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November 2003
SCI
talks with Rod Betit, former executive director
of the Utah Department of Health
Questions prepared by: Isabel Friedenzohn, SCI associate
 In
March 2002, Utah received a first-of-its-kind Medicaid 1115 waiver
to implement its Primary Care
Network (PCN), which provides primary care and preventive services
to low-income adults who would otherwise lack health insurance.
Rod Betit, former executive director of the Utah
Department of Health, was the key official responsible for the
development and implementation of this program. PCN began accepting
applications in July 2002, and 18,000 people are currently enrolled.
After
16 years of service to Utah citizens, Betit has accepted a position
as the president of the Alaska State Hospital and Nursing Home Association.
Prior to his departure, Rod answered some questions for us about
the inception of the PCN, its successes and challenges, as well
as the lessons he has learned through the process of designing and
implementing the program.
The
PCN program offers beneficiaries what Betit refers to as "front-end"
services. Newly eligible beneficiaries will have access to services
similar to those provided at community and rural health centers,
including physician office visits, immunizations, emergency care,
lab, x-ray, medical equipment and supplies, basic dental care, hearing
and vision screening, and prescription drugs. Although the program
does not cover inpatient care, beneficiaries can take advantage
of hospital and specialty care components donated from the community.
For
additional resources regarding the PCN program, read SCI's April
2003 Issue Brief, States'
Experience with Benefit Design or search the State
Reports database.
1.
SCI: Why did Utah move forward on this project? What was the rationale
behind the development of PCN?
BETIT:
Utah pursued the PCN in the spirit of a 10-year commitment to reducing
its number of uninsured by introducing affordable health insurance
products to low-income individuals. Utah's health policy initiatives
have contributed to the lowest uninsured rates among Utahns for
some time. The state's uninsured rates were reported at 8.7 percent
for all ages and 6.8 percent for children in 2001. The low percentage
of uninsured children is due in large part to the Utah's State Children's
Health Insurance Program, which covers children from families with
incomes up to 200 percent of the federal poverty level (FPL).
The
most worrisome uninsured group remaining in the state was adults
with family incomes below 150 percent FPL. Utah's 2001 uninsured
survey concluded that, among those still uninsured, approximately
85,000 are adults with family incomes below 200 percent FPL. Approximately
three-fourths of these adults work, but most of their employers
do not offer health insurance. The fiscal picture in Utah and most
other states prevented traditional expansions of Medicaid to parents
and people without children. It was simply too costly and would
not gain widespread political support.
Yet
Utah had some state funds to continue expanding eligibility to adults,
including savings from our Utah Medical Assistance Program, Medicaid,
Federal Financial Participation, and cost sharing. The policy question
facing Utah was whether to wait for new federal funding to expand
coverage to these low-income working adults, or to push the federal
government to allow the state to offer a limited benefit plan for
this population under Medicaid using the discretionary powers of
the Secretary of the U.S. Department of Health and Human Services.
This
limited-benefits approach had the potential to cover five times
as many adults as a more traditional Medicaid expansion, assuming
that they are at least as healthy as the population of adults covered
by Temporary Assistance for Needy Families (TANF) in Medicaid. The
per member per month cost was $75 for PCN after deducting administrative
costs compared with $465 for the Medicaid adult population for Fiscal
Year 2002 (when we started PCN).
Governor
Leavitt and I believed it was time to partially close the coverage
gap for adults with a primary care benefit that would meet their
day-to-day needs and encourage them to use the health care system
more appropriately until they were able to obtain employment that
offered more comprehensive coverage.
Further,
the limited-benefits approach could provide the stepping stone that
employers needed to provide coverage that would supplement the PCN,
and might stimulate the insurance industry to offer a wider range
of choices to employers, such as a catastrophic benefit that PCN
enrollees could purchase at an affordable price.
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2.
SCI: After developing PCN, you decided to discontinue your Utah
Medical Assistance Program (UMAP-a state-funded program for adults
who do not qualify for Medicaid). What was your rationale for that?
