maintain their own profits. Or they may increase denials of services on utilization review. Either way, the patient is placed at risk by rates that are too low. Even if the rates are adequate for the general population, they may be inadequate for physicians who serve primarily the chronically or acutely ill, disabled individual, elderly, and minority populations.

Three states (Hawaii, Illinois, and Tennessee) have standards to protect patients from insolvency of the managed care plan. [FN]375 Four states (Hawaii, Illinois, Oregon, and Tennessee) have standards to assure adequate capitation rates. [FN]376 Only three states had special capitation rates for special populations, such as chronically *1139 or acutely ill, disabled individuals. [FN]377 Aged, blind, and disabled persons were excluded from the first phase of Hawaii's waiver. [FN]378

Does the waiver application provide adequate standards relating to financial risk-shifting? None of the plans were overall positive in outlining standards regarding financial risk-shifting. However, all the plans had some positive aspects, while completely ignoring others. Florida, New York, and Oregon were generally negative. [FN]379 For instance, Florida had positive standards related to the kind of risk-shifting a managed care plan could undertake and no standards related to capitations. Oregon, on the other hand, was just the opposite.

 

fn379Financial

 

 

Does the Waiver Application Provide Adequate Standards Protecting Patients from Insolvency?



The waivers should include standards to protect patients from insolvency, including providing alternative insurance for individuals who cannot be covered by managed care plans. Four states (Hawaii, Illinois, Missouri, and Tennessee) had standards in their waivers regarding solvency of the managed care plans. However, only Hawaii provided for alternative insurance for individuals who cannot be covered by managed care plans. [FN]380

Does the waiver application provide adequate standards that protects patients from insolvency? As in other areas, the state waivers were mixed in their approach. None of the plans were overall positive in outlining standards protecting patients from insolvency. In fact, Florida, New York, and Oregon were generally negative. [FN]381

 

 fn381Cpitation

 

  • 1140 C. Protecting Patients from Cost Containment: Conclusion



Overall, many of the plans have positive aspects which will provide some protection for patients. This is particularly true in the are of financial risk-shifting where all the states had at least one or two positive aspects to their plan. However, as the waiver applications stands, there is sparse mention of special health concerns of minority populations. The failure of the waivers to require managed care plans to collect utilization review data is an oversight that overrides all other aspects of the states' cost-containment efforts.

 

 




V. Conclusion

For millions of Americans, Medicaid is their primary source of health insurance. Medicaid is a long established program that provides insurance for those who could not otherwise afford it. However, states have found a need to implement new and innovative ways to deliver health care under Medicaid law. Traditional Medicaid expenses have become unmanageable as the number of poor in America has increased and the provision of medical care has become prohibitively costly. Therefore, more and more states are turning to the waiver provision of Medicaid law. Section 1115 Medicaid waivers have been developed by a number of states in an attempt to better effectuate the purpose of the Medicaid Act. These waivers have been the focus of this paper. The waiver applications were evaluated to determine how well the applications would improve access, assure quality and manage cost containment. Section 1115 waivers are supposed to improve access to care. They do so by relying on managed care plans. However, if managed care is not carefully controlled, it could become a place where the uninsured, the indigent, and persons-of-color are systematically relegated to the lowest tier of health care. All of the waivers except Hawaii are ambiguous, at best, in articulating their ability to assure access. Hawaii's waiver fails entirely. Furthermore, there is a significant possibility that the waivers will erode access to traditional providers without replacing them with sufficient other providers. To the extent that the waivers results in long term corrosion 1141 of safety net providers capacity, individuals will be further disadvantaged in gaining access to adequate medical care. Assuring quality health care is extremely important in the managed care environment. Managed care actually operates under inverse incentive, where the providers make more money and the third party payers spend less as they reduce services. This incentive may encourage plans to cut services, particularly to vulnerable populations, which are marginally necessary. It is not enough for the states to increase access to health care, they must also assure the quality of the care given. While no waiver completely ignored this area, none of them were positive overall in the treatment of this criteria. The most striking feature about all of the states was the lack of detail with which they addressed this issue. This was particularly true with regard to standards to assure quality of health care to minority patients. As to cost containment, many of the plans have positive aspects which will provide some protection for patients. This is particularly true in the area of financial risk shifting where all the states had at least one or two positive aspects to their plan. However, as the waiver applications stands, there is sparse mention of special health concerns of minority populations. The failure of the waivers to require managed care plans to collect utilization review data is an oversight that overrides all other aspects of the states' cost containment efforts. Given the states' intentions of providing health insurance for those who are uninsured, the demonstration waivers should be viewed as a positive effort. However, there are important areas where the waivers fail to protect the populations they are meant to serve. Perhaps the biggest fault of the waivers is the failure to address the needs of minority communities--their particular health issues as well as their particular life styles that differ from the white middle-class population. All the state waivers reviewed are guilty of this lack of acknowledgment of minority population health needs. Through this article, we have addressed only several of the aspects of the state waivers: access to health care; quality assurance; and cost containment. On paper, the waivers tout how they are improving health care delivery in these areas. A look at Tennessee and Hawaii, though, reveals that what looks good on paper does not necessarily play out in the real world. Other vital areas that must be critiqued in future writings are patient protection from experimentation and antidiscrimination provisions of the waivers. 1142 In conclusion, Section 1115 Medicaid Demonstration Waivers are granted by HCFA to a state because the state wants to test a program improvement of the health care delivery system. States must take this opportunity to address the unique needs of the uninsured poor and minority communities as part of the overall health care reform initiative.






1

See 42 U.S.C. s 1396d(b) (1991); United States General Accounting Office, Medicaid: Restructuring Approaches Leave Many Questions, GAO/HEHS 95-103 (April 1995) [hereinafter Restructuring Approaches].

2

This includes the 50 states, the District of Columbia, Puerto Rico, and the U.S. territories.

3

42 U.S.C. s 1396.

4

Restructuring Approaches, supra note 1; see also 42 U.S.C. s 1396. For example, in fiscal year 1993, 13 states, including New York, received 50 cents for every dollar spent on their respective Medicaid programs, whereas Mississippi, West Virginia, and Utah each received more than 75 cents for every Medicaid dollar spent. Yet, because of the differences in prices, and the benefits and services offered, New York receives $3600 per beneficiary in federal aid, while Mississippi receives $1900.

5

Restructuring Approaches, supra note 1. States must cover inpatient and outpatient hospital care, physician services, laboratory and x-ray services, and preventive health services for children. They have the option of choosing to include services such as prescription drugs and dental, vision, and transportation services.

6

Federal law requires states to cover all individuals receiving: Aid for Dependent Children (AFDC); Supplemental Security Income; non-AFDC low-income children; pregnant women; and low-income Medicare beneficiaries. Restructuring Approaches, supra note 1, at 3. States, however, have considerable latitude in defining eligibility standards for AFDC and certain other programs. Id. At their option, states may also provide Medicaid benefits to other medically needy individuals. Id.

7

Health Insurance for the Aged Act s 1902(a), codified as 42 U.S.C. s 1396(a). To participate in Medicaid, the state must submit to the Department of Health and Human Services (HHS) a state Medicaid plan that complies with federal standards. 42 U.S.C. ss 1396(a), (b). HHS reviews the plan to ensure that it satisfies all federal requirements for participation. Only after the Secretary has approved the state plan can the state begin to participate in the program. To make a significant change in an approved plan, the state must submit the amendment to the Secretary of HHS and obtain approval for the proposed change. States that elect to participate in the Medicaid program are required to pay hospitals for, inter alia, inpatient and outpatient services provided to Medicaid beneficiaries. In addition, a state's Medicaid plan must include adequate safeguards to ensure that services are provided in a manner consistent with the best interests of Medicaid beneficiaries.

8

For instance, Nevada serves 284 Medicaid beneficiaries for every 1,000 poor or near-poor individuals in the state, while Rhode Island serves 913 per 1000. Mississippi spends less than $2400 per person on Medicaid services, while New York spends an average of almost $7300 per person.

9

Comparability requires that medical services provided to an eligible individual shall not be less in amount, duration, or scope from those provided to any other individual. Tit. XIX, sec. 1902(a)(1)(B)(i)-(ii), 79 Stat. at 345 (codified as amended at 42 U.S.C. ss 1396(a)(10)(B)(i)-(ii)).

10

“Freedom of choice” requires that most eligible individuals may obtain medical services from any institution, agency, community, pharmacy, or person qualified to perform the services provided. Social Security Amendments of 1967, Pub. L. No. 90-248, tit. II, sec. 227(a), tit. XIX, sec. 1902(a)(23), 81 Stat. 821, 903 (codified as amended at 42 U.S.C. s 1396a(23)).

11

Teresa A. Coughlin et al., State Responses to the Medicaid Spending Crisis: 1988 to 1992, 19 J. Health Pol. Pol'y & L. 837 (1994) [hereinafter State Responses]; Restructuring Approaches, supra note 1. The increase in Medicaid costs can be ascribed, at least in part, to the extension of eligibility to include low-income children, pregnant women, the elderly, disabled persons, the homeless, and legalized aliens. See John Holahan et al., Explaining the Recent Growth in Medicaid Spending, at 184.

