Section 5: Selecting a Care Management Program Model

In designing a care management program, States should consider which type of care management program model is most appropriate for them. Depending on the availability of State resources and staff, States can choose to contract with a vendor, operate a program internally, or choose a hybrid method to operate a care management program.

Incorporating information from the 13 State Medicaid care management programs in the initial AHRQ Learning Network and additional literature, this section of the Guide, Selecting a Care Management Program Model, provides information to State Medicaid staff and policymakers about:

• Selecting a care management program model.
• Additional considerations for contracting with a vendor.

Designing a care management program also involves selecting the populations to target and program interventions. Please go to Section 3: Selecting and Targeting Populations for a Care Management Program and Section 4: Selecting Care Management Interventions for additional information on these topics.

Considerations for Selecting a Care Management Program Model

To administer care management programs, States can contract with an external organization, undertake in-house operations, or use a hybrid of the two. As a result, care management models lie on a continuum, with three general categories—often referred to as buy, build, and assemble—as shown in Exhibit 5.1. The majority of States use a model between the two ends of the continuum or adopt a combination of these models.

When choosing to buy, build, or assemble a care management program, States must consider a variety of factors to determine whether they have the capacity and interest to operate the program in-house or whether contracting with a vendor is the more desirable option. Considerations include the following:

• Program staff capacity.
• Care management staff capacity.
• Data capacity.
• Program monitoring.
• Program design.
• Evaluation capacity.
• Program timeline.

Advantages and Disadvantages of the Models

Exhibit 5.2 lists potential advantages and disadvantages of the three types of care management program models: buy, build, and assemble.

Exhibit 5.2. Comparison of advantages and disadvantages of the buy, build, and assemble models

Model Type	Advantages	Disadvantages
Buy	Quick program implementation, relying on the vendor's established infrastructure. Building on the vendor's experience, particularly in managing care for the Medicaid population. Augmentation of scarce resources. Vendor accountability for financial risk or other outcomes.	Difficulty engaging local providers or the community during program design and implementation. Lack of sustainable investment in infrastructure. Difficulty making program refinements quickly. Potential for jobs and revenue associated with the program to be located out of State.
Build	Control over program operations. Sustainable infrastructure. Relationships with stakeholders that other State programs can use. In-State jobs and revenue associated with the program.	Difficulty finding appropriate personnel and implementing the program successfully.
Assemble	Customization of the program. Choice of the best vendor for each program component.	Complications and resource intensiveness in coordinating activities with State staff and across multiple vendors.

Program Staff Capacity

States need a variety of program staff to operate and oversee care management program operations, identify areas for improvement, and monitor the program. The number and type of program staff needed varies based on program model, as discussed throughout this section, and on the complexity and size of the program. Regardless, a State needs a minimum level of staff to operate the program effectively. Program administrative staff should include the following:

• Program Manager. Oversees program operations, identifies areas for quality improvement, and, if appropriate, ensures that vendors are complying with the contract and meeting performance indicators.
• Provider Liaison. Interacts with providers to build program support (in some States, the program manager or medical director serves this function).
• Medical or Clinical Director. Oversees quality initiatives, makes sure interventions are delivered appropriately, oversees nurse care management functions, communicates with the provider community, and ensures delivery of evidence-based practices.
• Data Analyst. Generates program reports and analyzes member data (in some States, this position is dedicated only partially to the care management program).

In addition, depending on the program model, States might need additional staff to operate the program, including the following:

• Program Associate. Assists the program manager in overseeing care management and program monitoring operations.
• Actuary or Actuarial Consultant. Conducts analyses and interprets financial reports. A State incorporating a financial and clinical performance guarantee into a vendor contract or one that is required to certify rates actuarially needs a State actuary or an actuarial consultant.

If States are unable to hire all of these staff internally, vendors can supplement internal capacity. For example, a care management vendor can hire a medical or clinical director, and a State can hire an actuarial consulting firm to provide actuarial support. A State that selects this option should dedicate staff to manage and monitor the vendor or vendors and to coordinate these activities with activities conducted by State staff.

Illinois requires its vendor to have on staff a medical director, licensed in Illinois to practice medicine, to help administer the care management program. The medical director must have previous experience in disease management and work with provider and stakeholder organizations at the direction of the State. The medical director also must be available to interact with providers to discuss the care management program, administration issues, and clinical guidelines and treatment protocols for members.

When considering this option, States should account for the fact that coordinating activities across multiple vendors might prove complicated and resource intensive.

