School-Based Health Centers – Financing
School-Based Health Centers and Managed Care:
Seven School-Based Health Center Programs
Forge New Relationships

John J. Schlitt
Julia Graham Lear
Carlos Ceballos
Denise Chuckovich
Karen Hacker
Kristine Hazzard
Kathleen Johnston
Bernice Rosenthal
Donna Zimmerman
April 1996

Supported by the
Office of Adolescent Health
Maternal and Child Health Bureau
Health Resources and Services Administration
Public Health Service
U.S. Department of Health and Human Services

About the authors

John Schlitt and Julia Lear are Associate Director and Director, respectively, of the Making the Grade National Program Office at The George Washington University, Washington, DC. Carlos Ceballos, Denise Chuckovich, Karen Hacker, Kristine Hazzard, Kathleen Johnston, Bernice Rosenthal and Donna Zimmerman are program directors of seven multi-site school-based health center programs across the United States. They contributed their insights based on their experiences negotiating with managed care plans. Institutional affiliations include Carlos Ceballos, New Haven Public Schools, New Haven, CT; Denise Chuckovich, Multnomah County Health Department, Portland, OR; Karen Hacker, Boston Department of Health and Hospitals, Boston, MA; Kristine Hazzard, Bridgeport Health Department, Bridgeport, CT; Kathleen Johnston, Memphis/Shelby County Health Department, Memphis, TN; Bernice Rosenthal, Baltimore City Health Department, Baltimore, MD; and Donna Zimmerman, Health Start, Inc., St. Paul, MN.


This report was made possible through a contract with the Office of Adolescent Health, Maternal and Child Health Bureau, Health Resources and Services Administration, Public Health Service, U.S. Department of Health and Human Services.

School-Based Health Centers and Managed Care:
Seven School-Based Health Center Programs Forge New Relationships

In June 1995, the Making the Grade National Program Office at The George Washington University, with support from the DHHS Bureau of Maternal and Child Health, convened a meeting of representatives from federal and state governments as well as school-based health centers and managed care plans to identify some of the policy and programmatic issues that must be addressed in linking school-based centers with the evolving managed care system. Comments from the June meeting were reported in a paper, “Medicaid, Managed Care, and School-Based Health Centers: Proceedings of a Meeting with Policy Makers and Providers,” available from the Bureau of Maternal and Child Health and the Making the Grade National Program Office. The following paper continues the exploration of issues affecting the relationships between school-based health centers and managed care plans and focuses on the experiences of seven school-based health center programs that have negotiated contracts with plans. The paper also examines the role of state governments in facilitating these negotiations.

A growing number of school-based health center programs have entered into relationships with managed care plans. These pioneer programs are providing early lessons about the benefits and challenges of linking school-based health centers to the clinical and financial systems of managed care. They also are providing insights into the special issues affecting health programs that provide a safety net to underserved, poor communities. Seven school-based health center programs were surveyed concerning their negotiations with managed care plans. While the centers are optimistic that linkages with managed care will strengthen services available to their patients, they report that creating these relationships has been challenging. In some locations, managed care plans that enroll a large number of health center patients have refused to negotiate agreements; others have agreed to negotiate but define the relationships narrowly. Still others have embraced school-based health centers as partners in providing primary care. Although survey respondents characterize these new relationships as “works-in-progress,” they are concerned about the future. This paper presents the results of the survey, describes the role of state governments in facilitating negotiations, and integrates relevant commentary and discussion from a June conference on Medicaid, managed care, and school-based health centers organized by the George Washington University.


Since their beginnings in the early 1970s, school-based health centers typically have been isolated from the organizational and financial arrangements that characterize the rest of the health care system. School-based health centers, for the most part, have not been linked closely with other community providers or participated in mainstream financing mechanisms. Their driving purpose has been to make health care readily available to adolescents. In the early years, the centers were supported by private foundations, local health departments, and Maternal and Child Health (MCH) block grants. Third-party payments were not sought. Only recently have many centers begun billing public and private insurers for care provided to beneficiaries. Reflecting the limited role of patient fees, the financial reports of the seven school-based health center programs indicate that third party revenues represented eight percent of the 1994/95 operating budgets. See Table 1, page 4. Data from other studies suggest that this experience is typical.