12

Between 1988 and 1990, Congress expanded eligibility to include low-income children, pregnant women, the elderly, disabled persons, the homeless, and legalized aliens. Holahan et al., supra note 11, at 184.

13

Restructuring Approaches, supra note 1, at 3.

14

Id.

15

Id.

16

Id. at 3-4.

17

Id. at 4.

18

Medicaid Source Book: Background, Data and Analysis, Congressional Research Service 3-4 (1993 Update) [hereinafter Medicaid Source Book].

19

Id.

20

United States General Accounting Office, Medicaid: States Turn to Managed Care to Improve Acccess and Control Costs, GAO/HRD-93-46 (March 1993) [[hereinafter States Turn to Managed Care].

21

42 U.S.C. s 1315 (a)(1)-(2).

22

HHS may grant a waiver for a demonstration program that “furthers the general objectives of [Medicaid].” See S. Rep. No. 1589 at 20, reprinted in 1962 U.S.C.C.A.N. at 1962. States must submit a proposal to HHS which indicates the statutory and regulatory mandates to be waived. Furthermore, the proposal application must discuss the impact of the waiver on program expenditures, relevant laws, and beneficiaries enrolled in the project. See Medicaid Source Book, supra note 18, at 418. After receiving the proposal, HHS has a technical review panel compare and evaluate the proposal's methodology and design, objectives, expected costs and returns, the state's knowledge and experience, and the potential risks to the health and safety of participants in research activity. See Allen Dobson et al., The Role of Federal Waivers in the Health Policy Process, Health Aff. 72 (1992); 48 Fed. Reg. 9266, 9269 (1983) (discussing exemption of certain research and development projects from regulation for protection of human research subjects). The review panel recommends either approval, conditional approval, or rejection of the proposal. See Dobson et al., supra, at 77. The Office of Research and Demonstration (ORD) send a recommendation to the agency's administrator, who subsequently decides whether to grant a waiver for the demonstration proposal. See id.

Projects whose net annual federal costs exceed $1 million and which affect more than 300 Medicaid recipients require the approval of both the HHS Assistant Secretary for Management and Budget and the White House Office of Management and Budget (OMB). See Elizabeth Andersen, Administering Health Care: Lessons from the Health Care Financing Administration's Waiver Policy-Making, 10 J. L. & Pol. 215, 227-28 (1994). Furthermore, states have to establish that the project will not cost the federal government more money-- “budget neutrality.” See Dobson et al., supra, at 85. However, HHS has started assessing budget neutrality over the projects' entire lives, rather than over each year of their existence. See 59 Fed. Reg. at 49, 250; Judith M. Rosenberg & David T. Zaring, Managing Medicaid Waivers: Section 1115 and State Health Care Reform, 32 Harv. J. on Legis. 545 (1995).

23

See PPRC Commissioners Express Concern with Section 1115 Medicaid Waivers, Health Care Pol'y Rep. (BNA) at D16 (Dec. 19, 1994); Sara Rosenbaum, An Advocates Guide to Section 1115 Waivers (1995); Rosenberg & Zaring, supra, note 22.

24

Rosenberg & Zaring, supra note 22.

25

See supra, note 21 and accompanying text (quoting section 1115 of the Medicaid Act).

26

See H.R. Res. 1414, 87th Cong., 2d Sess. s 24 (1962); S. Res. 1589, 87th Cong. 2d Sess. ss 19-20 (1962).

27

See, e.g., Aguyo v. Richardson, 352 F. Supp. 462 (S.D.N.Y. 1972), aff'd, 473 F.2d 1090 (2d Cir.), cert. denied, 414 U.S. 1146 (1973). See also Greater N.Y. Hosp. Ass'n v. Blum, 476 F. Supp. 234 (E.D.N.Y. 1979); Crane v. Mathews, 417 F. Supp. 532 (N.D. Ga. 1972); California Welfare Rights Org. v. Richardson, 348 F. Supp. 491 (N.D. Cal. 1972).

28

Blum, 476 F. Supp. at 243.

29

In 1982, in response to efforts by the Reagan Administration to use s 1115(a) to permit states to impose stringent and otherwise unlawful cost-sharing obligations on Medicaid recipients, Congress amended the Medicaid statute itself to circumscribe strictly the Secretary's research authority to undertake demonstrations in which benefits are found to outweigh risks and participation is voluntary, or provision is made for assumption of liability for preventable damage to beneficiaries involuntarily subjected to an experiment. Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, s 131(b), 96 Stat. 324, 367 (codified as amended at 42 U.S.C. s 1396o).

30

See, e.g., State of Tennessee, Section 1115 Medicaid Demonstration Waiver Application, TENNCARE, (June 16, 1993) [hereinafter Tennessee Waiver Application].

31

Florida Health Security is “designed to test a new approach to health insurance that, though partially financed by state and federal Medicaid funds, will extend coverage to approximately one million uninsured Floridians.” The waiver will cover individuals and families with incomes below 250 percent of the federal poverty level, who are U.S. citizens or documented aliens and Florida residents. State of Florida, Section 1115 Medicaid Demonstration Application, Florida Health Security, at E-2 (Feb. 9, 1994) [[hereinafter Florida Waiver Application].

32

Hawaii's demonstration project, Health QUEST, was implemented in August 1994. Its goal is to provide quality care, ensure universal access, encourage efficient utilization, stabilize costs, and transform the way in which health care is provided to public clients. Health QUEST covers traditional Medicaid recipiants: AFDC related families and poverty-related women and children, for a total of approximately 75,000 people. It also covers approximately 33,000 medically indigent adults and children receiving government assistance or who are uninsured. The demonstration project does not contain an enrollment cap. State of Hawaii, Section 1115 Demonstration Waiver Application, Health QUEST (April 19, 1993) [hereinafter Hawaii Waiver Application].

33

Illinois has proposed MediPlan Plus as its Section 1115 Waiver. The plan is available to all who qualify for Medicaid and are living in voluntary MediPlan Plus areas, with the exception of populations specifically excluded. The plan will provide health education in English or Spanish, outreach and social services, and case management services for pregnant women and young children. State of Illinois, Section 1115 Medicaid Demonstration Waiver Application, Illinois MediPlan Plus (Sept. 22, 1994) [hereinafter Illinois Waiver Application].

34

The goal of Missouri Health Care is to improve the accessibility and quality of health services in Missouri's Medicaid and state aid eligible populations while controlling the program's rate of cost increase. Missouri intends to achieve this goal by enrolling eligible Medicaid recipients in comprehensive, prepaid health plans that contract with the State to provide a specified scope of benefits to each enrolled member in return for a capitated payment made on a per member, per month basis. The waiver extends subsidized insurance coverage to certain low-income individuals not covered by traditional Medicaid benefits. State of Missouri, Section 1115 Demonstration Waiver Application, Missouri Managed Care Program (June 30, 1994) [hereinafter Missouri Waiver Application].

35

The Section 1115 Waiver Application presented by the State of New York essentially mandates managed care for almost all Medicaid eligible individuals and other persons who do not qualify for Medicaid but receive assistance from the State of New York's Home Relief program. The waiver, not terribly complicated in its approach to delivering health care, will affect 87% of New York's Medicaid eligible population (approximately 2.8 million individuals) shifting those individuals from a fee-for-service system to a managed care based program. State of New York, Section 1115 Demonstration Waiver Application, The Partnership Plan (March 17, 1995) [hereinafter New York Waiver Application]. The size of this demonstration program is unmatched as New York has the largest number of Medicaid recipients (3.6 million) and the largest program budget in the nation. Id. at 1-1.

36

Oregon's Medicaid Demonstration Project is designed to expand Medicaid eligibility to Oregonians with family income below the federal poverty level by redefining benefits through a prioritization process. The services will be provided through statewide use of managed care systems and target health care for the uninsured. The Oregon Legislature passed five laws that collectively affected the way Oregon would distribute health care in the 1990s. State of Oregon, Section 1115 Demonstration Project Waiver Application, Oregon Medicaid Demonstration Project (Aug. 1991) [hereinafter Oregon Waiver Application].

37

Tennessee's waiver application, TennCare, proposes to increase services and control cost. TennCare was approved by HCFA in November 1993 and was implemented on January 1, 1994. It defines a standard benefit package and emphasizes managed care, preventive services, and effective utilization of resources. Through this program, the state expects to provide quality health care to all of its current Medicaid population. TennCare has an enrollment cap of 1,750,000. Tennessee Department of Health Chapter 1200-13-12 Bureau of TennCare. This includes the current Medicaid population of roughly one million plus an additional estimated 775,000 currently uninsured and uninsurable individuals in the state. As codified, the total enrollment in TennCare shall not exceed 1,300,000 in the first full year of operation and shall not exceed 1,500,000 thereafter. The current proposal still includes coverage for the current Medicaid population; however, the additional number of individuals to be served in the program is 500,000. Tennessee Waiver Application, supra note 30, at Letter from David L. Manning, Department of Finance and Administration to Bruce Vladeck, Director of Health Care Financing Administration, November 11, 1993.

