NEWS RELEASE
June 17, 1996

MDCH Announces Managed Care Direction

Improved quality of care, better organization of public health services, and containing rapidly-growing health care costs are the focus of a new managed care direction announced today by Michigan Department of Community Health (MDCH) Director James K. Haveman, Jr..

The direction won swift approval from Governor John Engler. "I support Jim Haveman and the department's efforts to improve the quality of care for Michigan citizens and, at the same time, help rein in some of the runaway costs that have plagued our system," said Governor Engler. "In the end, what we can do is provide better services for people and guarantee that we can maintain a quality system."

The direction delivers on the promise made when MDCH was created, said Haveman. "We promised to improve access, to improve quality of care, and to get better values for the taxpayers' dollars that go into health services. Our managed care direction will accomplish those goals. Managed care is our health care purchasing direction for Michigan's future. Change in health care delivery systems will happen at the national and state levels. Michigan will proactively work to shape the health care marketplace as an aggressive purchaser of services. Our focus is on quality of care, accessibility, and cost-effectiveness. Michigan taxpayers deserve this approach."

The managed care plans will focus on four main areas of publicly-funded health services:

• Comprehensive health plan for low-income citizens
• Long-term care for elderly persons and people who have a disability
• Behavioral health services for people who have a mental illness, a developmental disability, or who are a substance abuser
• Children's Special Health Care Services for children who have serious diseases and conditions.
  

Managed care improves coordination of services among primary care physicians, specialists, hospitals, nursing homes, and other home & community-based providers. "A good example is the situation that faces many Michigan residents each day when a family member is referred from a hospital to a nursing home," Haveman said. "The current system forces hospitals to quickly discharge a patient who no longer needs hospital care. The hospital's most expedient discharge option is usually a nursing home. The referral is often made quickly, with little time to consider options that families could pursue to arrange appropriate home health services or other care that they and their family member may prefer to a nursing home. Managed care will consider the options, provide choices, and coordinate the care."

If care coordination is improved, Michigan can also accomplish its fiscal objective, which is to reduce the rate of increase in the cost of publicly-funded health services, Haveman said. "There are three ways to slow the growth in cost. They are restricting eligibility, cutting benefits, and stimulating more efficiency in health care delivery through managed care. We chose the efficiency approach because we can achieve other important health care goals at the same time we slow down costs."

MDCH will work with consumers, families, professionals, providers and advocates to gather input on the plans. The initiatives will use a selective contracting process with organized systems of care such as HMOs, integrated health care systems, and community-based service networks. Contracts will be based on performance requirements and financial risk-sharing.

In the 1997 MDCH budget, the legislature states that the department shall continue to implement managed care. "The legislature was clear that when we move further into managed care, we must include options for consumers, we must develop standards which assure quality of care and several other protections for Michigan health care consumers, which the department supports," Haveman said.

The first initiative to be implemented will be Children's Special Health Care Services. Voluntary enrollment is expected to begin in October for planned implementation in January, 1997. The program will feature care planning that is focused on the child and the family. It will create capacity for care coordination among the child's primary care physicians and specialists, high-tech specialty centers, and community and home-based support services. A statewide network will be developed by competitively-selected managed care systems.

MDCH will also begin enrolling Medicaid comprehensive health plan recipients who don't receive care from a managed care organization in competitively-selected managed care plans. The enrollment will be piloted in several counties. More than 330,000 of the current 834,000 Medicaid recipients are already members of HMOs and clinic plans.

"They key is to protect Michigan's vulnerable citizens by moving now to improve the efficiency of our health services and bring the rate of Medicaid growth more in line with the expected growth in state revenues," Haveman said. "This is something that private providers and the public sector will work on together to improve Michigan's health status."