The Blueprint

What is a Medicaid Health Home

by Amanda Berra

Through their states, providers are currently eligible for increased federal reimbursement for the provision of Health Home services to the Medicaid population. The Health Home model includes a team-based approach to providing comprehensive, person-centered care and integrating the physical and mental health needs of patients -- basically, a very robust version of the medical home (PCMH) model.  

In this blog entry, my colleagues Megan Clark and Yulan Egan detail the "what" of the model, as well as how providers can reach out to states to become involved and qualify for federal funding.

For high-risk, chronically-ill populations, active care management is crucial for preventing costly and unnecessary ED visits and hospitalizations. Such patients require seamless coordination across providers and comprehensive care plans that address both physical and social needs. While it is important for organizations to invest in care management strategies now, these changes will only become more urgent as reimbursement models shift to risk-based payment care.

With the introduction of the Affordable Care Act’s (ACA) health home option, providers may have additional incentives to address the care management needs of their Medicaid populations. States are currently eligible for increased federal reimbursement for the provision of health home services to the Medicaid population.

What is a Medicaid health home?

The health home model includes a team-based approach to providing comprehensive, person-centered care and integrating the physical and mental health needs of patients. The ACA stipulates that health homes must provide the following services:

  • Comprehensive care management
  • Care coordination and health promotion
  • Transitional inpatient to outpatient care
  • Individual and family support
  • Referrals to community and social support services
  • Services linked through health information technology

Medicaid patients eligible for participation in a health home include three groups: those with two chronic conditions, those with one chronic condition and risk of a second, and those with one “serious and persistent” mental health condition.

To qualify for enhanced reimbursement, states must submit a Medicaid State Plan Amendment (SPA) outlining their plans for implementing health homes and demonstrating adherence to the guidelines outlined by the ACA and CMS. CMS has developed a draft template for the SPA that states may use as well as an online tool that states may reference for additional guidance. States are required to consult the Substance Abuse and Mental Health Services Administration (SAMHSA) in the process of drafting and submitting the SPA.

Once approved, states receive a 90% enhanced federal match rate for the first eight fiscal quarters after implementation. When building a health home, states have considerable flexibility in developing their plans, allowing room for providers to lobby and work with their states to develop the most appropriate and easily implementable plan possible.

According to Sept. 2010 survey results released by the Kaiser Commission for Medicaid and the Uninsured, 33 states indicated that they are likely to implement health homes, including New York, Connecticut, Massachusetts, and Washington. At the time of publication, Missouri had become the first state to have its SPA approved by CMS. Applications by Rhode Island and Oregon are currently pending approval.

For more information about the health home guidelines, see CMS’s health home guidelines and SAMHSA’s health home Website.

How do providers participate in health homes?

While it is the states who petition for additional reimbursement for Medicaid health homes, it is ultimately providers who will be responsible for the provision of health services and benefit from the additional reimbursement. Three types of providers are eligible to provide health home services:

  • A designated provider, as defined by the state, such as a physician, clinical practice, rural clinic, community health center, community mental health center, home health agency, or any other provider identified and approved by the state. For example, other eligible providers might include pediatricians, gynecologists, and obstetricians.
  • A team of health care professionals, as defined by the state, which may include physicians, nurses, nutritionists, social workers, and behavioral health specialists. The team may be based in a variety of locations, including a free standing clinic, a hospital, or a virtual network.
  • A health team, as defined in Section 3502 of the ACA. This team may include medical specialists, nurses, pharmacists, nutritionists, dieticians, social workers, behavioral health professionals, chiropractors, alternative medicine practitioners, and physicians’ assistants.

States are given considerable leeway to identify and define health home providers based on their own population needs and existing infrastructure.

How is a health home different from a medical home?

In short, a health home is a very robust medical home. Two features setting health homes apart are: (1) a strong focus on behavioral health services and (2) extensive collaboration with community organizations and in-the-market resources.

Health homes seek to integrate physical and behavioral health services rather than treating them as separate, episodic care needs. Behavioral health illnesses often compound the effects of physical illness; for example, providers often struggle to treat the physical conditions of patients who are clinically depressed.