38

Medicaid Source Book, supra note 18, at 165.

39

See generally Sara Rosenbaum & Julie Darnell, Medicaid Section 115 Demonstration Waivers: Implications for Federal Legislative Reform, The Kaiser Commission (July 1995).

40

For example, the Tennessee Medicaid program provides health care coverage to the traditionally eligible groups. Tennessee Waiver Application, supra note 30, at 28. While the criteria for eligibility as an uninsurable will be the same as those currently used in CHIP, current membership in CHIP is not a pre-requisite for qualifying as uninsurable under TennCare, nor is it a barrier to enrollment in TennCare. Id. Tennessee will require families and individuals to pay a portion of their total insurance premiums, depending on their ability to pay. See id.

In Missouri, the eligible group include children and young adults under the age of 19 with family income below 200% of the federal poverty guideline for the applicable family size. A family with an income greater than 150% of the federal poverty level (FPL) for the applicable family size will be asked to contribute 25% of a premium established by the Department of Social Services for each child. See generally Missouri Waiver Application, supra note 34.

In Hawaii, low-income persons earning up to 300% of the FPL are covered so long as no employer-provided coverage exists. They are required to pay, on a sliding scale, a portion of the monthly premium. Those with an income which exceeds 300% of the FPL, but who are uninsured, may remain in the program if they pay the full premium amounts. See generally Hawaii Waiver Application, supra note 32.

In New York, the extension covers women and children (under one year) with up to 185% FPL, children up to age six that are up to 133% of the FPL, and children under 19 up to 100% FPL. See generally New York Waiver Application, supra note 35.

41

See, e.g., Florida Waiver Application, supra note 31, at E-2 (stating an intent to provide affordable health insurance for the large number of Florida residents who are uninsured because they fail to meet federal poverty guidelines).

42

See, e.g., Tennessee Waiver Application, supra note 30, at 28 (extending coverage to persons with an existing or prior existing health condition causing them to be uninsurable).

43

A major change in eligibility will be the elimination of the Medically Needy program which covers those who would not otherwise qualify for Medicaid under an SSI-related group because they exceed income or asset limits for those groups. Florida gives an unsympathetic description of the Medically Needy program recipients in justifying the phase-out of this program. The application explains that the program has little value in terms of health care prevention because the need to benefit from the program occurs when the recipient has costly major medical problems. Florida does not have a plan to fill the gap left when the Medicare beneficiaries under the Medically Needy program lose this program. Florida Waiver Application, supra note 31, at 65. Some states, however, have neither added the uninsurable adults nor provided for presumptive eligibility.

44

One mechanism used to exclude members from eligibility is to change the definition of family income. In Florida, family income has been changed to include the income of all individuals covered under the program (family unit), plus the income of any spouse or custodial parent of a person being covered who lives at the residence of the applicant, regardless of whether they are being covered by the premium discount program. Florida Waiver Application, supra note 31, at 41. Family income will include both earned and unearned income. Among items included in income are veterans' benefits, child support, and alimony. Id. The program also subjects demonstration eligible to income deeming of certain family members, such as stepparents, grandparents, and siblings. Rosenbaum & Darnell, supra note 39, at 5, at Table 2.

45

Florida will subject demonstration eligibles to income deeming of stepparents, grandparents, and siblings. Florida Waiver Application, supra note 31, at 41.

46

Rosenbaum & Darnell, supra note 39, at ss B-D.

47

See, e.g., Florida Waiver Application, supra note 31, at 228-49 (requesting a waiver of the standards requiring an asset test as part of eligibility determination).

48

See, e.g., Tennessee Waiver Application, supra note 31, at 100 (planning to discontinue retroactive eligibility so the state does not have to provide medical assistance for up to three months prior to the date of application for assistance).

49

Rosenbaum & Darnell, supra note 39, at ssB-D.

50

Medicaid Source Book, supra note 18, at 247.

51

See generally Rosenbaum & Darnell, supra note 39.

52

Missouri Waiver Application, supra note 34, at 7.

53

Id.

54

New York Waiver Application, supra note 35, at 2-29, 2-30.

55

See, e.g., Florida Waiver Application, supra note 31, at 79.

56

See, e.g., Missouri Waiver Application, supra note 34, at 7.

57

See, e.g., Florida Waiver Application, supra note 31, at 47 (waiving traditionally mandated coverage and cost containments for FQHC/RHS, but prohibiting the state from eliminating FQHC services as a mandatory Medicaid service).

58

Rosenbaum & Darnell, supra note 39.

59

Florida Waiver Application, supra note 31, at 77.

60

Jane Perkins & Michele Melden, The Advocacy Challenge of a Lifetime: Shaping Medicaid Waivers to Serve the Poor, Clearinghouse Rev. 864, 872 (December 1994).

61

Rosenbaum & Darnell, supra note 39.

62

Tennessee Waiver Application, supra note 30, at 31.

63

Id.

64

All care within a given community is capitated using a community rate based on historical health care costs in that community. The geographic basis for the delivery of TennCare services is the Community Health Agencies. Community Health Agencies, which were established under the Community Health Agency Act of 1989 for the purpose of coordinated services to the medically indigent across the state are located in both urban and rural areas of Tennessee. The CHA regions were established based on the concept of rational service areas. Each CHA is governed by a community-based board consisting of a representative of each county in the CHA region. There are 12 community health regions. Tennessee Waiver Application, supra note 30, at 32.

65

Rosenbaum & Darnell, supra note 39, at 10, Table 2. For instance, Hawaii eliminates cost-based FQHC/RHC payment methodology. The project requires the managed care organizations to include FQHCs/RHCs unless they can demonstrate reasonable access without contracting with the FQHCs/RHCs. New York alters the traditional treatment of health care providers to a certain extent. The most notable change is that FQHCs will no longer be reimbursed for 100% of their costs. The New York Plan, if approved, will reimburse FQHC on a reasonable cost basis. New York Waiver Application, supra note 35, at 6-2.

66

CHPA members may, however, purchase health plans that provide access to essential community providers; the essential community providers will be able to bill plans for services provided to AHP members. Florida Waiver Application, supra note 31, at 48.

67

At full implementation, Florida proposes to divert 50% of the DSH funds to FHS with funds initially earmarked for charity care going to finance FHS enrollment. Florida Waiver Application, supra note 31, at 91.

68

Rosenbaum & Darnell, supra note 39, at 10, Table 2.

69

Missouri Waiver Application, supra note 34, at 10. The Missouri plan would enroll all 540 school districts as school health providers for special education related services, administrative case management, and primary care. Under the New York Waiver, the Local Department of Social Services can “carve out” school based health clinics from the Plan and continue to reimburse those clinics on a fee-for-service basis. If a county opts to carve out such providers the state Medicaid funding will be frozen at the 1994 level, requiring the local district to make the combined state and local match for these services in order to obtain federal matching funds. New York Waiver Application, supra note 35, at 2-5.

70

Rosenbaum & Darnell, supra note 39; see also United States General Accounting Office, State Flexibility in Implementing Managed Care Programs Requires Appropriate Oversight, GAO/T-HEHS-95-206 (July 1995).

71

Tennessee Waiver Application, supra note 30, at 34. Tennessee will contract with each qualified managed care organization based on the capitation rate in that community for the provision of services to any eligible in that community. Id. Providers enrolled in the plans will be reimbursed by the plans on a negotiated basis. Id. The state then anticipates that annual capitation rates will be developed based on the lowest cost managed care organization meeting quality standards within each community.

72

Florida predicts that most FHS recipients will enroll in a managed care plan because of the individual's ability to meet the benchmark price and the lower out-of-pocket expenses offered by HMOs. Florida Waiver Application, supra note 31, at 85.

73

These waivers give the states authority to require managed care for Medicaid, AFDC-related, and non-Medicare-eligible SSI participants. Id. at 30.

74

Rosenbaum & Darnell, supra note 39; see also Medicaid Source Book, supra note 18, at 418.

75

Tennessee Waiver Application, supra note 30, at 25; Missouri Waiver Application, supra note 34, at 6.

76

HCFA has questioned how Florida will assure individuals with special needs access to essential providers with unique capabilities to serve these special populations in their geographic areas. Florida Waiver Application, supra note 31, at 49. Florida explains that any plan offered by CHPA members will be prevented from discriminating against persons with chronic and special health care needs because all providers must guarantee issue and community rate policies. Id. Individuals who reside in public health institutions such as MR/DD facilities will be ineligible for coverage under FHS. Id. at 64.

77

Missouri Waiver Application, supra note 34, at 26-31.

78

Tennessee Waiver Application, supra note 30, at 99. A waiver was given to expand eligibility to the following individuals: pregnant women and infants with income up to 184% of the official poverty line; children between ages one and five with incomes up to 133% of the official poverty line; children born after September 30, 1983, under the age of 19 whose family income exceeds 100% of the official poverty line, families with income up to 133 1/3% of the state's AFDC income payment standard for the Medically Needy; or other limits prescribed by the Secretary.