Care Management Staff Capacity

States also should involve care management staff, such as nurse and social service care managers, to deliver care management. Care managers reach members and deliver program interventions by telephone or in person. The number of care management fulltime equivalents (FTEs) varies across States, according to program size, desired caseload, and intensity of the interventions. Care manager caseloads might be as high as 500 members to 1 care manager for only telephonic interventions or as low as 25 members to 1 care manager for intensive in-person case management. Many care managers provide interventions of varying intensity and assume responsibility for a caseload between the above examples. Some examples of State care management staffing strategies include the following:

• Indiana. In Indiana's initial care management program, the Indiana Chronic Disease Management Program (ICDMP), each in-person nurse care manager provided services to approximately 150 members.
• Oklahoma. In Oklahoma's Health Management Program, a registered nurse performing in-person care management may be assigned to a maximum of 75 members by Oklahoma's vendor.
• Kansas. Enhanced care management staff employed by Kansas' vendor include four nurse care managers for approximately 200 members. Each nurse care manager has a maximum caseload of 60 members. To assist the nurses, the State also employs a disease management specialist nurse, whose maximum caseload is 150 members, and two community resource care managers with a social service background.>
• Texas. In addition to call center staff, Texas' vendor employs 11 community-based nurses to deliver in-person care management services for approximately 420 high-risk members. Caseloads vary by care manager.>

Although nurses often deliver care management interventions, some States use non-clinical health personnel to locate members and provide care management interventions. For example, Texas' vendor employs promotoras (Spanish-speaking outreach workers) and community-based nurses to reach members and deliver in-person care management interventions.

Data Capacity

State staff should use data systems to help them identify eligible members, review performance indicators, recognize areas for improvement, and store data. In addition to including a data analyst on the care management program staff, States should ensure that they have appropriate hardware, such as servers and software, for their data system. States should understand the current data capacity within the Medicaid program and assess whether this capacity will meet program needs. States can use already existing Medicaid Management Information Systems (MMIS), other data warehousing capabilities, or analyzing platforms, thereby enabling opportunities for coordination across programs and avoiding a large financial investment in software and system maintenance.

States also might need to use member data to identify "impactable" populations, depending on the role of State staff in program operations. Please go to Section 3: Selecting and Targeting Populations for a Care Management Program for additional information on identification and stratification strategies. Please go to Section 6: Operating a Care Management Program for additional information on data systems.

Program Monitoring

An important component of administering a care management program for both State-run and vendor programs is program monitoring. States can monitor their care management programs to track progress, identify areas for program improvement, and recognize program strengths. Program staff use regular reports and onsite monitoring strategies to monitor programs. For example, States receive weekly, monthly, quarterly, or annual reports on almost all facets of the care management program. States also can monitor a subset of their population receiving care management to understand improvements in utilization of services, costs, health outcomes, and self-management. States contracting with a vendor must monitor contract compliance and related process measures regularly. Please go to Section 6: Operating a Care Management Program for additional information on program monitoring strategies.

Indiana program oversight staff, in their former program, ICDMP, accompanied nurse care managers on in-person visits with members to better understand program operations. Medicaid staff assessed a variety of actions performed by the nurse care managers, including:

• Recording information gathered during the visit.
• Implementing strategies to encourage members to actively engage in the disease management program.
• Assessing members' readiness and ability to set self-management goals.
• Communicating regarding next follow-up visit.

The in-person visits with nurse care managers helped program staff to understand issues the nurse care managers face and identify areas for improvement.

Program Design

Designing a care management program also involves selecting populations to target and interventions appropriate for the care management program.

An integral part of any care management program is a thorough understanding of the population it will affect. A key challenge that States must address is targeting resources most effectively for members who are presently high risk and impactable versus members who might be low risk or medium risk currently but who can be prevented from migrating to high risk. As a result, most programs target specific populations because they are more impactable. A State must decide which population to target and how to identify and stratify members for enrollment in the program. In doing so, program staff will be better equipped to tailor appropriate interventions and resources to impact members most effectively. Please go to Section 3: Selecting and Targeting Populations for a Care Management Program for more information.

Program staff also should assess the type of interventions appropriate for their care management program. When choosing interventions, considering their outcomes, timing, and efficacy in managing certain diseases is important. A State should consider specific interventions that will prove most effective for that population. Interventions may target the patient or the provider and generally range from "low-touch" interventions, such as mailings, to "high-touch" interventions, such as home visits by nurse care managers. Please go to Section 4: Selecting Care Management Interventions for a comprehensive discussion of types of interventions and a comparison of the relative costs of various interventions.

Evaluation Capacity

Evaluating the value of care management programs is essential, both to ensure that Medicaid recipients are benefiting from the program and to garner support from the State legislature and other stakeholders.