BETIT:
The
idea was to make a clean break from UMAP because it was a different
type of program; it focused on specialty and emergency care rather
than primary health care. UMAP also targeted the very poorest of
the adult population (those who made less than $300 in income per
month) and, as a result, mostly ignored other working poor with
family incomes below 150 percent FPL. However, we did accommodate
those who were interested in transitioning into PCN. UMAP recipients
were given notice of the new PCN program, and they had the first
opportunity to transfer into it.
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3.
SCI: Utah approved reductions in benefits for part of the Medicaid
mandatory population as a result of budgetary constraints, not solely
to fund PCN. What prompted such cuts? Were there any unanticipated
consequences?
BETIT:
The
PCN-related reductions were minor, and I have seen no documented
adverse impact as a result of them. A supplementary
chart indicates which reductions were made as part
of the PCN waiver and which were made by the Utah legislature to
balance the Medicaid budget.
Far
more significant were the Medicaid cuts made by the Utah legislature
in response to the revenue shortfalls that most states were experiencing.
Utah had six special sessions in Fiscal Year 2003 alone to adjust
budgets to fit revenues.
We
have heard anecdotally about adverse impacts although no research
has been conducted. The Department of Health is in the process of
developing a study to address this issue.
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4.
SCI: Where did find your primary political support? What were your
major selling points to the health care advocates who had concerns
about the PCN proposal?
BETIT:
Primary support came from two key people: Governor Mike Leavitt
(R) and Secretary of the U.S. Department of Health and Human Services
Tommy Thompson. Both saw the value of moving forward with some coverage
for adults who had no financial capacity to purchase their own health
insurance. The governor saw this as a precedent-setting endeavor.
Secretary Thompson referred to Utah's PCN as a program that he hoped
could be adopted in some form by other states wanting to do something
short of a full expansion. Over time, additional support came from
Utah's legislative leadership, low-income advocates, employer groups,
the Utah Hospital Association, and others.
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5.
SCI: You negotiated a voluntary arrangement with Utah's hospital
systems to provide $10 million in donated hospital care? How do
the hospitals benefit from this arrangement? Why did they participate?
BETIT:
This
is a non-binding arrangement between the Utah Department of Health
and the Utah Hospital Association (UHA). It was negotiated between
myself and Rick Kinnersley, UHA President, and ultimately approved
by the UHA Board. The agreement dates back to 1990, when the UHA
consented to provide charity care connected to the UMAP in the amount
of $2.5 million annually. Today, the agreement covers up to $10
million annually. UHA agreed to transition the agreement from UMAP
to PCN. The longstanding relationship between Department of Health
and the UHA had created a degree of credibility and trust between
the two parties.
The
hospitals benefit from the agreement in several non-financial ways:
- Acute
care needs are being met by Utah's hospitals already, and collection
for the services provided to this low-income population is often
unsuccessful. Thus, this would formalize the "giving"
and take much of the frustration out of the process.
- The
state would uniformly certify the uninsured Utahns who were least
able to pay by qualifying them for PCN. This would allow hospitals
to focus their collection efforts in more productive areas.
- The
state agreed to triage patients who needed immediate hospital
care and to direct those referrals as evenly as possible to Utah's
hospitals.
- UHA
is also interested in the impact that PCN will have on the amount
of uncompensated care that is provided by their members, both
inpatient and emergency services. By participating, the hospitals
became a partner in the demonstration program and the evaluation
of its impact.
- The
state agreed to provide reimbursement for inpatient physician
care, so this would not be an issue to participating hospitals.
- Utah's
hospitals, both for-profit and not-for-profit, have a long tradition
of working with the state to provide charity care; this allowed
them to continue that tradition in a major way.
At
this point, the hospital component of PCN is working very well.
Approximately half of the $10 million line of credit has been committed
for Fiscal Year 2003, with ample reserve remaining to provide needed
hospital care for the remainder of the year. These cost estimates
are based on "charges," not Medicaid prices.
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6.
SCI: Safety net providers frequently discuss how difficult it is
to find specialist care for their patients. How are you addressing
that issue?