79

AFDC persons who are ineligible for AFDC cash payments will be eligible for the demonstration if they are currently uninsured. They will not be subject to resource (or asset) limits. Tennessee Waiver Application, supra note 30, at 100.

80

Florida Waiver Application, supra note 31, at 228-49.

81

Id.

82

Tennessee Waiver Application, supra note 30, at 99.

83

Florida Waiver Application, supra note 31, at 228-49.

84

Id.

85

Tennessee received a waiver of section 1927 by allowing plans to manage costs through establishment of their own formularies and by limiting the authorized formulary based on cost, therapeutic equivalent, and clinical efficacy. Tennessee Waiver Application, supra note 30, at 102. The State has asked for more stringent controls. It requested a waiver that will allow it to control costs by exempting drug providers from the best-price requirement for contract with TennCare HMOs and PPOs. Id. at 103.

86

Webster's Third New International Dictionary, Unabridged 11 (1993).

87

Andrew Jackson Institute, October 1994.

88

Michele Melden, Managed Care: How to Challenge Inadequate Access for Medicaid Beneficiaries?, Clearinghouse Rev. 228, 232 (July 1991) (citing 42 U.S.C. s 1396a(a)(30)(A)).

89

Id.

90

Id. at 229.

91

Id. at 230-31.

92

Id. at 230 (citing 42 U.S.C. s 1396a(a)(10)(B)(i); 42 C.F.R. s 440.240(b)).

93

Id.

94

Id.

95

Id.

96

Id.

97

Id.

98

42 C.F.R. s 440.230.

99

Melden, supra note 88, at 230.

100

Hispanics pay 57% of their own medical bills and Puerto Ricans pay 30% of their own medical bills. Hispanic Health in the United States, 265 J.A.M.A. 248 (Jan. 9, 1991) [hereinafter Hispanic Health].

101

Health Status of Minorities, at 360, Table 6.

102

Id. at 367.

103

Lack of insurance restricts access to health care for many Hispanics. Hispanic Health, supra note 100, at 248. Of the subgroups, Mexican-Americans, with 30% uninsured, are the most likely to be uninsured. Id.

104

Health Status of Minorities, supra note 101, at 367, Table 15. The rate of uninsured individuals could vary widely even within a group. For instance, 70% of Cubans have private insurance, but only 40% of Puerto Ricans have health insurance.

105

The magnitude of the impact, however, will vary not only among different minority communities but within groups as well.

106

Wilhelmina A. Leigh, Access To Primary Care For Underserved Americans: Summary Proceedings of a Roundtable, Joint Center for Political and Economic Studies 4-5 (1993).

107

Id. at 5.

108

Hispanic Health, supra note 100, at 248. Problems with language reduces the quality of care and impedes delivery. Id.

109

Haywood, Ethnicity and Medical Care, at 315.

110

Leigh, supra note 106, at 5.

111

Id. at 5, 6.

112

Haywood, supra note 109, at 325. The Puerto Rican subpopulation also prefers treating their seriously ill at home. Id. at 465. Because Hispanics are more likely to view their illness in terms of folk practices, some Hispanics seek out folk healers instead of doctors. Hispanic Health, supra note 100, at 248. Mexican-Americans present their illness to their friends and family for opinions before seeking medical assistance. Haywood, supra note 109, at 301. Mexican-Americans consider the needs of the family ahead of the needs of the individual. Id. at 322. The rural residence of some also serves as a barrier to health care. Healthy People 2000, U.S. Dept. of Health & Human Services [hereinafter Healthy People]. There is a close association between sickness and religion for many Mexican-Americans. Religious activities are performed to regain health, some homes have altars, and sometimes masses are performed in a home. Haywood, supra note 109, at 325-26. Some Mexican-Americans feel sickness is a punishment from God and suffering is a part of God's plan. Id. 5-26.

113

Healthy People, supra note 112, at 35.

114

Geraldine Dallek, Health Care for America's Poor: Separate and Unequal, Clearinghouse Rev. 361, 363-64 (Special Issue, Summer 1986).

115

Jane Perkins, Increasing Provider Participation in the Medicaid Program: Is There a Doctor in the House?, 26 Hous. L. Rev. 77, 79 (1989).

116

Id. In Kentucky, 90% of the physicians surveyed claimed to serve Medicaid patients, while at the same time reporting that Medicaid patients made up less than 1% of their practice. Id. at 80. Moreover, for prenatal care, which is vital to the minority community, physician participation is lower than other specialties. In California, the lack of obstetricians that serve Medicaid patients is critical. In 1988, it was estimated that 175,000 Medicaid eligible women of child-bearing age were without access in half of California's 58 counties.Id. at 82. Women were waiting 16 weeks for a prenatal care appointment, while women with private insurance did not experience a physician shortage, nor extended waiting for care. Id.

117

Id. at 83.

118

Id. at 84-85.

119

Id. at 85-86.

120

Id. at 86. The study, by the American Academy of Pediatrics, also indicated that 35.8% of the pediatricians found the paperwork burdensome. Id.

121

Id. at 87.

122

Id.

123

Id. at 88.

124

Vernellia R. Randall, Racist Health Care: Reforming an Unjust Health Care System to Meet the Needs of African-Americans, 3 Health Matrix 127 (1993).

125

Id. at 148; Alan Sager, The Closure of Hospitals that Serve the Poor: Implications for Health Planning, A Statement to the Subcommittee on Health and the Environment, Committee on Energy and Commerce, U.S. House of Representatives, 2 (April 30, 1982); Mark Schlesinger, Paying the Price: Medical Care, Minorities, and the Newly Competitive Health Care System, in Health Policies and Black Americans 275-76 (David Willis ed., 1989).

126

Randall, supra note 124, at 151; Equal Access to Health Care: Patient Dumping, Hearing before a Subcommittee of the Committee on Government Operations, 100 Cong, 1st Sess. 270-87 (July 22, 1987); Robert L. Schiff, et al., Transfers to a Public Hospital: A Prospective Study of 467 Patients, 314 New Eng. J. Med. 552-57 (1986); Stan Dorn et al., Anti-Discrimination Provisions and Health Care Access: New Slants on Old Approaches, Clearinghouse Rev. 439, 441 (Special Issue, Summer 1986).

127

Randall, supra note 124, at 154.

128

Perkins & Melden, Section 1115 Medicaid Waivers: An Advocate's Primer, at 20-21.

129

Id. at 20-25.

130

See generally Florida Waiver Application, supra note 31; Illinois Waiver Application, supra note 33; Missouri Waiver Application, supra note 34, at 27 (Request for Proposal).

131

See generally Florida Waiver Application, supra note 31; Missouri Waiver Application, supra note 34.

132

Missouri Waiver Application, supra note 34, at 27.

133

Id.

134

See generally Hawaii Waiver Application, supra note 32; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36; Tennessee Waiver Application, supra note 37.

135

Florida Waiver Application, supra note 31, at 81 (Response to HCFA); Missouri Waiver Application, supra note 34.

136

New York Waiver Application, supra note 35, at 35 (answers submitted to HCFA on August 4, 1995, in response to HCFA questions of June 30, 1995).

137

Perkins & Melden, supra note 128, at 24.

138

Missouri Waiver Application, supra note 34, at 28; New York Waiver Application, supra note 35; Tennessee Waiver Application, supra note 37, at 16 (Responses to HCFA).

139

Missouri Waiver Application, supra note 34, at 28.

140

Perkins & Melden, supra note 128, at 24.

141

See generally, Missouri Waiver Application, supra note 34; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36.

142

New York Waiver Application, supra note 35 (answers submitted to HCFA on August 4, 1995, in response to HCFA questions of June 30, 1995).

143

Florida Waiver Application, supra note 31, at app. C (Florida's Medicaid Current Service Coverage, Florida Health Security, Feb. 9, 1994).

144

Florida Waiver Application, supra note 31, at 56 (responses to HCFA questions, April 1994); Hawaii Waiver Application, supra note 32, at 1-9; Illinois Waiver Application, supra note 33, at 37; New York Waiver Application, supra note 35, at 2-27.

145

Perkins & Melden, supra note 128, at 25.

146

Id.

147

Florida Waiver Application, supra note 31, at 228-49; Hawaii Waiver Application, supra note 32, at abstract.

148

Missouri Waiver Application, supra note 34, at 5-18.

149

Illinois Waiver Application, supra note 33, at 37; New York Waiver Application, supra note 35, at 2-27; Oregon Waiver Application, supra note 36, at 7.1; Tennessee Waiver Application, supra note 37, at 98.

150

Perkins & Melden, supra note 128, at 24.

151

Florida Waiver Application, supra note 31, at 228-49.

152

Missouri Waiver Application, supra note 32, at 5-18.

153

Hawaii Waiver Application, supra note 32, at 4-4.

154

See generally Oregon Waiver Application, supra note 36.

155

See Perkins & Melden, supra note 128.

156

Florida Waiver Application, supra note 31, at 71-72; Illinois Waiver Application, supra note 33, at 46; New York Waiver Application, supra note 35, at 2-3; Oregon Waiver Application, supra note 36, at 3-5.

