Financing Policy Considerations From Texas to Optimize Care for Children With Medical Complexity

CCC is a primary care medical home exclusively for children and youth with the most complex health needs in the Austin area. CCC provides team-based, timely, comprehensive care and empowers families by providing tools, knowledge, and collaborative support for living the best life possible.⁶ 

Over time, Texas Medicaid has shifted enrollees from fee-for-service into managed care. In November 2016, on the basis of Senate Bill (SB) 7 passed in 2013,⁷ Texas implemented the STAR Kids managed care program to provide acute care and LTSS for children and youth with disabilities. STAR Kids includes those receiving LTSS through the Medically Dependent Children Program (MDCP), Texas’ 1915(c) waiver that provides home- and community-based services to children aged <21 as an alternative to nursing facility care. Many children with the highest medical complexity in Medicaid receive MDCP and/or private duty nursing (PDN) services.

In state fiscal year (SFY) 2021, STAR Kids enrollment was about 169 000.⁸ A subset of these children met the criteria to be CCC patients, which include: Having chronic medical conditions expected to be lifelong and potentially life-limiting, conditions requiring 3 or more specialists, high medical technology use, and/or high emergency department (ED) and inpatient hospital services utilization. In early 2022, CCC was the medical home for 840 CMC, including 686 with Medicaid (predominantly enrolled in STAR Kids).

SB 7 required that STAR Kids improve health outcomes, access to services, and cost efficiency by enhancing care coordination, reducing administrative complexity, and utilizing health homes.⁷ The STAR Kids procurement solicited “a consistent and integrated source of health care for the STAR Kids population through a person-centered health home” and required each MCO to “submit a plan with alternative payment structures to increase quality and efficiency through collaboration and innovation to improve access to comprehensive health homes.”⁹ However, it appears this requirement was not enforced during STAR Kids’ implementation. Five years later, there was little evidence of alternative payment models (APMs)¹⁰ between STAR Kids MCOs and comprehensive health homes, such as shared savings arrangements or monthly subcapitation payments. Preliminary Financial Statistical Report data for SFY 2021 showed that, of $2.4 billion in STAR Kids MCO medical payments to providers, ∼99.5% was fee for service and only 0.5% was in capitated payments or for patient-centered medical home services.

CCC and several other comprehensive health homes as described in the STAR Kids-enabling legislation and procurement are not compensated appropriately to meet the program’s goals. BCBSTX, 1 of the STAR Kids MCOs for the Austin area, received approval from Texas Medicaid to delegate service coordination functions to CCC nurse case managers. Now, families have a single nurse case manager who knows their family best, conducts assessments, and helps get what the child needs. A provider is available to the family 24/7. However, the payment for the delegated service coordination functions is insufficient to support CCC’s costs for providing these services. Without a sufficient compensation structure and further regulatory flexibility, including to reduce duplication of administrative effort, the arrangement is untenable in the long run.

Texas Medicaid included numerous oversight provisions in its STAR Kids MCO contracts to achieve the state’s goals. However, on the basis of CCC’s experience, these requirements and each MCO’s administrative processes have complicated care coordination and not resulted in the administrative simplification, enhanced care coordination and integration, and cost efficiencies envisioned for STAR Kids.

In April 2019, the federal Advancing Care for Exceptional (ACE) Kids Act became law to improve care for CMC in Medicaid. The act authorizes specially designed health homes for CMC with teams to coordinate timely care, develop comprehensive family-centered care plans, and coordinate access to subspecialty and out-of-state care. Each state may participate, with federal planning funds and enhanced Medicaid federal matching funds for a limited time period.¹¹ 

Also in 2019, prompted by parent advocates, the Texas Legislature passed House Bill 4533, requiring a report on the feasibility of providing Medicaid benefits to children enrolled in STAR Kids under an accountable care organization or alternative model.¹² In 2021, although the Legislature did not direct Texas Medicaid to participate in the ACE Kids Act, the Legislature did direct Texas Medicaid through SB 1648 to develop and implement a pilot program substantially similar to the ACE Kids Act to provide coordinated care through health homes for CMC.¹³ 

In response to SB 1648, Texas Medicaid issued a request for information in 2021 to solicit alternative care model ideas to improve care for CMC.¹⁴ In October 2021, the STAR Kids Managed Care Advisory Committee, with thought leadership from CCC and other stakeholders, submitted a proposal for a network of provider-led, integrated health homes for CMC with teams of health care professionals as described in the ACE Kids Act. “The core requirements for the integrated health home include: Primary care provider as a quarterback; integrated visits to include specialists and other providers by maximizing telemedicine; incorporating the child/family as full partners; care coordination embedded within the health home and designed to build longitudinal relationships; 24/7 access; full delegation of authority to the health home in determining appropriate treatment plan including home support, therapy supplies, and equipment (within Texas Medicaid guidelines); integrated assessments and single care plan with fully shared accessible technology for care and analytics; and a payment system that incentivizes evidence generation and quality improvement.” CCC is 1 of several clinics in Texas well positioned to implement this model and support smaller clinics serving CMC statewide.