Historically, school-based health centers have confronted a number of barriers to securing patient care revenues. Limited Medicaid coverage for adolescents, exclusion of preventive services from many private insurance plans, and administrative costs associated with billing have all constrained billing efforts. Moreover, a portion of services commonly provided by the centers — for example, group counseling and classroom-based health education — are not covered by medical insurance.

Despite barriers to billing, organizations that sponsor school-based health centers increasingly have determined that maximizing patient care revenues will be essential to future financial viability. The pursuit of patient care dollars, however, places school-based health centers in a difficult dilemma. Traditional private health insurance and state Medicaid programs as well as fee-for-service payments by managed care plans primarily have reimbursed for medical treatments; support for mental health and health education has been more limited. School-based health centers, which have emphasized preventive services, health promotional activities, and mental health care, risk compromising their comprehensive approach to patient care if they seek to maximize revenue by focusing on reimburseable medical services.

While discussions about the appropriate “fit” of school-based health centers with mainstream health care continue, the number of centers seeking relationships with the plans is increasing. The rapid growth of managed care and anticipated reductions in federal and state grant dollars available to the centers have provided a powerful incentive for the school-based health centers and their sponsors to undertake major changes in the way they are financed as well as the ways they relate to the larger health care system. While negotiations with managed care plans may begin with the goal of securing payment for revenues for patient care, under the best circumstances they lead to a process that places the centers squarely within the provider networks whose responsibility is meeting the comprehensive care needs of children.

Initial agreements between school-based health centers and managed care: Defining the scope of services and financial arrangements

Representatives from seven school-based health center programs were surveyed to gain insight into their relationships with managed care. Survey participants included Baltimore City Health Department, Bridgeport Health Department, Boston Department of Health and Hospitals, Health Start, Inc. in St. Paul, Memphis/Shelby County Health Department, Multnomah County Health Department, and New Haven Public Schools. As noted in Table 2 on page 6, these school-based health center programs are operating in mandated Medicaid managed care environments, assuring that at least some of their patients will be enrolled in managed care. The proportion of school-based health center patients who are Medicaid beneficiaries ranges from 18 percent in Multnomah County, Oregon, to 80 percent in Memphis/Shelby County, Tennessee. The seven programs all operate multiple sites that provide comprehensive primary medical and mental health care. Five of the seven programs are sponsored by city or county health departments. Their experiences with managed care contract negotiations range from six months to several years. All but one have concluded written agreements with managed care, or are part of an agreement negotiated by their sponsor organization. Baltimore operates under a verbal agreement with a plan. Survey responses describe a total of 26 contracts.

The survey respondents are not the only multi-site school-based health center programs that have developed contracts with managed care plans. Established programs in New York City and Philadelphia have developed contracts; programs in Dallas, Houston, Los Angeles, Pittsburgh, and San Francisco are considering such arrangements. The seven programs participating in the survey were selected because they were established programs that had operated at least five years; they provide comprehensive services and do business in a geographic area with a high penetration of managed care in the public health services market.

