Medicaid Health Homes: A Profile of Newer Programs

Section 2703 of the Affordable Care Act (ACA) established a new state option in the Medicaid program to implement “health homes” for individuals with chronic conditions, giving states a new tool to develop models of care designed to improve care coordination and reduce costs for high-need populations. The ACA also provided a 90% federal match rate for health home services during the first two years an approved health home program is in effect. As of this writing, 15 states have at least one health home program in place. In August 2012, the Kaiser Commission on Medicaid and the Uninsured (KCMU) issued a brief examining the first six health home programs. This update profiles health home programs in the nine states that have taken up the option in the intervening two years – Alabama, Idaho, Maine, Maryland, Ohio, South Dakota, Washington, Wisconsin, and Vermont. States implement their health home programs in their own ways, reflecting different targeting priorities, underlying delivery and payment systems, and visions of delivery system reform, as well as other state-level factors. Both diversity and themes can be seen in key areas of the more recent health home programs, as follows:

• Geographic Scope. While the first health home states generally implemented their initiatives statewide, several states with newer programs limited their initiatives to selected counties initially. Local factors such as the existing provider infrastructure or geographic concentration of the target population may support a more limited approach.
• Target Population. The newer health home states have used health homes to target both Medicaid beneficiaries with a broad cross-section of chronic conditions and narrower Medicaid populations defined by a particular chronic condition. Consistent with the vision of health homes as a tool for better integrating physical and behavioral health services for people with mental health conditions, the one constant among almost all health home states is the inclusion of individuals with serious mental illness in their target populations.
• Health Home Providers. States whose programs serve a Medicaid population with a particular condition typically designate a narrower set of health home provider entities with significant experience serving that population. States targeting beneficiaries with a broader spectrum of chronic conditions generally rely on their existing network of primary care providers to provide health home services, with the health home structure and payment bolstering their capacity to serve people with complex chronic care needs. Two states also make separate payments to community-based or regional care coordination teams that support primary care practices operating as health homes.
• Payment. While payment approaches vary, states generally pay health homes a per member per month (PMPM) rate based on the intensity of beneficiary needs and the staff resources required to meet them. Several states tier their payment rates to reflect different levels of beneficiary acuity and different interventions, and one state is implementing a payment withhold designed to incentivize provider-patient engagement and the development of care plans for health home beneficiaries. As health home programs become more firmly established and the parameters of what is approvable by CMS are more clearly defined, more states are likely to move in the direction of value-based payment.
• Fee for service vs. managed care. Most of the nine states profiled in this brief are implementing their health home initiatives in a fee-for-service environment, in contrast to some of earlier states, which integrated health homes into their capitated managed care programs. This shift may, in part, reflect some of the complexities inherent in sorting out roles and responsibilities between managed care plans and health homes and preventing duplication of services and payment on behalf of health home enrollees.
• HIT. Health home providers’ use of HIT to support care coordination and other health home services varies greatly by state, reflecting variation across states in the current capacity of providers, as well as in states’ ability to support health homes with HIT and their progress in developing a state HIE.

Looking Ahead

In a recent 50-state survey of Medicaid directors conducted by the KCMU, 21 states indicated that they planned to adopt or expand their use of health homes, evidence of the popularity of this new state plan option with enhanced federal financing. As state Medicaid programs continue to take action to improve health care delivery, the 90% federal match remains available for new health home programs, expansions of existing programs, and additional programs in states that already have health home programs in place. Later in 2014, the HHS Secretary is due to submit an interim Report to Congress on the five-year evaluation of the health home program required by the ACA. In the meantime, these state profiles of the health home programs now in operation illustrate how the option can be adapted to states’ diverse priorities and capacities, and inform their efforts to provide better care for Medicaid beneficiaries, advance health outcome goals, and spend Medicaid dollars more effectively.