BETIT:
Several
community efforts are in place to create a referral charity system
to obtain needed specialty physician services. Utah's physician
community wants to give back to the community as well. As a result,
several physician groups have come together to provide some referral
capacity for this demand. It remains unclear whether this will prove
adequate in the long run. Enrollee demand may exceed capacity. If
that happens, enrollees must arrange and pay for any necessary specialty
care that their PCN provider cannot provide. Due to the limited
funds we had to work with, we made a conscious program design decision
that some adults would have to seek specialty coverage on their
own.
The
state expects specialty physician charity participation to continue
to increase. A barrier to past participation has been specialists'
concern that they would have to take on primary care for individuals,
rather than just specialty care. Primary care is not generally their
strong suit or area of interest. PCN allows them to provide their
specialty component and then refer patients back to their primary
care provider for ongoing care requirements.
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7.
SCI: Utah has large rural areas. How did this play into the design
of the PCN?
BETIT:
It
is important to take rural areas into account when designing an
access initiative. Generally, there are only a small number of large
employers in rural communities (e.g., school, local government,
hospital, etc.), leaving many people without employer-based coverage.
This contributes to a high number of uninsured in many rural towns.
PCN
provides an option to these rural residents for an affordable price.
PCN enrollment underscores this point, as evidenced by the high
percentage of rural residents in the total enrollee count. As of
May 2003, 45 percent of all enrollees in the PCN were from rural
communities.
Rural
enrollees have access to the providers in the Medicaid network.
We haven't had difficulty getting physicians to participate, in
part because they are paid 12 percent more than urban Medicaid providers.
Having
this limited benefit option is also beneficial to the long-term
sustainability of health care providers, including physicians, dentists,
and pharmacists. This additional coverage addresses a critical economic
need for these providers and helps ensure that they will have adequate
business to survive.
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8.
SCI: Who is eligible for the PCN? How do you verify eligibility?
BETIT:
The eligible populations includes adults (both with and without
children) aged 19 to 54 who have not had health coverage for six
months or more, who have annual family incomes less than 150 percent
FPL, and whose employers pay less than 50 percent of their health
care benefit. PCN is open to both working and non-working adults.
As of May 2003, approximately 46 percent of those enrolled are employed.
The lower percentage of employed enrollees at this stage of implementation
is probably due to the limited outreach that has been done to the
employed target group.
PCN
eligibility is handled by Utah Department of Health Medicaid eligibility
staff who look for the same traditional kinds of income verification
used for Medicaid eligibility.
The
goal of PCN is to encourage people to be proactive about getting
coverage and enroll before they need to be hospitalized. So, we
made an arrangement with hospitals that inpatient care would be
free for those who took the time to enroll in PCN as a primary care
customer. If, on the other hand, they just show up in the emergency
room without having applied for PCN previously, they don't qualify.
There is no retroactivity for PCN. You have to think about it, enroll,
and pay your premium and co-pays.
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9.
SCI: How did you determine cost-sharing requirements? Do you think
they are set at an appropriate level?
BETIT:
Cost sharing was patterned after the State Children's Health Insurance
Program's cost-sharing policy, which requires people to pay approximately
half of what would be required by the average employer plan. We
believed that requiring significant rather than nominal cost-sharing
would help the public and providers to perceive the program as more
akin to a commercial insurance product, and was administratively
easier to operate than collecting monthly premiums.
We're
currently evaluating at what level cost sharing begins to affect
utilization. We didn't see any significant change in utilization
when we changed co-pays from $2 to $3, so now we're considering
what the impact would be of making a switch from $3 to $5. Some
anecdotal information suggests that the $5 co-pay is more of an
incentive than $3 to use services appropriately. However, we haven't
figured out how to model the question of whether to move to a $5
co-pay in a way that we're comfortable in order to draw firm conclusions.
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10.
SCI: Although this program has created a formal entry into the delivery
system, how do enrollees maneuvers through the system once they
have been identified as needing immediate hospital/specialty care?
BETIT:
Most enrollees present themselves to the hospital emergency room
and are then admitted for inpatient care. We confirm PCN eligibility
and the admission is then tracked by our department. We collect
the needed financial information to monitor the $10 million line
of credit and the impact on individual hospitals.