2. Medicaid Environment for Seven School-Based Health Center Programs

Medicaid Recipients Enrolled in SBHCs
State Medicaid
as % of total % in managed of students in managed care
State SBHC/Medicaid Managed
SBHC enroll-ment care % in HMOs % in PCCMb program
Care Policy
Bridgeport/ New Haven, CT 1915(b)Goal: 70% enrollment by 1/97 42% 100% 100% n/a Managed care plans are required to contract with SBHCs in service area (State Request for Proposals for managed care plans)
Baltimore City, MD 1915(b);1115Submitted to state legislature 52% 99% 30% 70% SBHCs can enroll as PCCMs; proposed 1115 waiver requires HMOs to contract with SBHCs; proposed 1115 waiver requires plans to reimburse for SBHC services and allow adolescents to self-refer to SBHCs
Boston, MA 1915(b)
Implemented in 19921115 approved 4/95
30% 85% 33% 66% HMOs, but not PCCMs, are required to “coordinate” with SBHCs and develop a work plan for improving access to preventive and confidential services to adolescents
St. Paul, MN 1915(b) Implemented beginning in 1975
1115Approved 4/95
50% 100% 100% n/a Managed care plans required to offer contracts to public health departments and community clinics that serve Medicaid clients; plans also required to develop action plans for adolescents; no specific reference to SBHCs
Multnomah County, OR 1115
Implemented 2/94
18% 100% 100% n/a Managed care organizations encouraged to contract with traditional public health providers; no specific reference to SBHCs
Memphis/Shelby County, TN 1115Implemented 1/94 80%+ 100% 100% n/a MCOs required to coordinate with traditional public health providers; no specific reference to SBHCs

a The 1915(b) waiver gives states flexibility in defining eligible providers and payment mechanisms for categorically and medically needy Medicaid recipients; the 1115 waiver, in addition to provider and payment flexibility, allows the state to define eligible populations and services.

b Primary Care Case Management (PCCM) is a “managed care” system that pays primary care providers to provide “gate-keeping” services. The primary care case manager is paid a special fee or an enhanced primary care rate to supervise specialty referrals and hospitalizations for their patients. The PCCM does not bear risk for patient use of services. Maryland and Massachusetts provide both HMO and PCCM options for Medicaid enrollees. Boston and Baltimore school-based health centers (through their sponsor agencies) can serve as PCCMs provided they or their sponsoring agency meet 24-hour care coverage requirements. Under the Maryland PCCM plan, providers are paid an enhanced primary care rate; in Massachusetts, the PCCMs receive a monthly case management fee.

Moreover, they were headed by directors willing to make the substantial time investment required to gather and analyze data concerning their managed care arrangements.

The school-based health center programs were asked to describe the following elements of their contracts or agreements: scope of services, payment mechanisms, pre-authorization requirements, and service coordination and information exchange policies. Survey responses, summarized in Table 3 on pages 8 and 9, indicate that negotiations with the managed care plans have resulted in a diverse set of agreements. The differences among them reflect alternative approaches to two main issues: the scope of services provided by the school-based health centers to plan members, and arrangements by which the centers are paid for their services.

Scope of services. Twenty of the 26 contracts authorize school-based health centers to serve as “secondary” primary care providers. As defined in these agreements, the health centers provide a specific set of services — typically well child visits and acute, episodic sick care — to the plans’ beneficiaries without pre-authorization by the plan. The centers do not serve as a medical home in that they do not manage referral and hospitalization services.

In Memphis/Shelby County, the Health Department contracts with five managed care plans to participate as a member of their provider networks. For those families that select the Health Department as their primary care provider, the school-based health centers may serve as the medical home for enrolled students who attend the two high schools with school-based health centers. The health centers are authorized to provide all services defined in the managed care contract, including medical services, mental health services (up to 45 visits per year), and preventive services. Substance abuse treatment is not included. In addition, the centers, through the Health Department, are responsible for providing 24-hour coverage and managing specialty and hospitalization care.

A few contracts define a narrow service package: one provides for comprehensive dental screening and treatment; another authorizes the screening component of the EPSDT examination; and three others authorize urgent or acute medical care only. The Bridgeport, Connecticut dental contract takes advantage of the full-time dentist and the dental operatories located in four of the Bridgeport school-based health centers. Services covered include diagnostic exams, prophylaxis, fluoride and sealant treatments, fillings, and emergency care.

Generally, the most significant uncovered service in the managed care contracts is mental health care. Frequently mental health comprises between 25 – 50 percent of the services utilized by SBHC enrollees. According to the survey, 16 of the 26 contracts authorize the centers to provide mental health assessment and treatment services to plan enrollees. Several of these, however, do not cover group counseling, an approach frequently used by school-based health centers. One barrier to inclusion of mental health services is the limited mental health care authorized by many state Medicaid plans. If the service has not been included in calculation of the capitation rate or if there is limited financial support for sub-acute mental health services, managed care plans may consider these to be potentially high-risk or high-use services that must be closely monitored. Sub-contracting for mental health may also be difficult in states that carve out services for the seriously mental ill as a separate program requiring a unique provider network and separate service agreements.