157

Florida Waiver Application, supra note 31, at 71-72.

158

Id.

159

See generally, Missouri Waiver Application, supra note 34.

160

Perkins & Melden, supra note 128, at 22.

161

Oregon Waiver Application, supra note 36, at 4.30.

162

See generally Hawaii Waiver Application, supra note 32; Illinois Waiver Application, supra note 33; Missouri Waiver Application, supra note 34.

163

Perkins & Melden, supra note 128, at 22.

164

Illinois Waiver Application, supra note 33, at 48; Missouri Waiver Application, supra note 34, at 18; Oregon Waiver Application, supra note 36, at 15-17. See generally New York Waiver Application, supra note 35; Tennessee Waiver Application, supra note 30, Tennessee Health Campaign Literature.

165

Oregon Waiver Application, supra note 36, at app. IV.

166

Perkins & Melden, supra note 128, at 20.

167

Illinois Waiver Application, supra note 33, at app. D, Healthy Moms/Healthy Kids Waiver Program; Missouri Waiver Application, supra note 34, at 22; Oregon Waiver Application, supra note 36, at 15-16.

168

See generally Missouri Waiver Application, supra note 34.

169

Perkins & Melden, supra note 128, at 20, 21.

170

Florida Waiver Application, supra note 31, at 67 (responses to HCFA questions); Illinois Waiver Application, supra note 33, app. D.; Oregon Waiver Application, supra note 36, at 3.13; Tennessee Waiver Application, supra note 37 (Provider Network Analysis, Attachment to Letter from David L. Manning, Commissioner to Bruce Valdeck, HCFA, November 11, 1995).

171

Florida Waiver Application, supra note 31, at 67 (responses to HCFA questions); Illinois Waiver Application, supra note 33, at app. D.

172

Illinois Waiver Application, supra note 33, at 61.

173

Perkins & Melden, supra note 128, at 21.

174

Id.

175

Id.

176

Florida Waiver Application, supra note 31, at 67 (responses to HCFA questions); Illinois Waiver Application, supra note 33, at 61.

177

Perkins & Melden, supra note 128, at 26, 28, 30.

178

Florida Waiver Application, supra note 31, at 64; Illinois Waiver Application, supra note 33, at 65; Oregon Waiver Application, supra note 36, at 3.16. See generally Tennessee Waiver Application, supra note 30.

179

Florida Waiver Application, supra note 31, at 64 (responses to HCFA questions).

180

Perkins & Melden, supra note 128, at 20-21.

181

Id. at 22.

182

Illinois Waiver Application, supra note 33, at app. D; Missouri Waiver Application, supra note 34, at 30; Oregon Waiver Application, supra note 36, app. IV, at 15; Tennessee Waiver Application, supra note 30 (letter to HCFA in answer to requested response to questions, August 4, 1993).

183

Tennessee Waiver Application, supra note 30 (letter to HCFA in answer to requested responses to questions, August 4, 1993).

184

Perkins & Melden, supra note 128, at 22.

185

Missouri Waiver Application, supra note 34, at 30; Tennessee Waiver Application, supra note 30 (Provider Network Analysis, attachment to letter from David L. Manning, Commissioner, to Bruce Vladeck, HCFA, November 11, 1993).

186

Tennessee Waiver Application, supra note 30 (Provider Network Analysis, attachment to letter from David L. Maning, Commissioner, to Bruce Vladeck, HCFA, November 11, 1993).

187

Perkins & Melden, supra note 128, at 23.

188

Missouri Waiver Application, supra note 34, at 30; Tennessee Waiver Application, supra note 30, at 18 (letter to HCFA in answer to requested responses to questions).

189

Perkins & Melden, supra note 128, at 22.

190

Florida Waiver Application, supra note 31, at 56 (responses to HCFA questions); Missouri Waiver Application, supra note 34, at 30-31; Oregon Waiver Application, supra note 36, at 15; Tennessee Waiver Application, supra note 30, at 17 (responses to questions).

191

Missouri Waiver Application, supra note 34, at 30-31.

192

See generally Hawaii Waiver Application, supra note 32.

193

See generally Missouri Waiver Application, supra note 34; Tennessee Waiver Application, supra note 30.

194

See generally Florida Waiver Application, supra note 31; Illinois Waiver Application, supra note 33; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36.

195

Perkins & Melden, supra note 128, at 23.

196

Florida Waiver Application, supra note 31, app. B; Illinois Waiver Application, supra note 33, app. D; Missouri Waiver Application, supra note 34, at 3-28; Oregon Waiver Application, supra note 36, at 1-3.

197

Oregon Waiver Application, supra note 36, app. IV.

198

Hawaii Waiver Application, supra note 32, at 1-3; Tennessee Waiver Application, supra note 30, at 49.

199

Hawaii Waiver Application, supra note 32, at 1-3.

200

Perkins & Melden, supra note 128, at 23.

201

Hawaii Waiver Application, supra note 32, at 32; Missouri Waiver Application, supra note 34, at 3-28.

202

Missouri Waiver Application, supra note 34, at 45.

203

Perkins & Melden, supra note 128, at 24.

204

Illinois Waiver Application, supra note 33, at 32; Oregon Waiver Application, supra note 36, at 3-28.

205

Perkins & Melden, supra note 128, at 23.

206

Illinois Waiver Application, supra note 33, at 45; Oregon Waiver Application, supra note 36, at 3-28.

207

See generally Florida Waiver Application, supra note 31; Hawaii Waiver Application, supra note 32; Tennessee Waiver Application, supra note 30.

208

Perkins & Melden, supra note 128, at 25.

209

Hawaii Waiver Application, supra note 32; Hawaii: Health Quest May be Off to a Rocky Start, Health Line, Sept. 1994; Illinois Waiver Application, supra note 33, at 36; Missouri Waiver Application, supra note 34, at 45.

210

Illinois Waiver Application, supra note 33, at 36-38.

211

See generally Florida Waiver Application, supra note 31.

212

Rosenberg & Zarig, supra note 22, at 554.

213

Id. at 554.

214

Marsha Gold et al., Managed Care and Low-Income Populations: A Case Study of Managed Care in Tennessee, The Kaiser Foundation 35 (July 1995).

215

Id. at 35.

216

Emily Friedman, The Eternal Triangle: Cost, Access, and Quality 17 Physician Executive 3 (July-Aug. 1991).

217

Id. at 3.

218

W.A. Hassouna, A Strategy Against Poverty, Quality Health Care at Affordable Cost, 47 World Health 6 (Nov.-Dec. 1994).

219

Linda A. Headrick & Duncan Neuhauser, Quality Health Care, 271 J.A.M.A. 1711 (1994). A clinic in Atlanta used continuous improvement techniques to identify factors associated with the 22.3% rate of cesarean section deliveries. The clinic identified two factors that were common for more than 50% of the repeated caesarean sections: 1) failure to progress and 2) patient requests. First, no agreement on what was considered failure to progress could be found. The clinic defined failure to progress by local consensus. Second, patient requests were based on unfounded beliefs that once you have had a caesarean you must always have a caesarean. They established an education program which educated patients that vaginal delivery was still an option. The first year following the implementation of the recommendations the caesarean section rate dropped to 17.8%, with no ill effects to either mothers or infants. Five years after implementation, the rate has continued to drop to 15.7%. Id. at 1711.

220

Timothy Stoltzfus Jost, The Necessary and Proper Role of Regulation to Assure the Quality of Health Care, 25 Hous. L. Rev. 525, 526 (1988).

221

Barry R. Furrow, The Changing Role of the Law in Promoting Quality in Health Care: From Sanctioning Outlaws to Managing Outcomes, 26 Hous. L. Rev. 147, 154 (1989).

222

Id. at 153.

223

Vernellia R. Randall, Managed Care, Utilization Review, and Financial Risk Shifting: Compensating Patients for Health Care Cost Containment Injuries, 17 U. Puget Sound L. Rev. 1 (1993).

224

Id. at 1.

225

Furrow, supra note 221, at 153 (citing Brook & Kosecoff, Commentary: Competition and Quality, 7 Health Aff. 150, 157 (1988)).

226

Id.; see also Avedis Donabedian, The Methods and Findings of Quality Assessment and Monitoring 150 (1985).

227

Randall, supra note 223, at 1.

228

Furrow, supra note 221, at 153; A. Donabedian, Evaluating the Quality of Medical Care, 44 Millbank Memorial Fund Q. 166, 167-70 (1966).

229

Furrow, supra note 221, at 153.

230

Id. at 155.

231

Id.

232

Id.

233

Id. For instance, outcomes such as death are easily measured, while other outcomes such as patient attitudes, satisfaction, and social restoration present greater difficulties. Id.

234

Id. at 155-56.

235

Id. at 156.

236

Id.

237

In 1994, US HealthCare, in Blue Bell, Pennsylvania, became the first HMO to publish performance report cards showing how all of its health plans scored in selected clinical areas based on the Health Plan Employer Data and Information Set (HEDIS). Carol Sardinha, US HealthCare Releases HEDIS-Based Report Card, 7(16) Managed Care Outlook (Aug. 12, 1994). The NCQA considers HEDIS to be the only uniform national standard for evaluating and comparing the performance of HMOs and other plans. Id. at 1.