In 2022, Texas Medicaid issued an Opportunity to Participate in the Comprehensive Health Homes for Integrated Care Kids Pilot Program, which invited STAR Kids MCOs and providers to voluntarily engage in an APM that provides enhanced care coordination through health homes specially designed for CMC using existing funds.¹⁵ Unfortunately, the pilot does not include new direction to MCOs around allowable administrative flexibilities and financial incentives to enable the care transformation envisioned in the request for information response. Eight pilot projects will run from December 1, 2022, to September 1, 2025.¹⁶ 

There is growing evidence that comprehensive complex care models serving CMC are cost effective, as outlined in an article that grew out of the CMC CoIIN.¹⁷ The largest study comes from the Center for Medicare and Medicaid Innovation’s CARE Award project. This controlled study began in 2014 and showed cost savings for 4530 CMC enrolled across 10 children’s hospital complex care programs. Over 3 years, the enrolled group had decreases of 4.6% in total spend, 7.7% in inpatient spend, and 11.6% in ED spend. The article also cites many smaller studies that demonstrate the cost effectiveness of intensive care coordination and team-based care for CMC, often delivered through health homes.

CCC and other health homes in Texas have demonstrated the valuable role that dedicated clinics play in an integrated system of care for CMC.^18,19 CCC made substantial progress on all required CMC CoIIN quality measures, including single point of management, shared care plan, family engagement, and unmet needs. CCC also substantially reduced unscheduled hospitalizations. Recent preliminary data from BCBSTX comparing hospital use for its MDCP-enrolled members show promise in demonstrating CCC’s cost effectiveness. For 5 of the 6 data points in 2020 and 2021, CCC performed substantially better than other BCBSTX primary care providers with fewer ED visits, hospital admissions, and readmissions. A Houston comprehensive clinic found in a randomized clinical trial that total clinic and hospital costs (assessed from a health system perspective) were reduced by $10 258 per child per year.¹⁸ 

Below are CMC CoIIN lessons learned and related recommendations to support truly integrated health homes for CMC on the basis of CCC’s journey to transform care for its patients and their families.

CCC fosters trusting relationships with diverse partners dedicated to its mission, including families, other providers, payers, Texas Title V, and Texas Medicaid. CCC has an actively engaged Family Workgroup involved in all aspects of the design, implementation, and evaluation of the clinic’s quality improvement process. Family voices are crucial to building systems of care that best serve their children.

Texas Medicaid has moved almost all enrollees into managed care and shifted its operational structure to managed care oversight. Capitated managed care provides more budget certainty through MCOs’ assumption of risk for members and increases funding for Texas Medicaid through a 1.75% premium tax and associated federal match funding.²⁰ The Legislature assumed STAR Kids would reduce costs because of managed care efficiency and increase premium tax revenue.²¹ 

Current Texas Medicaid provider payments are insufficient to support an integrated care system that provides longitudinal, relationship-based care for CMC and their families. To illustrate, CCC analyzed the effort it expended caring for a single patient over a period of 29 months. There were 208 CCC staff touchpoints (eg, face-to-face visits, calls with the family, care coordination and case management calls, including with durable medical equipment, PDN, school, and hospital), of which only 3 clinic visits were billable.

CCC is largely subsidized by its parent organization, Ascension Seton. CCC and similar clinics have worked to sustain their care models through grants and other supplemental funding. Unless Medicaid payments change for these clinics, this vital work may not continue.

Because Texas Medicaid utilizes a managed care model to serve CMC, we recommend it take additional steps to enable successful alternative payment models with providers. Through 2021, there was little evidence MCOs had entered into meaningful APMs with comprehensive health homes, despite strong encouragement to do so. Texas Medicaid must provide explicit direction and financial incentives to MCOs to catalyze movement toward payment arrangements with health homes to achieve the goals envisioned for STAR Kids: Person-centered, integrated health care; enhanced health outcomes; administrative efficiency; and cost efficiency.

First, Texas Medicaid must give additional direction and create financial incentives for MCOs to change how they pay comprehensive health homes. The existing savings achieved from comprehensive health homes for better managing care (eg, fewer preventable hospitalizations and ED visits) are already reflected in Texas Medicaid’s financial reports. Texas Medicaid can recognize these built-in savings so that MCOs can use these funds to adequately compensate comprehensive health homes for their services.

