[NYAPRS Enews] KFF: Focus on Managed Care Demos for Medicare and Medicaid Beneficiaries

[Harvey Rosenthal]

Duals: The National Health Reform Experiment We Should Be Talking More
About

By Drew Altman, President and CEO, Kaiser Family Foundation


The Center for Medicare & Medicaid Services (CMS) and 26 states are
moving to launch a large scale managed care demonstration project
potentially involving millions of the poorest, sickest, most expensive
Medicare and Medicaid beneficiaries, the so-called dual eligibles. The
experiment is getting more and more attention from policy experts, but
with controversial issues like the survival of the Affordable Care Act
and converting Medicare to a premium support program grabbing the
limelight, it has otherwise flown under the radar screen.

The 9.1 million dual eligible beneficiaries represent just a small share
of the 97 million beneficiaries served by either Medicare or Medicaid
but account for about 35 percent of all dollars spent by the two big
programs. As a group they are sicker than other Medicare beneficiaries
-- half have three or more chronic conditions and six in ten have
cognitive limitations, leading to increased use of health and long-term
care services. While most are over age 65, four in ten are younger with
permanent disabilities. Two of three are women. A striking 56 percent
have incomes of less than $10,000 per year. (Kaiser.EDU,
Medicare/Medicaid Dual Eligibles
<http://www.kaiseredu.org/Tutorials-and-Presentations/Dual-Eligibles.asp
x> .)

Of the 26 proposed state demonstrations, most are planning capitated
managed care models, but some propose using a managed fee-for-service
approach. For the capitated model, states and the federal government
will enter a three-way contract with private managed care companies to
manage the care of the enrolled population. Medicare, which mainly pays
for acute care, and Medicaid, which mainly pays for long-term care, will
blend payments into one rate, with savings taken off the top for both
Medicare and Medicaid. The demonstration is moving quickly; half of the
26 states are looking to implement either the capitation or
fee-for-service model in 2013 and others in 2014. Both the challenges
and the potential of this health reform experiment are enormous. (Dx For
A Careful Approach To Moving Dual Eligible Beneficiaries Into Managed
Care Plans, Health Affairs, June 2012
<http://www.kff.org/medicare/med060512oth.cfm> .)

  <http://www.kff.org/medicaid/8312.cfm> 

Analysis by researchers on our staff and at the Urban Institute shows
that while the duals as a group are higher utilizers than other Medicare
beneficiaries, a smaller subset of duals are very high utilizers: 2
million of 9 million duals in 2007 (the last year for which merged
Medicare and Medicaid data were available) were responsible for 60
percent of Medicare and Medicaid spending; the remaining 7 million duals
accounted for 40 percent of spending (The Diversity of Dual Eligible
Beneficiaries <http://www.kff.org/medicaid/7895.cfm> ). 

Some states will pursue broad demonstrations while others may pursue
more targeted approaches, focusing on groups with recurring high
expenses, such as nursing home residents. If states and health plans
could target their efforts and more effectively coordinate the care of
the very high utilizers, the benefits to both beneficiaries and the
programs could be quite large. 

In the capitated model, managed care companies will strike deals
providing front-end savings to Medicare and Medicaid to manage the care
of this population. The real challenge will be to assemble the delivery
networks at the local level to effectively manage the broad range of
services duals use, including behavioral health, pharmacy,
community-based and institutional long-term care services, and a full
range of acute care services. Managing care for a population that
includes some who are very reliant on long term care, in particular,
will require developing new networks of services for many managed care
companies. So will managing care for a population with a high incidence
of cognitive and mental health problems. Very few health plans now have
the necessary experience to manage the care of this complex population
and it will take time to develop new arrangements for appropriate
services. 

Medicaid is a federal-state program administered by the states and
Medicare is a federal program, both with different populations and
benefits (Medicare's Role for Dual Eligible Beneficiaries
<http://www.kff.org/medicare/8138.cfm> ; Medicaid's Role for Dual
Eligible Beneficiaries <http://www.kff.org/medicaid/7846.cfm> ). It is
predictable that there will be federal-state control issues to work
through as a demonstration program involving a merger of both programs
with private plans evolves. None of these challenges are reasons not to
undertake the demonstration, only to recognize that implementation will
take careful planning and time because the details of delivering care
and services will matter. 

I learned first-hand about the challenges of developing new service
networks in the early days of Medicaid managed care in the 1980's, as
Human Services Commissioner in New Jersey. We established the first
state-run, federally-qualified HMO for Medicaid. It achieved front-end
savings and some ability to reallocate more of the Medicaid dollar to
primary care. But we never were able to build the network of providers
to more effectively manage care to improve outcomes or lower costs, for
a population far less complex than the dual eligibles are.

Across the country Medicaid managed care slowly replaced fee for service
for children and their parents but it never became the huge cost saver
it was originally expected to be. Thirty years after it began to gain
momentum Medicaid managed care is now moving to higher cost populations
where the potential for savings are thought to be larger but the risks
to sick patients are also greater.

With the spotlight on the ACA and Medicare and Medicaid budget
challenges, this experiment involving millions of some of the highest
cost, sickest people served by public programs has so far been
under-reported. Eventually, covering this story will require getting
inside delivery systems and interviewing policymakers, providers, and
especially patients and their families, just the kind of journalism news
organizations are hard pressed to do with their frayed budgets. This is
not a breaking story a reporter can cover in one day. It will never have
the drama of the highly politicized ACA and Medicare wars. But it
deserves attention beyond our world of health policy.

Success in the dual eligibles demonstration could help reduce federal
and state health spending in both big health care entitlement programs
and improve the health of a very needy population. But the pressure to
save money always cautions prudence, patience, and in this case careful
targeting and customization of services, when large numbers of
low-income people with disabilities and serious illnesses are involved.

http://www.kff.org/pullingittogether/dual-eligibles-health-reform.cfm

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