238

Sardinha, supra note 237, at 1. The Clinton Health Care Plan relied heavily on the use of performance report cards for assuring quality. The Health Security Act appears as H.R. 3600, 103d Cong., 1st Sess. (1993) and as s 1757, 103d Cong., 1st Sess. (1993) ss 1325, 5005, 5012.

239

Jason Ross Penzer, Grading the Report Card Lessons from Cognitive Psychology, Marketing, and the Law of Information Disclosure for Quality Assessment in Health Care Reform, 12 Yale J. on Reg. 207, 221 (1995).

240

Id.

241

Id. at 222.

242

Id. at 223.

243

Robin Elizabeth Margolis, Can Total Quality Management Help Care for the Poor, 11 Healthspan 19 (1994).

244

Id. at 19.

245

TQM principles include: (1) a clear organizational mission, understood by all employees, must be developed by the health care entity; (2) the mission must be placed in a strategic plan or statement articulating the organization's vision of the future, and the values and strategies that the organization will use to achieve its mission; (3) a commitment to listen carefully to customers (or patients, in a health care setting) about their wishes;--empowerment of employees to solve their own problems, as long as they work in accordance with the health care entity's mission and strategic plan; (4) a scientific or benchmark approach to work, described as the “plan, do, check, act cycle,” so that results will be available for use in improving performance; and, (5) a commitment to continue improving rather than resting on a satisfactory plateau. Margolis, supra note 243, at 19.

Studies show that doctors incomes rose in direct proportion to the services proscribed. Jost, supra note 220, at 526. Recent studies done under total quality management suggest that too many resources have been wasted due to the current system which discourages economy and efficiency. Id.

246

Robin Elizabeth Margolis, Can Total Quality Management Help Care for the Poor, 11 Health Span 19 (Sept. 1994). TQM principles must be modified in accordance with the realities of the public hospital setting. Id. The emphasis on customer satisfaction in corporate TQM efforts cannot always be translated to hospitals. Id. For example, the conflict between the desire of poor patients' families and friends to visit patients freely, and the cumbersome security precautions that hospitals must undertake in high crime areas causes commentaters to ask “whose expectations must be met or exceeded?” Id. at 19.

247

John D. Ayres, The Use and Abuse of Medical Practice Guidelines, 15 J. Legal Med. 421 (1994). Initially, the guidelines focused on such areas as immunization. The guidelines now have developed to include “a plethora of diagnostic and therapeutic treatment recommendations from many national medical organizations.” Id. (reporting that more than 60 organizations have produced over 1600 such guidelines).

248

Id. at 421.

249

Id. at n.8. In fact, the guidelines have had a much broader application by insurers in determining payment to hospitals and physicians, courts in litigating medical malpractice, and legislatures in applying practice parameters as the standard of care in an alternative dispute resolution system. Id. at 421.

250

Id. at 424.

251

Id. at 425.

252

Id.

253

Furrow, supra note 221, at 147.

254

Id. at 153; see, e.g., Kollmorgen v. State Board of Medical Examiners, 416 N.W.2d 485, 487, 491 (Minn. App. 1987) (upholding action of State Board of Medical Examiners ordering discipline against the individual physician who overprescribed benzodiazepines to patient); Gonzales v. Nork, N. 228566 (Cal. Super. Ct., Nov. 19, 1973) (excerpted in, Barry Furrow et al., Health Law: Cases, Materials and Problems 164-92 (1987) (substance abuse, coercion of patients, gross incompetence in performing surgery), remanded on other grounds, 573 P.2d 458 (Cal. 1978)).

255

Furrow, supra note 221, at 153.

256

Id. at 153.

257

Devon C. McGraw, Financial Incentives to Limit Services: Should Physicians be Required to Disclose These to Patients?, 83 Ger. L. J. 1821 (1995).

258

Rand E. Rosenblatt, Equality, Entitlement, and National Health Care Reform: The Challenge of Managed Competition and Managed Care, 60 Brook. L. Rev. 105, 126 (1994).

259

See Rosenberg & Zaring, supra note 22.

260

Rosenblatt, supra note 258, at 138.

261

Id. at 108.

262

McGraw, supra note 257, at 1826.

263

Id. at 1824.

264

Rosenberg & Zaring, supra note 22, at 553.

265

Id.

266

Id.

267

Id. at 554.

268

Elizabeth Anderson, Administering Health Care: Lessons from the Health Care Financing Administration's Waiver Policy-Making, 10 J.L. & Pol. 215 (1994); Rand E. Rosenblatt, Health Care Reform and Administrative Law: A Structural Approach, 88 Yale L.J. 243, 288 (1978).

269

Marsha Gold & Suzanne Felt, Reconciling Practice and Theory: Challenges in Monitoring Medicaid Managed-Care Quality, 16 Health Care Financing Rev. 85-106 (1995).

270

Id. at 85-106; Harris Myer, Quality Problems Could Spell Trouble for Medicaid HMOs, 38 Am. Med. News 9-10 (Jan. 23, 1995) (reporting problems with Florida, California, and Tennessee).

271

Perkins & Melden, supra note 128, at 26-30.

272

Id. at 27.

273

Oregon Waiver Application, supra note 36, at 5.11; Tennessee Waiver Application, supra note 30, at 7.

274

Tennessee Waiver Application, supra note 30, at 57. The Handbooks provided by the MCOs must include a description of services available, including preventive services which include: regular checkups for adults and children, care for women expecting a baby, well baby care, shots for adults, tests for cholesterol, blood sugar, colon and rectal cancer, bone hardness, sexually transmitted diseases, HIV, AIDS, pap smears, mammograms for breast cancer, urine tests, EKG test, test for hearing, birth control information, and EPSDT for children under 21. All handbooks are required to have specific language regarding EPSDT.

275

Tennessee Waiver Application, supra note 30, at 57. Despite the outline of these goals, “it was months before computer systems and administrative procedures were developed to the point where those applications could be processed.” Bonnyman, Private Interview, at 8. “Good information on the care patterns of individuals is not routinely available. Nor is there readily available data on how these patterns vary by important characteristics such as income, race, or insurance status.” Id.

276

See generally Tennessee Waiver Application, supra note 30.

277

For instance, Oregon's goals include: (1) Pregnancy outcomes will improve as indicated by birth weight and neonatal mortality; (2) incidence of severe untreated conditions among new eligibles will improve; (3) provider adherence to accepted practice standards for selected tracer diagnoses will improve during course of demonstration; (4) current eligibles will report no change in quality of care; new eligibles will report increased quality of care; (5) the health status for both self reported and based health outcomes for tracer conditions will, of new eligibles will improve, and; (6) mortality rates among new eligibles will be reduced and show no change for current eligibles. Oregon Waiver Application, supra note 36, at 5.11.

278

See generally Missouri Waiver Application, supra note 34.

279

See generally Florida Waiver Application, supra note 31.

280

Hawaii Waiver Application, supra note 32, at exhibit 4-1.

281

See generally New York Waiver Application, supra note 35. New York's application states that data collection will be used to improve health care, it does not indicate how the statistical data will be used. Id. at 67 (State of New York's answers to HCQFA questions, Aug. 1995). The application does require that managed care organizations have several quality assurance, credentialing, and utilization review committees and a medical director responsible for quality assurance. Id. at 66. Although these operations are required by the application, there do not appear to any optimal levels at which the managed care organizations are supposed to perform. A demonstrative monitoring system is supposed to collect data as to the availability of urgent and routine care, adequate telephone lines, enrollee inquiries, and follow-ups on missed appointments. Id. However, the application indicates that the Advisory Committee should take this information into consideration in making suggestions for improvements. Id. It does not indicate a goal that the suggestions should aim for other than the ambiguous concept of improving health care. Id.

282

Perkins & Melden, supra note 128, at 27, 28.

283

Florida has no goals directly related to reducing the disparities in health status between minority vs. nonminority populations. See generally Florida Waiver Application, supra note 31. However, Florida does plan to examine the extent to which the health status of previously uninsured individuals improves during their participation in FHS. Id. at 201. Of course, axiomatic to this objective is the hypothesis that the health status of all FHS participants will maintain or improve during the course of the demonstration and that previously uninsured individuals will improve in health status after one, two, and three years of coverage. Id. All the generalized hypotheses regarding improved quality of care and health status do not address the real issues we are interested in the unique health concerns of minority populations. Second, in their effort to disassociate health care from Medicaid, Florida may be further ignoring the reality of the differences in health status between minority and nonminority populations. Similarly, neither Hawaii's nor New York's waiver addresses the racial disparity in health status. See generally Hawaii Waiver Application, supra note 32; New York Waiver Application, supra note 35; Missouri Waiver Application, supra note 34; Illinois Waiver Application, supra note 33; Oregon Waiver Application, supra note 36; Tennessee Waiver Application, supra note 30.

284

Missouri Waiver Application, supra note 34.

285

See generally Florida Waiver Application, supra note 31; Hawaii Waiver Application, supra note 32; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36; Tennessee Waiver Application, supra note 30.