Texas Medicaid could use several vehicles to enable appropriate reimbursement for comprehensive health homes. The ACE Kids Act is 1 opportunity to test new methods of care for CMC with initial, enhanced federal funding for services and some planning grant funds. Per legislative direction, however, the state instead is pursuing a pilot program called Comprehensive Health Homes for Integrated Care, as discussed earlier in this article. Without state guidance around additional administrative flexibilities and financial incentives to better leverage comprehensive health comes, this pilot falls short of the recommendations in this article.

Texas Medicaid could recognize comprehensive CMC health homes as a distinct provider type and incentivize care integration, as Michigan Medicaid did in 2015 with requirements and new billing codes for its children’s multidisciplinary specialty (CMDS) clinics.²² CMDS clinics provide a highly coordinated, interdisciplinary approach to manage specified complex medical diagnoses. In an extended appointment at 1 location, the child visits with all or almost all providers they need to see.

CCC is piloting biannual whole-child visits to integrate and streamline care planning. Goals of these visits are to reduce redundant assessments, improve health and well-being by identifying what matters most to the family, foster shared decision-making, and create a single, comprehensive shared care plan. CCC is working with BCBSTX to receive payment for these visits. However, unlike the new billing codes in Michigan, BCBTX does not directly reimburse for integrated visits.

Texas Medicaid encourages movement toward more advanced APMs,²³ which could support delegation of service coordination to comprehensive health homes for CMC focused on value and total cost of care. An MCO could start with a bundled or upside risk-only subcapitation payment to the health home with appropriate quality benchmarks and then move to a balanced risk arrangement. We recommend analysis of quality and total cost of care throughout the reimbursement policy progression. Texas could conduct a pilot under an 1115 waiver or revisit the ACE Kids option.

Michigan Medicaid is in the process of implementing coverage of health home services for the most medically fragile children and considering a proposal for a nonrisk-based, per member-per month payment of $1000 for the first month of a child’s enrollment in a CMDS clinic and $750 for each subsequent month. On the basis of data presented by a Houston comprehensive care clinic, if STAR Kids MCOs were to pay the clinic $700 per member per month for CMC, Texas Medicaid would realize net savings, primarily from avoided hospital care. Building on this cost analysis and the preliminary BCBSTX MDCP data, a Texas Medicaid analysis of historical utilization data for CMC would show how much the state’s comprehensive clinics are saving Medicaid in hospital and emergency care that is preventable with robust health home services. These savings could be used to determine an appropriate range for monthly bundled payments that would be expected to be budget neutral for Texas Medicaid and calibrated on the basis of the acuity level of members served by a health home.

Finally, Texas Medicaid can leverage existing statutory authority to reward APMs that improve the health and well-being of CMC. In 2013, SB 7 added Section 533.014(c) to the Texas Government Code. If cost-effective, the state may use amounts it receives from managed care experience rebates to incentivize MCOs to promote quality of care, encourage payment reform, reward local service delivery reform, increase efficiency, and reduce inappropriate or preventable service utilization. Texas Medicaid could leverage this provision to establish financial incentives for STAR Kids MCOs and providers with effective APMs.

The Texas CMC CoIIN team found that parents/caregivers of CMC face extraordinary challenges securing needed services and supplies, which limits quality time with their children. Completing administrative tasks to get needed care for CMC is exhausting, stressful, and takes a heavy toll on families and providers. CCC has worked to reduce this burden, but has encountered regulatory barriers.

Medicaid is inherently complex, and the administrative requirements in the STAR Kids contract and imposed by each MCO siphon resources to justify eligibility and authorize care delivery. Texas Medicaid approved delegation of service coordination to CCC’s nurse case managers for STAR Kids patients enrolled with BCBSTX. However, this delegation did not address the following burdens on families and their care teams: Redundant assessments; siloed care plans; requirements for multiple authorizations for tests, medications, supplies, and equipment; and letters of medical necessity and justifications for care that takes several hours every week.

We recommend Texas Medicaid assess which regulatory barriers it can waive for comprehensive health homes to focus resources on care. The Dell Medical School at UT Austin, in partnership with CCC, recently received a 5-year HRSA demonstration award to continue improving care delivery for CMC.²⁴ A key component of this project entails working with Texas Medicaid, MCOs, providers, and families to assess the administrative barriers to care in STAR Kids and remove as many as possible.

Texas Medicaid’s SFY 2017 data show that >25% of STAR Kids medical expenses were for services delivered at home, including PDN, MDCP, and personal care services. For the high-needs CMC population served by CCC, more is spent on home-based services. During 2012 to 2013, an analysis of 212 CCC patients found that the average Medicaid expenditures per patient were $108 906 per year, of which 18% were for inpatient hospital and ED care, whereas 62% were for PDN, therapies, durable medical equipment, and supplies.

