State Issues in the Integration of Acute and Chronic Care

Can the goals of reducing cost and improving quality both be met? States planning to integrate acute and chronic care generally have two goals: reducing the increases in state financial outlays and improving the quality of care (Riley, I998). The first goal is hardly surprising. While most states have stemmed the growth in expenditures for Medicaid, they want strong fiscal controls that will continue to restrain costs, prevent cost shifting, and improve administrative efficiencies. As to the quality improvement goal, acute and chronic illnesses can receive more comprehensive care when treated jointly. To integrate acute and chronic care, a much discussed but as yet infrequently applied method is the employment of managed care entities (including risk-based health maintenance organizations). A number of states have introduced managed care for Medicaid-funded acute and primary care, but few states have experience in integrated acute and chronic managed care (which likely would include the integration of Medicaid and Medicare as well). At the same time, traditional risk-based managed care entities have virtually no experience in operating long-term-care systems. Consequently, such private-sector entities have limited understanding of the needs of chronic-care clients, the various (and sometimes competing) structures under which their services are provided, or the support systems (both formal and informal) that are at work within the chronic-care context. State concern about HMO inexperience in long-term care has been recently compounded by the wave of Hmos dropping out of the Medicare managed care system. This phenomenon has raised questions about the reliability of cost projections and the potential for unplanned state outlays should calculations prove to be too low, as well as doubt about the interest of HMOS in serving a population with a greater incidence of illness. The possibility of breakdowns within the system, already familiar from highly publicized problems in HMOS serving the general public, become particularly worrisome when the populations involved are the vulnerable aging and disability communities. States adopting integrated acute and chronic care within a managed care system (particularly a risk-based system) will need to define carefully their expectations, and Hmos will have to gain considerable practical experience to avoid the pitfalls and criticisms that have arisen in other contexts about managed care. Public trust plays a very important role in implementation of managed care in a public program. Recent experience in Wisconsin indicates that constructing a rational integrated system is more complex than might be anticipated. The state planned to introduce a single capitated payment to managed care entities for the provision of both acute and long-term care. However, the plan engendered heavy public criticism: Counties, as traditional providers, wanted to continue their role. Homecare providers opposed a plan that might give them a reduced share or less control of the market. Others voiced concern that managed care organizations lacked experience in caring for the elderly and might either ignore chronic-care needs or emphasize institutional long-term care. An additional worry was the possibility that all services would become medically driven, with minimal regard for the client's desires (Wiener and Stevenson, Ig98). Consequently, the state withdrew its plan and is designing a new one that is less dependent on a single provider. The reactions in Wisconsin indicate that to be successful in this arena, HMOs will need to learn much more about the public response to changes in long-term care as they venture into this field. The first step should be learning more about the basics of long-term care. Hmos will need to examine how services are currently delivered to chronic-care clients, including the differences between institutional and home- and community-based care. …