286

Perkins & Melden, supra note 128, at 26.

287

See generally New York Waiver Application, supra note 35.

288

Florida Waiver Application, supra note 31; Hawaii Waiver Application, supra note 32, at 4-10; Illinois Waiver Application, supra note 33, at 78; Missouri Waiver Application, supra note 34; Oregon Waiver Application, supra note 36, at 5-10; Tennessee Waiver Application, supra note 30.

289

Florida Waiver Application, supra note 31, at 41 (response to HCFA questions).

290

Id.

291

Id. at 209; Hawaii Waiver Application, supra note 32, at 4-9 to 4-17;

292

Florida Waiver Application, supra note 31, at 209; Hawaii Waiver Application, supra note 32, at 4-9 to 4-17; According to Hawaii's waiver application, beneficiary surveys should be administered to evaluate consumer satisfaction with the program and health plans. Hawaii Waiver Application, supra note 32, at 4-11. The surveys should be administered before, during, and after the demonstration project. Id. Subjects relating to consumer satisfaction which could be covered in the surveys are: the enrollment process, re-certification process, eligibility problem resolution, and the disenrollment process. Id. Questions regarding the health plan should include: convenience, difficulty in establishing a primary care provider, responsiveness in nonemergency visits, patient rapport and confidence, availability of specialty care, treatment by nonmedical support personnel, treatment by medical support personnel, grievances handled quickly and fairly, health plan requirements and procedures, cost considerations, referral problems, and billing problems. Id. at 4-12. Plan and provider surveys assess their satisfaction with the program. Id. Health and service plans would be questioned regarding factors affecting their decision to participate in the program. Id. at 4-13. Oregon's waiver incudes a survey of clients that disenroll form health plans and quarterly client service utilization reports from the plans. United States General Accounting Office, Medicaid: Oregon's Managed Care Program and Implications for Expansions, GAO-HRD 92-89 at 35 (June 1992).

293

Florida Waiver Application, supra note 31, at 209; Hawaii Waiver Application, supra note 32, at 4-12. Medical records analysis would evaluate the changes in health status on the basis of medical record documentation of encounters, including preventative care, diagnosis, treatment, referrals, and outcomes. Hawaii Waiver Application, supra note 32, at 4-12.

294

Hawaii Waiver Application, supra note 32, at 4-19. According to the Hawaii Waiver Application a number of issues may be addressed in the case study interviews are: (1) program expectations for the state, providers, eligible, etc.; (2) reasons policy and operational decisions; (3) needed changes in operations; (4) factors influencing the plan's capitation rates and delivery system; (5) effectiveness of outreach and enrollment strategies, and; (6) adequacy of program in meeting the needs of special populations. Id. at 4-9. Furthermore, the waiver lists quite a few people who may be interviewed for this purpose. Administrators and staff from the Department of Human Services, Department of Health, State Health Planning and Development Agency, legislatures, representatives of both participating and nonparticipating health plans, medical care advisory board, and welfare advocacy and other citizen consumer groups are all listed as potential interviewees. Id.

295

Florida Waiver Application, supra note 31, at 209; Hawaii Waiver Application, supra note 32, at 4-9. Florida's AHP Performance Data System will provide the minimum data set for FHSP participants and is comprised of indicators that combine the HEDIS with other data elements. Florida Waiver Application, supra note 31, at 42 (responses to HCFA questions). HEDIS focuses on outcomes, health status, and satisfaction, while the new Performance Data System will use quality, health status, access, utilization, satisfaction, and cost efficiency as indicators. Id. The AHP Performance Data System is supposed to provide more information on FHS participants than Florida now gets for Medicaid recipients. Id. at 43. Although this is commendable, it is curious that Florida is not providing as comprehensive data collection for Medicaid recipients.

296

Hawaii Waiver Application, supra note 32, at 4-10 (indicating sources for this data as Medicaid claims from the state Medicaid Management Information System, current statistical and utilization information from the SHIP program, and the demonstration data set from the plans).

297

New York Waiver Application, supra note 35, at 4-1. Although the Medicaid Management Information System (MMIS) retains the enrollment information and eligibility criteria of recipients, a second system will use “Demonstration Data Sets” to record encounter information for services. Id. at 4-15. According to the waiver application, the services that are to be tracked include: professional service, dental, transportation, vision, inpatient, outpatient, and home health. Id. The term “drug” is included in the list of services covered by the data set, but the term is ambiguous as to the meaning. See id. The term may be referring to prescription drugs or to the use of substance (drug) abuse treatment services.

298

Oregon Waiver Application, supra note 36, at 5.10.

299

Tennessee Waiver Application, supra note 30, at 36.

300

Id.

301

Tennessee Health Care Campaign, May 13, 1995. Yet, the assessment of the monitoring to date is that the focus, is on the process and structure; little analysis of the data has taken place. The Tennessee Health Care Campaign issued recommendations in May 1995. Among its comments were that handbooks for enrollees which provide a road map to tell enrollees where to go for care and how to access care have in many cases not been issued. Tennessee Health Care Campaign, May 13, 1995. Their criticism is that information regarding access and quality control to both the provider and the enrollee is only available through the media and not from official documents or analysis.

302

Florida Waiver Application, supra note 31, at 43. HEDIS indicators will allow for cross-state comparisons and will provide AHP information directly to consumers. Florida proposes a data system that is not based on a separate system of claims-based encounter level data collection for FHS participants. Id. The reason behind this makes sense in the FHS framework creating such a data system would identify and set apart FHS participants from other participants of plans, thus identifying FHS participants with the welfare label. Id. Again, this leaves the impression that Florida is going to abandon the traditional Medicaid population in favor of its section 1115 population.

A further component of the AHP reporting system will require AHPs to submit data to AHCA on performance indicators such as mammography and cervical cancer screening rates, chronic disease follow-up rates, low birth weight rates, and postoperative wound infection rates. Id. at 46 (responses to HCFA questions). FHS participants complete the “RAND 36-Item Survey 1.0” at enrollment and annual reenrollment. Id. at 217. This survey appears to address patients' subjective opinions of their pain level and daily ability to function.

303

See generally Florida Waiver Application, supra note 31.

304

Hawaii Waiver Application, supra note 32, at 4-17.

305

New York Waiver Application, supra note 35, at 4-15 (listing gender, age, location, plan status, and rates).

306

Oregon Waiver Application, supra note 36, at 5-10. Oregon's minority population is not heavily monitored and this may mean the state has not considered using these data factors as indications of quality care. See id.

307

New York Waiver Application, supra note 35, at 4-15.

308

See generally Florida Waiver Application, supra note 31; Hawaii Waiver Application, supra note 32; Illinois Waiver Application, supra note 33; Missouri Waiver Application, supra note 34; Oregon Waiver Application, supra note 36; Tennessee Waiver Application, supra note 30.

309

Perkins & Melden, supra note 128, at 28.

310

Id.

311

See generally Hawaii Waiver Application, supra note 32; Illinois Waiver Application, supra note 33; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36; Tennessee Waiver Application, supra note 30, at 6, 7, 36, 45.

312

Oregon Managed Care, supra note 292.

313

Perkins & Melden, supra note 128, at 28.

314

Id.

315

Florida Waiver Application, supra note 31, at 14, 15, 18, 19 (responses to HCFA questions); Oregon Managed Care Programs, supra note 292.

316

See generally Oregon Waiver Application, supra note 36; Illinois Waiver Application, supra note 33.

317

See generally Florida Waiver Application, supra note 31.

318

See generally Hawaii Waiver Application, supra note 32; Missouri Waiver Application, supra note 34; New York Waiver Application, supra note 35; Tennessee Waiver Application, supra note 30.

319

Bruce Bronzan, Keynote Address: The Twelfth Annual Health Law Symposium, 15 Whittier L. Rev. 75 (1994).

320

321

Perkins & Melden, supra note 128, at 30.

322

See generally Missouri Waiver Application, supra note 34; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36, at 3.17.

323

See generally Florida Waiver Application, supra note 31; Hawaii Waiver Application, supra note 32; Illinois Waiver Application, supra note 33; Tennessee Waiver Application, supra note 30.

324

See generally Florida Waiver Application, supra note 31; Oregon Waiver Application, supra note 36; Tennessee Waiver Application, supra note 30.

325

See generally Florida Waiver Application, supra note 31; Illinois Waiver Application, supra note 33; New York Waiver Application, supra note 35, at 69; Oregon Waiver Application, supra note 36, at 35; Tennessee Waiver Application, supra note 30.

326

Perkins & Melden, supra note 128, at 29.

327

Id.

328

Id.

329

Id.

330

Id.

331

Oregon Waiver Application, supra note 36, at 3-14.

332

See generally Florida Waiver Application, supra note 31; Missouri Waiver Application, supra note 34; Illinois Waiver Application, supra note 33, at 15; Oregon Waiver Application, supra note 36, at 3-14; Tennessee Waiver Application, supra note 30, at 12-13, 12.03; Hawaii Waiver Application, supra note 32, at 2-9; New York Waiver Application, supra note 35, at 2-25.