For children in STAR Kids with the highest medical complexity, care received at home is pivotal to their health. Proper home care can prevent avoidable ED visits and hospital stays. CMC in Texas Medicaid may get PDN services and/or personal care services delivered by an attendant (at a base rate of $8.11 per hour). Because of coronavirus disease 2019, it has become increasingly difficult to staff authorized PDN hours. Texas has no mid-level service available for home-based support. Creating this mid-level provider for home-based care would help relieve the current nursing shortage crisis, give parents more input on who provides care in their home, and may help relieve stress and isolation by strengthening each family’s informal support network.

Colorado and Arizona have enabled caregivers to become certified nursing assistants and receive Medicaid funding to care for their medically fragile children.^25,26 Training trusted individuals (eg, parents, adult siblings, friends) to provide certified nursing assistant-level care at a percentage of the PDN rate if a nurse is not available is 1 budget-neutral option to help address the nursing shortage.

Because most care for CMC is at home, allowing more flexibility in a child’s home-based care budget would be a powerful tool for the integrated health home and family to help maintain children’s health and quality of life.

The Healthcare Effectiveness Data and Information Set measures that may be good indicators of quality care for most children are not necessarily the best measures for CMC.

Texas Medicaid has a Pay-for-Quality program where 3% of MCO capitation payments are at risk contingent on performance on select quality measures. Texas Medicaid should improve STAR Kids at-risk measures with the input of stakeholders, including families, because some current measures are not necessarily appropriate for CMC. For instance, what may be a preventable ED visit for most children may not be preventable for CMC with serious underlying health conditions.

With its Family Workgroup, CCC has worked to identify which outcomes matter most for the well-being of CMC and their families. The CMC CoIIN required 4 measures: Single point of management in a medical home, shared care plan, family engagement, and reducing unmet needs. The Texas team also focused on reducing unscheduled hospitalizations, completing prereview sessions for whole-child visits, creating evidence-based comprehensive care plans, and engaging families in ongoing quality improvement.

With the Value Institute for Health and Care at UT Austin, CCC adapted the National Quality Forum-endorsed “heard and understood” measure for its biannual whole-child visit pilot to assess whether families think these visits resulted in them being heard. The CCC uses a Family Workgroup-developed survey to assess if needs were met by the visit. The evaluation also will assess impact on care team well-being and total cost of care.

For the 5-year HRSA Enhancing Systems of Care for CMC demonstration spanning 2022 to 2027, required outcome measures center on the number of families who report: Being actively engaged as shared decision-makers in developing their child’s shared care plan; an improved patient/family experience of care; and increased care coordination and access to needed services, supports, and resources.²⁴ The Austin team also will assess family-reported measures related to stress, care team understanding of their child, and whether the whole-child visit helps their child achieve their full potential. The innovative measures for the whole-child visit pilot and HRSA demonstration grew from CMC CoIIN learnings about what matters most for the health and well-being of CMC and their families on the basis of vital input from families.

CCC strengthened its health home model for CMC through the CoIIN, focusing on child quality of life, family well-being, and cost effectiveness. Key learnings are that parental/caregiver involvement and broad stakeholder collaboration are essential, and clinic-level improvements are only sustainable if they are supported by changes in payment models, regulatory oversight, and outcome measures. We recommend that care planning and coordination be delegated to provider-led, integrated health homes for CMC with alternative payment structures that appropriately reimburse and align incentives with optimal care delivery. CCC is 1 of several clinics in Texas well positioned to implement such a model and serve as a hub to support smaller clinics serving CMC statewide.

We thank the team at Boston University for leading the 10-state CMC CoIIN. We also thank our partners in Texas who contributed to the CMC CoIIN. Although some are not coauthors on this article and may not concur with all of its recommendations, we greatly appreciate their ongoing commitment to working to improve care and health for CMC. Lastly, we thank the families who entrust the CCC with their children’s care and are at the heart of this work, including CCC’s dedicated Family Workgroup.

ACE

Advancing Care for Exceptional

APM

Alternative Payment Model

BCBSTX

Blue Cross/Blue Shield of Texas

CCC

Dell Children’s Comprehensive Care Clinic

CMC

children with medical complexity

CMC CoIIN

Collaborative Improvement and Innovation Network to Advance Care for Children With Medical Complexity

CMDS

children’s multidisciplinary specialty

ED

emergency department

HRSA

US Health Resources and Services Administration

LTSS

long-term services and supports

MCO

managed care organization

MDCP

medically dependent children program

PDN

private duty nursing

SB

Senate Bill

SFY

state fiscal year

UT Austin

The University of Texas at Austin