Many States prefer to use an external vendor for the program evaluation to ensure an independent review. For example, an actuarial consulting firm and the University of Washington have conducted program evaluations for Washington. Also, professors at the University of Arkansas Medical School and the University of Alabama at Birmingham perform Arkansas' care management program evaluation.

Please go to Section 7: Measuring Value in a Care Management Program for additional information on program evaluation.

Program Timeline

When selecting a program model, States must consider the implementation timeline, including resources needed to develop interventions and reach target populations. Initial implementation of a care management program is resource intensive, and, as a result, might be difficult to accomplish in a short timeframe. States that build a program from scratch must recruit and retain appropriate State personnel, design intervention and outreach strategies, tailor data systems, and develop a measurement strategy, as described earlier.

States that assemble a care management program might also have to undertake some of these tasks; they should build additional time into their implementation schedule because they might have to engage in multiple procurements.

States contracting with an experienced vendor to implement their program often have the advantage of relying on the vendor's established infrastructure and experience in managing care for the Medicaid population. However, in all cases, staff dedicated to overseeing project operations is critical.

Additional Considerations for Contracting with a Vendor

Additional considerations for States contracting with a vendor include request for proposal (RFP) evaluation, dedicated and accessible staff, and financial arrangements.

RFP Evaluation

Contracting with a vendor usually requires that States conduct a formal procurement process. A State should consider what expertise is required to review the proposals and form an appropriate committee to do so. Assembling a mix of State staff to review the proposal, including data analysts, actuaries, technical experts, or other financial staff, is also important. States such as Wyoming and Pennsylvania used a consultant from the initial stages of procurement for input and review. Texas' and Wyoming's consultants also provided expertise on the methodology for calculating the savings guarantee, which was set in the signed contract.

In 2006, Washington released an RFP for a care management program. To help evaluators score proposals received in response to its RFP, the State created an evaluation tool. General evaluation guidelines included the following:

• Evaluation by section is more effective than evaluation by bidder. Because section-specific information can be forgotten by the time an evaluator compares bidders, evaluation by section is more valuable.
• Evaluation approach will differ by section. Sections might vary significantly regarding information requested and overall weighting. For example, in Washington, responses related to certain RFP requirements were more important and, therefore, worth more points than others. Also, certain questions within a section might be important to understanding the bidder and, therefore, require more time spent in evaluating them.
• The best writer should not necessarily win. Content is more important than grammar or style. As a result, evaluators should distinguish actual capabilities.
• The general sense of a bidder should not be permitted to bias ratings. Certain bidders, because of their history with the State or their reputation, might generate a higher rating.

States also should engage stakeholders, such as the patient and advocacy community, in the review process.

Pennsylvania involved consumers in the RFP review process. The State split its technical committee into financial and consumer subcommittees. Ten to 12 consumers reviewed RFP materials, notices, and call center requirements.

Dedicated and Accessible Vendor Staff

States should gauge a prospective vendor's willingness to dedicate staff who are accessible and responsive to the care management program on an ongoing basis. In care management programs where a vendor employs dedicated staff and establishes a local office, State and vendor staff have significantly increased opportunities for interaction. For example, Wyoming's vendor staff is located in the same building as State staff who administer the care management program. This physical proximity has facilitated an open relationship.

In their contract, States might also specify job descriptions for vendor staff and a clause that the State reserves the right to replace vendor personnel. For example, in Pennsylvania, the current vendor medical director has Pennsylvania Medicaid program experience and maintains an office near the Pennsylvania Medicaid office. Although the State was not involved in identifying candidates for the medical director position, it was offered the opportunity to comment on candidates before the selection was finalized. Oklahoma's Health Management Program's vendor contract also reserves the right to replace vendor personnel and withhold payment for vacancies of key program personnel.

Financial Arrangements

Financial arrangements with a vendor might be complicated, depending on the use of financial incentives such as guaranteed savings where the vendor puts its administrative fees at risk for program impacts on medical costs and quality indicators. States should make certain that they possess the relevant expertise to understand the vendor's proposed financial arrangement. If a State lacks this capability, contracting with an actuarial consultant to provide guidance in this area might help, both during the RFP development and proposal evaluation process and throughout the program. Most States have chosen to pay vendors a per-member per-month (PMPM) fee for their services. Some States also have incorporated a performance savings guarantee.

Lessons Learned: Vendor Contracting State vendor contracts should require dedicated and accessible staff to provide increased opportunities for interaction with State staff. States should ensure they have relevant expertise to understand the vendor's proposed financial arrangement and program outcomes. States should monitor programs to track progress, identify areas for improvement, and ensure vendors are meeting performance goals. States should review contracts from other States to incorporate additional lessons learned.