333

See generally Missouri Waiver Application, supra note 34.

334

Perkins & Melden, supra note 128, at 30.

335

Id.

336

See generally Illinois Waiver Application, supra note 33; Missouri Waiver Application, supra note 34; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36.

337

Perkins & Melden, supra note 128, at 30.

338

Id. at 28-29.

339

Id. at 29.

340

Id.

341

See generally Illinois Waiver Application, supra note 33; Missouri Waiver Application, supra note 34; Oregon Waiver Application, supra note 36.

342

See Vernellia R. Randall, Utilization Review and Financial Risk-Shifting: Will Managed Care Products Improve the Health Status of Ethnic Americans and the Underserved Population? 5 J. Health Care for the Poor & Underserved 224-37 (1994).

343

P.S. Bouey, Peer Review In Managed Care Setting, in Managed Health Care Legal and Operational Health (1988).

344

Richard A. Hinden & Douglas L. Elden, Liability Issues for Managed Care Entities, 14 Seton Hall Legis. J. 1-63 (1988).

345

Alexander M. Capron, Containing Health Care Costs, Ethical and Legal Implications of Changes in the Method of Paying Physicians, 36 Case W. Res. L. Rev. 708, 708-59 (1986).

346

M.E. Corcoran, Liability for Care in Managed Care Setting, in Managed Health Care Legal and Operational Health (1988).

347

P. Elwood, When MDS Meet DRGs, 57 Hosp. 62-63 (1983); E.H. Morreim, The MD and the DRG, 15 Hastings Center Rep. 34-35 (1985); Capron, supra note 347, at 708-59.

348

Rewards can be a predetermined fixed dollar amount, a fixed percentage of the surplus distributed among the risk pool, a bonus based on a physician's productivity or a combination of methods. The methods also include increasing fee schedules and allowing practitioners to become investors. A.L. Hillman, Financial Incentives for Physicians in HMO's-Is There a Conflict of Interest 317 New Eng. J. Med. 1744 (1987).

349

Some penalty mechanisms used to place the provider at risk beyond the withholding include: (1) increasing the percentage of payment withheld the following year; (2) placing liens on future earnings; (3) decreasing the amount of the capitation payment the following year; (4) excluding the physician from the program; (5) reducing the distributions from surplus; and (6) requiring physicians to pay either the entire amount of any deficit or some set percentage of the deficit. For example, a large percentage (approximately 40%) of managed care products require primary care physicians to pay for outpatient laboratory tests directly out of their capitation payments. HMOs also use peer pressure as a significant motivator. They develop a reporting system that informs providers of their performance compared with that of their peers. The reporting identifies areas of excessive costs and service intensity. Alan M. Gnessin, Liability in the Managed Care Setting, in Managed Health Care 1988: Legal and Operational Issues, at 405 (PLI Commercial Law & Practice Course Handbook Series No. A4-4275, 1988).

350

Gnessin, supra note 349.

351

G.D. Powers, Allocation of Risk in Managed Care Programs, in Managed Health Care Legal and Operational Issues (1988).

352

Gnessin, supra, note 349.

353

With capitation, a provider (or provider group) is paid a set fee per enrollee. The group then provides all necessary physician services. The primary care physicians are the “gatekeepers” to specialists and hospital services and are financially responsible for utilization. Because the amount of payment to the physician group is independent of the actual services rendered, the group takes on the risks of an insurer. Capron, supra note 345, at 708-59.

354

When managed care products utilizes withholding, they shift part of the risk by withholding part of the provider's periodic fee for service payments for a claim period. The managed care products usually withhold from 5% to 20%. At the end of a claim period, a medical claim trend is determined and compared to a target medical claim trend. If the actual medical claim trend is lower than the target, the withheld funds are paid to the providers. If the actual medical claim trend exceeds the target, the withheld funds are paid to the payer. 42 U.S.C. s 1396.

355

If the managed care product utilizes a discounted fee for service, they obtain an up-front agreement that the providers give a discount to the payer on amounts due. The managed care product assumes the risk that the payer's premium will be sufficient to cover hospital charges. However, there is no participation by hospitals in profits of the managed care products and payers which contract with hospitals without a discount may pressure the hospital for a discount, but discounted charges may be insufficient to cover the hospital's actual costs. 42 U.S.C. s 1396.

356

With per diem payments, hospitals are paid a flat rate per patient day which must cover all necessary services. The advantage of per diem payments is that the hospital is not at risk for length of stay. However, if the managed care product also has an emphasis on early discharge, then the hospital's total income may be reduced because the predetermined per diem payments are too low for the hospital to cover its costs and the managed care product discharges the patient before the hospital can “break even” by averaging cheaper end-of-stay days with the more expensive beginning-of-stay days. 42 U.S.C. s 1396.

357

With case mechanisms, based on the diagnosis, a predetermined amount is paid to the hospital for each admission. The hospital is then at risk for the treatment and the length of stay.

358

Finally, similar to capitation, hospitals are paid capitated payments per patient. That is, a hospital is paid a lump sum per enrollee in the hospital's service area to provide all covered hospital services required by those enrollees. Because the hospital's payments are independent of the actual services rendered by the hospital, the hospital is assuming the role of an insurer.

359

42 U.S.C. s 1396.

360

C.M. Clancy & B.E. Hillner, Physicians as Gatekeeper: The Impact of Financial Incentives, 149 Arch. Intern. Med. 917-20 (1989).

361

Paul Starr, The Social Transformation of American Medicine (1984).

362

W.L. Dowling & P.A. Armstrong, The Hospital, in Introduction to Health Services (1992).

363

Missouri Medicaid Managed Care Program Working Copy Incorporating Amendments 001-009, RFP B500406, 7, Bureau of Tenncare Rule 1200-13-12-01 (24).

364

See generally Hawaii Waiver Application, supra note 32; New York Waiver Application, supra note 35.

365

See generally Florida Waiver Application, supra note 31; Hawaii Waiver Application, supra note 32.

366

Randall, supra note 340, at 230.

367

Id. at 231.

368

David R. Williams, Socioeconomic Differences in Health: A Review and Redirection, 53 Soc. Psychol. Q. 81-99 (1990); David R. Williams, et al., The Concept of Race and Health Status in America, 109 Pub. Health Rep. 26, 26-42 (1993).

369

The National Institutes of Health now requires all grant applicants to include women and minorities in study samples or provide justification for their exclusion. Williams et al., supra note 368, at 26-42.

370

Illinois Waiver Application, supra note 33, at 62.

371

Id.

372

See generally Florida Waiver Application, supra note 31; Hawaii Waiver Application, supra note 32; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36; Tennessee Waiver Application, supra note 30.

373

See generally Illinois Waiver Application, supra note 33; Missouri Waiver Application, supra note 34; Tennessee Waiver Application, supra note 30.

374

See generally Florida Waiver Application, supra note 31; Hawaii Waiver Application, supra note 32; Illinois Waiver Application, supra note 33; Tennessee Waiver Application, supra note 30.

375

Hawaii Waiver Application, supra note 32, at 2-10; Illinois Waiver Application, supra note 33, at 56.

376

Hawaii Waiver Application, supra note 32, at 5-1; Illinois Waiver Application, supra note 33, at 57; Oregon Waiver Application, supra note 36, at 3.34; see generally, Contractor Risk Agreement between Tenncare & Contractor.

377

See generally Missouri Waiver Application, supra note 34; Oregon Waiver Application, supra note 36; Contractor Risk Agreement between Tenncare & Contractor.

378

See generally Hawaii Waiver Application, supra note 32.

379

See generally Florida Waiver Application, supra note 31; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36.

380

See generally Hawaii Waiver Application, supra note 32.

381

See generally Florida Waiver Application, supra note 31; New York Waiver Application, supra note 35; Oregon Waiver Application, supra note 36.




 

Author Information

 

This Article was delivered at the Symposium on Consumer Protection in Managed Care, on November 17, 1995, at the Seton Hall University School of Law.

Vernellia Randall, Professor, University of Dayton School of Law; J.D., Lewis and Clark College (1984); M.S.N, University of Washington (1978); B.S.N., University of Texas (1972).

This paper was written as a cooperative effort between myself and seven students. Each student had sole responsibility for reviewing and evaluating a particular state waiver. However, additional acknowledgement has to be extended to Sally Giess and Gabrielle Boller, who played a primary role in helping me to edit the paper.

Sally Giess, J.D. Candidate 1996, University of Dayton (evaluated Florida waiver).

Gabrielle Boller, J.D. Candidate 1996, University of Dayton (evaluated Hawaii waiver).

Cornelia Tinkler. J.D., University of Dayton (1995) (evaluated Tennessee waiver).

Shalonda Bayless, J.D., University of Dayton (1995) (evaluated Missouri waiver).

Stacey Henry. J.D. Candidate 1996, University of Dayton (evaluated Oregon waiver).

Andrew Romero, J.D. Candidate 1996, University of Dayton (evaluated Illinois waiver).

Charles Whipple, J.D. Candidate 1996, University of Dayton (evaluated New York waiver).