If
self-directed hospital admission does not occur, providers generally
contact the Department of Health and we negotiate the arrangements
with the appropriate hospital. The process seems to work well.
There
are many ways that enrollees can get referred to specialty care.
The most common is to contact our health program case manager, who
will steer them to a specialty physician in the network that we
created. People can also go to the department of health clinics,
where we have specialty physicians coming in every day for allocated
time periods to provide specific services. Alternatively, they can
have their primary care physician make the referral for them; he
or she can contact us to make sure that the referred physician is
part of the network donating specialty care.
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11.
SCI: How are reimbursement rates for participating providers determined?
How do they compare to Medicaid? How did you convince providers
to participate?
BETIT:
Generally, the Medicaid rate is used for PCN. Current Medicaid providers
were automatically enrolled in PCN. Others were solicited to participate.
All community health centers enrolled as providers. The Utah Department
of Health's four clinics were converted to PCN primary care sites.
There has been adequate capacity to serve all the enrollees thus
far. Utah Department of Health staff are available to help PCN enrollees
find a provider if they do not have one.
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12.
SCI: What are the actual costs per patient and how do they compare
with your budget projections?
BETIT:
Initial estimates indicated that a mature program with near full
enrollment would produce a per patient cost of $70 per month-$50
paid by the state and $20 paid by the enrollee through cost sharing.
During the first few months, per person costs were closer to $120
per month due to heavy adverse selection. At this point in the implementation,
per person costs are around $95 per month-$20 paid by the patient
and $75 paid by the state. We are hopeful that these numbers will
come down further as enrollment grows. If they don't, the upper-end
enrollment cap of 25,000 adults will have to be adjusted downward.
The
initial estimates include all federal and state costs of providing
the direct health care services that enrollees are accessing, plus
an administrative cost of $5. However, it does not include the $50
annual fee, which goes toward covering some of the enrollment expenses.
The annual fee is sent across as an administrative revenue source
to reduce some of administrative costs of enrollment.
The
initial estimates of per person costs were taken from actual experience
through primary care grant programs that the state funds. Eventually,
analysis will be conducted to ascertain where the differences lie
in the utilization by these two populations of people.
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13.
SCI: What have been the most challenging operational aspects of
designing and implementing the program?
BETIT:
One of the main challenges was figuring out how to roll out a non-proprietary
network with enough capacity to serve the PCN population. We addressed
this by automatically enrolling all Medicaid providers as PCN providers,
and including our four clinics and community health centers in the
program. We also reached out to rural providers by promising to
pay them a 12 percent higher fee for all procedures billed on a
fee-for-service basis.
Another
big challenge was converting our four crisis-oriented clinics at
the Department of Health into clinics that focused on primary care.
This involved making a cultural shift of no small measure. After
having been sustained through state budgets, these clinics had to
become financially self-sufficient and compete for PCN clients on
the same level as everyone else. I worked directly with clinic staff
to ensure that they were up to the transition.
Initially,
we were not sure how to meet the needs of very low-income individuals
who could not afford the $50 annual enrollment fee (i.e., those
who made less than $300 per month). To address this, we approached
the legislature for funding to reduce their enrollment fee to $15
annually instead of $50. The legislature agreed, and provided state
funds to cover the remaining $35.
Finally,
it was also difficult to figure out how to promote the program in
a manner that would target its availability to the intended population
without drawing too much unwanted political attention. We decided
to conduct outreach more subtly for PCN than for the State Children's
Health Insurance Program. We avoided TV spots, billboards, and other
high-visibility media forums. We have promoted it in statewide information
sheets prepared by myself and Governor Leavitt. Numerous media pieces
have been written on the program as well, and we have targeted our
advertising to some employers such as child care providers.
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14.
SCI: Has implementation proceeded as expected? What surprised you?
What modifications have been made to the program since implementation?
BETIT:
Implementation
has progressed quite well. From approval of the waiver on February
9, 2002, to implementation of the PCN program on July 1, 2002, the
department had very little time to pull all of the program components
together. Thanks to the preparatory work done by department staff
in designing the program and gaining waiver approval, the stage
was set for a quick implementation.