Health education, group counseling, and outreach are not routinely included in the contracts. Of 26 contracts, 7 provide for these services. The inclusion of health education and outreach in the service package may become more likely as the plans become more comfortable with the health centers and more oriented to early intervention efforts.

Financial arrangements. Fee-for-service reimbursement is the most common means by which the plans pay school-based health centers for services. Payment rates are based on a variety of factors including Medicaid and EPSDT fee schedules, fixed global visit rates, or a service-specific rate negotiated by the school-based health center and the plan. While fee schedules are frequently treated as proprietary information unavailable to the public, several centers reported receiving global visit rates of approximately $50.00 per visit.

Under two pre-paid arrangements, Multnomah and Memphis/Shelby County health departments allocate to the school-based health centers a portion of the per member/per month capitation fee for those students whose families select the sponsoring health department as their primary care provider. The financial risks associated with a prospective payment system are assumed by the sponsoring health departments. Health department representatives report, however, that although parents may designate the school-based health center as their child’s primary care provider, this has not occurred frequently. Parents may not be aware of the school-based health center option for their school-age children or may desire a provider who is accessible to the entire family.

The Bridgeport Health Department has contracted to provide services to participants in a local Medicaid dental plan. This plan, which receives a sub-capitation payment from five of the eleven Medicaid managed care plans in Bridgeport, has contracted with the Health Department for its school-based health centers to provide a full range of primary dental care, including assessments and fillings. For those eligible students who elect to receive their dental care at school, the dental plan will pay the health department $2.80 per member per month. While Bridgeport Health Department representative Kristine Hazzard acknowledges that the rate may not cover the cost of care, she notes that, “Two years ago we were providing the very same dental services as a public health service with limited-to-no reimbursement. At a minimum, this contract provides for financial remuneration that we’ve never had.”

Sub-capitation agreements present two financial challenges to school-based health centers. First, the initial contract between the sponsoring agency and the plan must provide for a payment that covers the cost of comprehensive services to school-age children. If the initial contract does not cover the cost of that care, neither will the sub-contract. For example, if the scope of services in the Medicaid contract does not include services, neither will the subcontract. Secondly, the school-based health center program must negotiate with the sponsoring agency to determine how much of the original capitation should be passed on to the centers. The process for negotiating sub-capitation payments requires on-going discussions and data gathering.

Managed care-sponsored school-based health centers. A new approach in managed care-sponsored school-based health centers is emerging in regions where Medicaid managed care penetration is high. A small number of HMOs that function both as managed care plans and community health centers have established centers in schools attended by large numbers of their enrollees. In Baltimore, Maryland, for example, Total Health Care has organized school-based health centers in three elementary schools. The centers provide triage for all students in the school regardless of their plan enrollment status, and offer full services to students affiliated with Total Health Care.

Few of the surveyed programs are recovering significant revenues under managed care agreements, and some report that Medicaid revenues have fallen sharply. The Memphis/ Shelby County Health Department has experienced a dramatic decline in Medicaid support since the introduction of TennCare, the state’s mandatory Medicaid managed care program. At present, six managed care plans are enrolling TennCare beneficiaries in Memphis, five of which have made agreements with the Health Department. With only a small number of enrollees selecting the Health Department as their primary care provider, most Medicaid revenues result from fee-for-service payments for specified services rather than capitation fees.

Table 4. Memphis/Shelby County School-Based Health Centers,Billing/Reimbursement Activity, 1993-95
SBHC Services Billed 78% 60% 45%b
Billed Services Paid 60% 40% 32%
Total Services Paid 47% 24% 15%
a. 1995 “Services paid” category may be underestimated because it does not include anticipated revenues for services billed in the last quarter.b. Excludes self-pay, unallowed and denied claims, sliding adjustments, and capped fees for health department and designated-managed care enrollees.