Behavioral health comorbidities are particularly prevalent in high-risk populations with multiple chronic conditions. An estimated 66% of Medicaid adults with a ‘top 5’ disorder (i.e. asthma, congestive heart failure, coronary artery disease, diabetes, or hypertension) have at least one behavioral health condition. Coordinating behavioral health services and medical services is thus critical for these populations.

Health homes also go beyond the comprehensive treatment that can be offered through a care team by extending their reach into the community and offering referral and support services outside the immediate care setting. Coordinating with community organizations is particularly important for those populations with low health literacy.

Organizations run by community members can provide education about the importance of lifestyle choices such as exercising and healthy eating. They can also provide close-to-home resources for the management of common chronic conditions such as diabetes or asthma. Rather than simply treating patients once they feel a need to come in for care, community organizations have the potential to prevent such issues from arising in the first place.

Because medical homes have many of the same characteristics as health homes, those seeking to create health homes should look to existing medical homes as a potential template. Medical homes may be modified to fit the health home criteria outlined by the ACA and CMS, forgoing the need to build a health home from scratch.

What steps need to be taken to establish a health home?

1)(States): Define and locate appropriate providers. Having a team-based approach to care is one of the most important components of a health home. While the definitions put forward by the ACA are a good place to start, states have considerable room to modify and make additions to the care team based on the specific needs of their communities.

Although states are ultimately responsible for putting their definition of a health home provider in the SPA, providers interested in becoming a health home are advised to work with states to design a viable model. This process should include identifying potential non-clinical partners and building relationships with community organizations. Providers should be particularly proactive in this part of the process as they will ultimately be responsible for working with their community partners.

For more information about building a comprehensive care team, see Transforming Primary Care (pages 52-82) and "Elevating Staff to ‘Top of License’ at Kaiser Permanente Northwest."

2)(Providers and states): Identify target chronic conditions. The ACA identifies mental health conditions, substance abuse, asthma, diabetes, heart disease, and obesity as potential chronic conditions for health homes to focus on. However, states may decide to focus on only a subset of these conditions or conditions not listed in the ACA. This decision could depend on a variety of factors: the prevalence of certain conditions within the state, the costs associated with various conditions, and the ease with which conditions may be targeted due to existing resources.

Additionally, organizations may decide to start with one condition to acclimate providers to the new model before taking on additional conditions. Again, given the experience and knowledge providers have regarding which conditions are the most problematic or prevalent, interested providers should work with their state to identify appropriate starting places.

3)(States, with input from providers): Develop an appropriate payment plan. The ACA allows for considerable flexibility in this regard. While a per-member-per-month payment model is mentioned in the bill, health homes may use other payment models such as shared savings. It is up to the state to determine the most appropriate payment model and note their payment plan in the SPA. However, providers may again work with the state to identify a payment model that aligns to the specific workstreams and outcome goals of the health home.

For more information about implementing a new payment model, see the section of our study Promise or Peril called “Building a Sustainable Financial Model." or the "Emerging Trends in Medical Home Contracting" webconference. The Medical Home Project also has additional resources on medical home finance

How will health homes impact my hospital?

The goal of health homes is to actively engage patients in primary care and reduce unnecessary downstream utilization. Similar to medical homes, we would expect health homes to reduce preventable hospitalizations and the use of the ED as a site for primary care. Although the Medicaid health home focuses specifically on the care management of a low-reimbursement population, strategies taken to manage this population are widely applicable to the general population.

Furthermore, these strategies will only become more important as a rapidly increasing number of baby boomers become eligible for Medicare, resulting in a dramatic increase in the numbers of yet another high-risk, chronically ill population.

For information about preventable admissions, including a customized report on your organization, see the Customized Preventable Admissions Identification Assessment.

Hospitals may also benefit from working closely with health homes by referring patients or sharing patient information. An important component of health homes is improved coordination between providers, which helps reduce readmissions and duplication of care services, allowing hospitals to prevent unnecessary spending.

For information about how to calculate potential savings from reduced readmissions, see the Customized Readmissions Penalty Estimator.

Register today for this year's national meeting

For more information about managing the Medicaid population and responding to the Medicaid crisis, including caring for pregnant women, increasing access to primary care, coordinating physical and behavioral health care, and managing the dual eligible population, please register for our 2011 Health Care Advisory Board national meeting, Beyond the ACO: Moving Past Regulatory Uncertainty to Deliver on the Promise of Accountable Care.