What
surprised me most about the implementation process was the public's
overwhelming response to the program. The PCN's growth has exceeded
that for our SCHIP program with far less advertising.
Two
key modifications have been made to PCN since its implementation.
The first was to develop a waiver amendment that will allow 6,000
of the 25,000 slots to be committed to adults who have not taken
up the comprehensive coverage offered by their employers. This program,
called Covered at Work, would be open to the first 6,000 people
who apply for it, regardless of their employers' size. Under this
amendment, individuals would receive a voucher for the value of
the PCN benefit, which they could use to cover part of their employee
contribution for their employers' coverage plan.
We
implemented Covered at Work in the beginning of August 2003. Since
then, we have had very small enrollment--fewer than a hundred people.
We get applications, but insurers won't allow people to select employee
coverage at any time other than a narrow open enrollment period.
We haven't yet found a solution for this.
We
made a second modification to PCN through legislation that was passed
during the 2003 Utah legislative session. It allowed the Utah Department
of Health to provide a subsidy to the general assistance (GA) clients
who were registering for financial and employment assistance from
the Utah Department of Workforce Services (DWS). The DWS made applying
for the PCN a condition of GA eligibility. To help this happen,
the Department of Health worked with DWS to reduce the enrollment
fee for these clients to $15 rather than $50 annually.
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15.
SCI: UMAP was intended for people in a medical emergency, while
PCN addresses health care needs at earlier stages. How are you working
to market this strategic change to potential enrollees?
BETIT: At the time of enrollment, PCN participants are oriented
about the importance of this primary care benefit and how to use
it effectively. As part of the program design, payment was deliberately
structured on a fee-for-service basis to encourage appropriate use
of services. To further educate participants, we distribute a detailed
handbook explaining what the PCN program is and how to use it appropriately.
(For
more information about program marketing and outreach, see the last
paragraph of Betit's answer to question 13.)
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16.
SCI: What indicators have you identified to evaluate the PCN demonstration
and what methodologies are being used?
The
PCN outcome evaluation includes two aspects: enrollees' health status
and uncompensated care for the health care systems in Utah. For
the health status aspect, ten health indicators were identified
to evaluate the PCN clients' health status and conditions, health
care utilization, enrollee satisfaction, and risk behavior. These
indicators are derived from the PCN enrollees' self-health assessment
surveys.
The
questions are adopted from the national standard Short Form-12 questions
on health status; the NCQA's Consumer Assessment of Health Plan
Survey, CDC's Behavior Risk Factor Surveillance Survey, and Utah's
ongoing statewide household health status survey. These external
standard surveys provide comparative measures for us to benchmark
the PCN performance measures. The Year 2 health reassessments are
conducted through the reenrollment and disenrollment surveys.
For
the uncompensated care aspect, the evaluation plan is to measure
overall hospital charity care for the uninsured population aged
19 to 64 at the pre- and post-PCN implementation stages. Ideal specific
measures include overall amount of charity care, charity care by
county, health care system, hospital market share, patient age,
gender, race/ethnicity, and severity, etc.
Initially,
we considered using the method of the State Health Access Data Assistance
Center (SHADAC)-the Minnesota study conducted by Dr. Lynn Blewett
and her associates (publication forthcoming in Medical Care Research
and Review). However, due to limited number of identifiable geographic
areas in Utah, SHADAC advised Utah that its methodology is not appropriate
for its PCN study. At this stage, we only plan to estimate the overall
amount of charity care in 2001 from 41 acute care hospitals in Utah.
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17.
SCI: Who is funding these evaluations?
BETIT:
The
Year 1 evaluation was jointly funded by Utah's Health Resources
and Services Administration (HRSA) State Planning Grant and, to
a lesser extent, the Office of Health Care Systems' (OHCS) contract
with the Utah Division of Health Care Finance. The OHCS' Medicaid
contract is covering a majority of the cost with small supplements
from the State Planning Grant for Year 2 evaluation.
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18.
SCI: What do you think your major data challenges will be?