Table 4, above, documents the decline in Medicaid payments for school-based health center services in Memphis over the past two years.

The Multnomah County Health Department, which sponsors 10 school-based health centers, has secured a contract with only one of the eleven managed care plans serving Medicaid recipients. The Health Department is a member of that plan. The loss of fee-for-service payments by Medicaid and the limited number of students or their families who select the Health Department as their primary care provider are expected to result in an 86 percent decrease in Medicaid income for the school-based health centers, down from $188,000 in school year 1994/95 to $26,000 in 1996/97.

In Minnesota, Health Start, Inc. successfully negotiated comprehensive fee-for-service contracts with all plans serving Medicaid recipients in its service area and is also contracting with two plans for commercial enrollees. As a result, Health Start has strengthened its linkages to its patients’ other care providers and has been able to sustain its pre-managed care patient services revenues. This income, however, represents only 20 percent of the combined operating budget for seven centers.

Many in the school-based health care field express concern that the focus on managed care contracting may lead to a false impression that school-based health centers could become self-supporting through either prepayment or fee-for-service patient care revenues. According to Karen Hacker, director of adolescent and school health for Boston Department of Health and Hospitals, “School­based health centers will never be fully reimbursable through insurance alone. Not only are many students uninsured but much of what the centers do is not reimbursable through either traditional medical insurance plans or managed care contracts.” Bernice Rosenthal with Baltimore City Health Department agrees: “Because school-based health centers have a public health perspective, they will always need other dollars to exist.”

As the St. Paul experience suggests, even the most optimal conditions will not solve the fundamental challenge: paying for care to uninsured students and providing all students with a range of services not generally included in traditional health care arrangements.

To illustrate the additional difficulties of trying to marry a comprehensive health care model to a traditional medical insurance approach, health finance consultant Steve Rosenberg offers the neighborhood health center model as a case in point. After five years of grant support, the federal government attempted to secure funding for these “Great Society” anti-poverty programs by re-shaping them to fit within a Medicaid reimbursement structure.

Around 1972, the United States stopped looking at neighborhood health centers as a social model of health care and started looking at them as a medical model. This change was made so that the health centers could bill Medicaid. We made the change by having the predecessor of the Bureau of Primary Health Care define the Bureau Common Reporting Requirements (BCRR). The BCRR set the standards for health centers in such areas as scope of service, budget allocations, productivity, and how services are delivered. These rules essentially defined a medical model and did not support a broader social approach to care. Now, can we write similar rules for school-based health centers? Can we secure federal and state reimbursement dollars without narrowing the model so drastically that we take away the easy access, range of services, and all the other reasons that gave rise to these centers in the first place?

Other contract provisions

Pre-authorizations. Most fee-for-service contracts do not require pre-authorization by the plans to provide services described in the contract. Pre-authorization is necessary, however, if centers want to be reimbursed for services outside the scope of the contract. Baltimore City Health Department is the exception to this rule. The managed care plan with which it has an agreement requires the school-based health centers to seek pre-authorization for all services rendered to its enrollees. School-based health centers operated by the Boston Department of Health and Hospitals may or may not need to obtain pre-authorization, depending on which contract is involved and what service is provided. Under the primary care capitation sub-contracts in Memphis/Shelby and Multnomah counties, care is compensated under the sub-capitation and does not require pre-authorization if the sponsoring health departments are the designated primary care provider. If the student is enrolled with a different provider, pre-authorization for all services from that provider is required. Health Start contracts do not require pre-authorization for any of the physical and mental health services provided in the school-based health centers.

Pre-authorization policies are difficult for many centers, not only because pre-authorization requires maintaining accurate information on students’ plan enrollment and contact numbers, but also because pre-authorizations frequently must be secured while students wait to be served. In general, school-based health centers have hired few support staff. A single front-desk aide may be responsible for pulling medical charts, sending appointment reminders to students in classes, writing student passes to return to class, setting up new appointments, and maintaining order in the waiting room. Busy clinics will have difficulty meeting the administrative requirements of their managed care contracts without adding to operating costs and creating barriers to care for their patients.