States might pay a PMPM fee based on several factors. One option is paying a PMPM fee for the entire eligible population. Another is to pay varying PMPM fees based on intervention level. For example, a State could pay a higher PMPM fee for members receiving in-home visits rather than just telephonic care. The State might also pay an additional fee to the vendor for its efforts to identify eligible members. An advantage to paying a variable PMPM fee based on intervention level is that the vendor has an incentive to provide care management services to as many members as possible. However, assessing the level of care management interventions members are receiving can be difficult for the State and, consequently, can complicate program monitoring efforts. To mitigate this issue, States should be clear when the PMPM fee is paid to the vendor. For example, members assigned to a higher intervention group might become disengaged over time, perhaps evidenced by the care management program's inability to reach the member for a sustained period of time. States should adopt mechanisms to define for which members the PMPM will be paid or develop a PMPM level assuming a certain proportion of inactive or unreachable members.

To provide additional incentives, some States use a performance guarantee, at times in response to a vendor proposal. States will specify in their contract financial and quality goals for the vendor to meet. If the vendor fails to achieve the specified goals, a percentage of the fees the State paid are returned. This arrangement offers vendors incentives to meet quality and financial goals, while States are guaranteed cost savings, which legislative mandates might require. However, this agreement might cause the vendor to charge higher fees to allow for the possibility of fee repayment due to nonperformance. Additionally, this arrangement can lead to a potentially prolonged, difficult, and costly reconciliation process with the vendor. If a State chooses this option, it should clearly define methods and processes for determining reduction in medical cost or improvement in quality measures, which might require support from the State's actuarial consultant. Exhibit 5.3 summarizes the advantages and disadvantages to the State and the care management program inherent in various financial arrangements for the assemble and buy models.

Exhibit 5.3. Advantages and disadvantages of various financial arrangements with vendors

Financial Arrangement	Advantages	Disadvantages
Per-member per-month (PMPM) fee for the entire eligible population	Try to improve health status and outcomes of overall eligible population.	Paying for members not engaged in interventions.
PMPM fee based on intervention level	Provide more intensive care management services to as many members as possible.	Difficulty in assessing the level of care management interventions members are receiving. Must clearly stipulate which members should receive specific levels of intervention.
PMPM fee and a performance guarantee	Aligning vendor with State's quality and financial goals.	Higher fees to allow for the possibility of fee repayment due to nonperformance. Potential for prolonged, costly, and difficult reconciliation process with the vendor. Possibility of unintentional cessation in reaching members if the vendor thinks it has met its performance guarantee. Less incentive to improve care for people whose future enrollment is uncertain due to large turnover of eligible population in Medicaid.

Many States that have a cost savings guarantee incorporate clinical performance goals as part of the reconciliation. As well as providing a list of measures in their vendor contracts, States should operationalize measures and determine baseline measurements before a contract is signed. For example, the State and vendor will have to come to an agreement on which members count in the numerator and denominator of each metric. Please go to Section 7: Measuring Value in a Care Management Program for additional information on setting quality and performance measures.

States can spend a significant amount of time agreeing on evaluation results, especially when the contract contains a cost savings guarantee. Thus, the focus on reconciliation might prevent the State from concentrating on program management and contract monitoring.

Lessons Learned: Performance Guarantees Ensure adequate resources to calculate cost savings. States often must hire external assistance to complete a possibly complicated reconciliation, which can prove expensive. Agree on performance indicators. If the vendor is at risk for quality indicators, the State and vendor should operationalize measures and agree on baseline values and measurement methodology for performance indicators before the contract is signed.

Washington chose to eliminate its cost savings guarantee after the fourth year. Initially, 100 percent of fees were at risk, 80 percent for cost savings and 20 percent for meeting quality indicators. The State was concerned that the vendor would lower the intensity of its outreach to members when it thought it had achieved its cost savings. Based on experience, when Washington issued an RFP for its care management contract in 2006, it stipulated cost neutrality (i.e., the program must save enough money in medical and pharmacy costs to pay for itself), and savings will be measured against an "abeyance" group of clients who will not be enrolled in the program until 2008. If the program is not cost neutral, the State will consider other non-financial program outcomes and assess whether to continue the program.

Conclusion

When selecting a care management program model, States must consider their administrative staff capacity, clinical staff capacity, program timeline, data expertise, and evaluation capacity. By conducting an assessment of a State's internal capabilities, a State can design a program that fits its needs. Designing a care management program also involves selecting the populations to target and program interventions. Please go to Section 3: Selecting and Targeting Populations for a Care Management Program and Section 4: Selecting Care Management Interventions for additional information on these topics.

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