BETIT:
Three
major challenges for data collection for the PCN evaluation are:
(1)
Utah's Department of Health does not have sufficient authority to
collect charity care data from Utah hospitals. As a result, the
Department is unable to conduct a comprehensive evaluation of uncompensated
care throughout Utah. Under this legal environment, any uncompensated
care study has to depend on the voluntary participation of each
hospital. In order to address this problem, we solicited the participation
of Brigham Young University (BYU) faculty and students. Unfortunately,
11 hospitals were not able to participate in the BYU study due to
individual corporate policy.
(2)
Due to limited funding, the Office of Health Care Systems will only
conduct re-enrollment and disenrollment surveys once in the current
fiscal year (July 2003 - June 2004).
(3)
The PCN enrollee health assessments focus on the program's direct
impact. Due to limited funding, indirect and statewide policy impact
evaluation is not planned. Another weakness of the current research
design is that we do not have a control group with which to compare
PCN enrollees. Utah's Department of Health has been conducting statewide
household health status surveys in 2001 and 2003. This survey also
collects data on insurance status and household income level. In
other words, it could help researchers to identify potential PCN-eligible
candidates and provide proxy information for a control group. However,
no resources are currently available for the department to conduct
the study.
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19.
SCI: Your legislature approved a private-sector insurance package
as a part of the PCN strategy. What has occurred since then? Do
you have any first indications of its effect on Utah's health care
marketplace?
BETIT:
No
insurance plan has chosen to offer a PCN-like product since the
legislation was passed, although we have been having ongoing discussions
with members of the health insurance industry. Hopefully, this will
change if the state successfully demonstrates that people want a
basic plan of this kind, that there is enough interest to make offering
the product worthwhile financially, and that the absence of the
specialty and hospital components of the benefit plan will not prove
fatal to the long-term survival of the product. For the foreseeable
future, the PCN product offered by Utah's Department of Health will
be the only option available to uninsured working adults who work
for employers that do not offer coverage.
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20.
SCI: When do you expect that the PCN will begin to meet some of
its goals of reducing uncompensated care and improving health status?
BETIT:
We expect to see a positive impact by 2005. Since PCN enrollees
did not have health insurance for at least six months prior to enrollment
in the program, we expected them to have a higher utilization of
health services in Year 1 than insured individuals, regardless of
whether they were covered through a public or private source. Indeed,
preliminary data bear this out: Approximately 9.3 percent of enrollees
reported that they were hospitalized in the six months prior to
enrolling in PCN, which was three times higher than that of the
general population in Utah.
In
the initial health assessment, individuals in their first six months
of enrollment in PCN reported more problems getting the care that
they or their doctors believed to be necessary than did adult Medicaid
HMO enrollees in 2002. Newly insured PCN enrollees are likely to
use services more in Year 1 than in later years. Thus, it will take
several years before we anticipate seeing improvements in health
status and uncompensated care.
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21.
SCI: What are some lessons you have learned from implementing PCN?
BETIT:
The
demand for the PCN program, which is evident from its enrollment
growth, indicates to me that we were correct to go down this road,
even though there were some complications, at both the state and
community level, associated with taking a limited-benefit approach.
We
learned about the importance of having a plan B through our experiences
with Covered At Work.This program was added to PCN as a waiver amendment;
it will allow 6,000 of the 25,000 PCN slots to be committed to adults
who have not taken up the comprehensive coverage offered by their
employers. When we launched Covered at Work, we thought it would
be available right away to people, and that we could get around
the open enrollment issues (the fact that insurers won't allow people
to select employee coverage at any time other than the narrow open
enrollment period). The fact that we haven't yet achieved our goals
with this is a disappointment. But it will come together eventually.
We
looked at financial data from other primary care programs in the
state to try to predict what the PCN population's needs would be.
Unfortunately, there is more demand for ongoing health care needs
than we were able to glean from our analysis. This is particularly
evident in the area of pharmacy. The biggest expenses for the PCN
population are physician and pharmacy-even with a four prescription
limit in the program. We underestimated how pharmacy-dependent this
population is. We'd like to think they are a fairly healthy population,
but they appear to have a lot of medical issues for a young workforce.
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For
additional resources regarding the PCN program, read SCI's April
2003 Issue Brief, States'
Experience with Benefit Design or search the State
Reports database.
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