The pre-authorization policy also has posed new questions for school-based health center providers. Does the commitment to increase students’ access to care require the center to treat students enrolled in managed care plans that have not negotiated agreements or that refuse to authorize service? Should the health center support a plan’s request to refer its enrollees back to their medical home and hope that the young people will follow through? Should the centers spend limited resources caring for students whose care is already paid for and organized by a plan? Some of the providers feel strongly that the pre-authorization policy is contrary to their mission of expanding access to care. Consequently, pre-authorization policies are not always heeded, the care is provided whether or not compensated.

Service coordination and information exchange. Managed care plans, particularly those operating under a Medicaid contract, have data reporting obligations to the state Medicaid agency. The precise nature of those data requirements are still being developed. The seven respondents all report that they provide information on patient visits to the managed care plans, primarily for claims processing. In Massachusetts, a common reporting form has been developed for school-based health centers to use with all managed care partners. Although most of the information flows from the school-based health centers to the managed care plans, Health Start in St. Paul can access information on emergency room utilization by their patients. Health Start also agrees to communicate with clinics in the health plan’s network. To protect their adolescent patients’ confidentiality, Health Start negotiated with the plans to assure that information on legally protected confidential services (contraceptive care, mental health services, and substance abuse treatment) would not be forwarded by the plan to the home.

Three Lessons Learned

For school-based health centers, negotiating with managed care plans has been hard work. Based on their experiences, the school-based health center programs offer three guidelines to building successful partnerships with managed care plans.

Understand the managed care perspective. Key to building a successful partnership is understanding the potential partner’s perspective. Representatives from the managed care industry note that plans, even those organized by non-profit entities, approach partnerships with school-based health centers as business ventures. It is important, therefore, to understand the organization and financing of managed care and how school-based health centers might fit within this model. What might compel managed care plans to collaborate with providers such as school-based health centers? Some of the more obvious reasons include: the ability of school-based health centers to help the plans meet certain state requirements (e.g. providing EPSDT exams to a specified percentage of their Medicaid enrollees); the easier access school-based health centers provide for adolescents; the greater likelihood that early intervention services may be provided; and the desirability of center sponsorship as a marketing strategy for the community.

As pointed out by Donna Zimmerman, many plans may resist relationships with school-based health centers because they do not have sufficient information about the centers. Educating the medical leadership and contract administrators about school-based health centers — what they do and how they are staffed — is an essential first step in building the relationship. Clinic tours, written materials (for example, protocols, parent permission forms, and clinic formulary lists), and meetings can help plans understand how school-based health centers function.

Market the Strengths of the Centers Some plans view school-based health centers as an opportunity to invest in primary prevention and are willing to explore the possibility that increasing access to care will improve the quality of care for school-age children — without triggering a cost explosion. According to Zimmerman, “We were successful with the managed care plans because we went in and said, ‘Look at the utilization of adolescents. They aren’t likely to go to your providers for care.’ And the plans agreed with us.” Today, Health Start has primary care contracts with all of the county’s managed care plans that serve Medicaid recipients as well as contracts for commercial enrollees. Although the administrative tasks associated with multiple contracts are complex, the impact has been largely positive, according to Zimmerman: “Our net receipts from Medicaid have been maintained, we’ve established open lines of communications with the plans, and have been able to tap into the plans’ resources for operational management and staff development needs.

A Managed Care Perspective
Sandra Maislen, Vice President of Professional Affairs with Neighborhood Health Plan (NHP), a managed care organization serving Massachusetts Medicaid recipients, offers critical questions that managed care plans like NHP are asking school-based health centers:

  • Are you a full service primary care provider?
  • What level of risk can you accept?
  • Will you be the primary medical home?
  • How will you manage 24-hour coverage?
  • How will coverage be provided 365 days a year?
  • Are your providers board-certified in pediatric/adolescent medicine?
  • If nurse practitioners are delivering care, where is the attending level oversight?
  • How will the HMO obtain clinical information?
  • How should the HMO pay for these services?
  • Does the HMO need to pay for these services?
  • What is the school-based health center product?
  • Can it meet standards and licensing requirements?
  • Has the HMO already paid another provider for these services?

