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Local Health Departments in a Managed Care Environment

Direct Delivery

Local Health Departments Involvement in the Direct Delivery of Personal Health Care and Related Services


Rob Fulton, M.Ed., Director of Public Health, Ramsey County Department of Public Health, St. Paul, MN.

Donna J. Zimmerman, Director, Government Programs, HealthPartners, Minneapolis, MN.

Bonnie J. Sorenson, M.D., Director, Volusia County Public Health Unit, and Vice President, St. John's River Rural Health Network, Daytona Beach, FL.

As indicated in the previous session, one of the most controversial questions often raised by the implementation of Medicaid managed care in a community is what future role the local health department (LHD) should play in the delivery of personal health care and related services. This session explored the issues associated with LHDs' involvement in direct service delivery from a number of different perspectives.


Rob Fulton drew upon his own LHD's experience and discussed what issues LHDs must address if they wish to continue providing certain services to Medicaid recipients as subcontractors to managed care organizations (MCOs).

Among the key things he identified that LHDs must focus upon were the following:

  • Identify those services that are important to the community, consistent with your mission, and that you do a good job providing. Be able to accurately identify the costs of providing your services, as well as your areas of particular expertise (e.g., special populations).
  • Work hard to understand MCOs, how they operate, what requirements they must meet to serve Medicaid recipients in your State, and how you might best help them meet their objectives and the community's needs. Approach the MCOs not as adversaries, but as potential partners in improving community health.
  • Be prepared to do what it takes to carry out new roles, including the subcontractor role. This may involve staff training, new systems, etc.
  • Continue to organize for public health and never forget your mission.

Donna Zimmerman approached the issue of LHDs serving as subcontractors to managed care organizations from a health plan perspective. She discussed a number of activities that HealthPartners, one of the largest health maintenance organizations (HMOs) in Minnesota, carries out with LHDs and school-based clinics.

In discussing what LHDs need to do to become attractive subcontractors to health plans, she recommended, among other things, that LHDs:

  • Get to know the plans and the networks, but don't assume that the plans are aware of all the things that the LHD does in different service areas and for different populations.
  • Develop a package of "niche" services that are needed by the plan and that the LHD is particularly skilled in providing.
  • Bring data on your utilization and outcomes to your meetings with plans.
  • Develop systems for billing and care communication/coordination.


Finally, Dr. Bonnie Sorenson discussed her LHD's experience operating as a fully capitated health plan under the Florida Medicaid program. The LHD found that it could not remain financially viable providing care under the State's capitated payment system. There were several reasons for this, including:

  • The high cost of providing for the recipients medical and related social needs (which the LHD had traditionally done), compared to a much more circumscribed set of purely medical services.
  • Problems of adverse selection that the LHD experienced.
  • The difficulty the LHD encountered, given the State's regulatory policies, in expanding to neighboring geographic areas. This expansion potentially would have enabled the LHD to spread its overhead costs and risks over a substantially larger enrolled population.

Dr. Sorenson recommended, among other things, that LHDs exploring the possibility of becoming full risk providers should fully understand relevant accreditation requirements, carefully analyze their own utilization and costs, and make the necessary investment in management information systems (MIS).


Medicaid Managed Care Arrangements: Local Health Department and Community and Migrant Health Center Experiences, Case Study of the Ramsey County Health Department and the West Side Community Health Center, National Association of County & City Health Officials, 1995.

House File 1303, 1997 Minnesota Legislative Session, billed introduced, but not passed at the time of the workshop.

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