Collect , Analyze and Use Data. While the St. Paul experience has been a model for many school-based health centers around the country, Zimmerman is quick to acknowledge that, in addition to the historical presence of managed health care in Ramsey County, Health Start has benefited from two decades of delivering care in schools and four years of billing Medicaid and other insurers for services to their beneficiaries. That experience meant Health Start knew the insurance status of its students, had excellent data on services provided, and could give managed care plans a record of care provided that had been deemed reimbursable under fee-for-service arrangements.

Sandra Maislen, Vice President of Professional Affairs for Neighborhood Health Plan of Massaschusetts (see box, left), represents a plan that is investing in school-based health centers. Twenty-one of the 31 school-based health centers in Massachusetts are sponsored by community health centers that participate in the Neighborhood Health Plan (NHP) primary care provider network. Because the school-based health centers have long been a part of their network, Maislen and NHP created an internal carve out from reserve funds for the school-based health centers. The strategy, according to Maislen, is to collect utilization and encounter data as evidence that the Massachusetts capitation rate for school-age children does not cover costs.

States as midwives and matchmakers: Facilitating partnerships between school-based health centers and managed care plans

The surveyed programs indicate that beyond the details of specific negotiations, the major challenge to developing relationships with managed care has been the unwillingness of some plans to come to the bargaining table. With the exception of Health Start, directors of the other six programs have been unable to secure contracts with all the managed care organizations that enroll Medicaid beneficiaries in their service area. While a number of factors may account for this reluctance on the part of the plans, the perception of the health centers is that the plans are not eager to share control of patient care utilization and resources with providers external to their networks. A critical role for state government has been to facilitate or encourage negotiations between the plans and the school-based health centers. If the school-based health center’s sponsor is itself an organizer of a plan and competitor with other plans in the community, those other plans may be reluctant to negotiate. Without state involvement, six of the seven program directors believe that school-based health centers will have difficulty initiating discussions with the plans and that the plans may remain unaware of the opportunities that school-based health centers represent.

State governments that have been most active in facilitating partnerships between the health centers and the plans historically have invested federal and state dollars in school-based health centers. As suggested in Table 2, the momentum of the Medicaid managed care movement has prompted state health departments and local providers to explore how they can encourage managed care to link with the centers. With the help of state health care financing agencies, states are attempting to develop supportive state policies, provide technical assistance, or utilize a combination of both to sustain the ability of school-based health centers to care for underserved students.

One state strategy for supporting school-based health centers in a managed care environment is to confer a preferential status on the centers through a carve out arrangement. The issue of carve outs or special treatment for provider types, services, or categories of beneficiaries deeply divides managed care plans and public health advocates and is a recurring theme in discussions concerning the role of safety net providers within managed care networks. The plans argue that management of costs and quality requires full authority to control service utilization. Public health advocates and safety net providers maintain that certain services such as family planning, or vulnerable populations such as the elderly or adolescents, may not be attended to adequately unless special provisions are made. To protect these services and populations, some states have carved out select categories and made them eligible for favorable treatment. In various states, these protected categories have included special needs children, the chronically mentally ill, and the aged. Service carve outs have included family planning, sexually transmitted diseases, mental health, and substance abuse services. Not all states implementing Medicaid managed care programs, however, have agreed to a carve out strategy and there is considerable variability among the states on the subject of carve outs.

Four states — Connecticut, Massachusetts, Delaware, and New York — while avoiding any explicit guarantees to school-based health centers, have used the state contracting process to require managed care plans serving Medicaid beneficiaries to link with school-based health centers. Through the Medicaid managed care Request For Proposals (RFP) process, these states obligate managed care plans to contract with the school-based health centers located in their service area. The specifics of the relationship — scope of services, authorization, financial reimbursement, information coordination — are not defined in the RFP but are left to the negotiations between the plans and the school-based health centers. To assist in the negotiation process, New York and Connecticut have developed model contracts. They have also devised service and staffing standards for school-based health centers as a way of assuring plans about the quality and content of care delivered at the centers.

For Boston Department of Health and Hospital’s Karen Hacker, the role of the Massachusetts Department of Public Health has been critical. “Without state pressure for change we would not be doing anything,” admitted Hacker. “When the state Medical Assistance office mandated linkages between managed care and school-based health centers as part of its contracting policy, it meant there was an open road ahead of us — not an easy one, but an open one.”

In Maryland, the Governor’s Office has drafted Medicaid reform legislation that would permit school-age plan members to seek health care from school-based health centers without pre-authorization. The students’ Medicaid managed care plan would be responsible for reimbursing care rendered by a school-based health center provider.

Other states, such as Colorado, have avoided even limited mandates, preferring to bring managed care plans and school-based health centers together voluntarily to explore the benefits of partnership. The state’s strategy is to demonstrate to the managed care plans and other insurers that school-based health centers can help plans meet quality and access standards to which they ultimately will be held accountable. A public-private task force on school-based health center policies and financing has provided technical assistance and written materials for insurance companies and managed care plans. The written documents include: a school-based health center benefits package; a cost analysis of school-based health center services; a set of accountability measures drafted as a requirement for contractual arrangements with insurers; and a two-county market share analysis using school enrollment data matched with Medicaid and selected managed care organizations.

The West Virginia Department of Health and Human Resources, in its Request for Applications (RFA) to its 1915(b) managed care program, established a financial incentive of up to two percent in additional capitation for plans to contract with public health care providers, including school-based health centers.

Minnesota has not adopted measures directed at linking school-based health centers with managed care. MinnesotaCare, the health reform legislation that has restructured financing and delivery of health care in the state, requires all managed care plans to develop action plans for addressing the health care needs of adolescent enrollees. In addition, under the prepaid Medicaid program, health plans must offer contracts to community clinics and public health departments. According to Zimmerman, these requirements were helpful to Health Start. It marketed its school-based health services to the managed care plans as an opportunity for the plans to effectively meet the state directives. In the future, Health Start may use its association with Neighborhood Health Care Network, a consortium of Twin Cities community clinics, to negotiate larger contracts, including risk-sharing, with the heatlh plans. Massachusetts, in a similar vein, requires its Medicaid health maintenance organizations to develop a plan for improving access to preventive and confidential services for adolescents. Because this requirement does not apply to the more than 1,300 primary care case management physicians who enroll 75 percent of Medicaid managed care beneficiaries, the reach of this requirement is limited.

Into the Future

Despite the challenges school-based health center programs and managed care plans have faced in negotiating mutually satisfactory agreements, these relationships represent a critical step forward for all involved. In agreeing to open their networks to school-based health centers, the managed care plans have acknowledged existing barriers to care, especially for adolescents, and the opportunities presented by the centers to overcome those barriers. School-based health centers, in responding to the challenges posed by the plans regarding their quality of care and accountability, are developing new skills and expertise that promise to strengthen school-based health care.

Perhaps critical to the future of these partnerships will be the ability of states to play a facilitative role, whether through encouragement or regulatory means, in brokering relationships between school-based health centers and managed care plans. As these relationships continue to evolve and mature, state oversight will likely be critical in identifying emerging clinical, financial, and administrative issues.

The continued development of outcomes measures or accountability efforts by managed care plans, major health care purchasers and state offices offer a particular opportunity for school-based health centers to demonstrate how they can assist the plans meet quality-related requirements. A shared commitment to patient care outcomes, as the St. Paul experience attests, eases the negotiations between the plans and the school-based health centers. As the seven school-based health center administrators report, however, negotiating these contracts can be a complex and demanding process. The challenge for the future will be the development of contractual relationships that, through the defined scope of services and payment structure, recognize the mix of medical and psycho-social services provided at the centers and support the continued availability of comprehensive care to school-age children.