Ambitious programs aim to manage duals

July 1, 2012

Efforts to reduce outlays are generating initiatives to better manage the care for some 10 million dual eligibles.

WASHINGTON – Efforts to reduce federal and state outlays for healthcare are generating a host of initiatives to better manage the care for some 10 million dual eligibles. This population comprises only 18% of Medicare fee-for-service beneficiaries, but more than 30% of program spending. Similarly, they account for about 15% of Medicaid enrollment and 40% of state healthcare spending.

Various programs over the years attempted to improve care coordination for these high-cost patients, but have failed to attract enrollees, reduce costs or effectively integrate Medicare and Medicaid payments and requirements. The provider-based Program of All-Inclusive Care for the Elderly (PACE) has few participants, and most dual-eligible special needs plans are not fully integrated with the states.

Many hope that a large demonstration program being launched by the Centers for Medicare and Medicaid Services (CMS) in collaboration with state Medicaid agencies will establish more effective programs for managing needy patients. One test approach is a capitated model that involves negotiating contracts between CMS, the state and health plans. An alternative managed fee-for-service (FFS) program calls for states to finance care coordination for duals that remain in Medicare FFS.

Savings from either model will be shared by CMS and the state in order to reduce some of the conflicting financial incentives for coordinating coverage.

The CMS Coordinated Health Care Office is working with 26 states interested in participating in the demonstration, most looking to adopt the capitated model.

The process involves negotiating memoranda of understanding with each state and posting them for public comment. The agency also promises to improve state access to Medicare patient data, including profiles on each state's dual population. The goal is to improve quality of care, reduce costs, ensure duals have full access to services and improve coordination between federal and state initiatives.

However, a number of analysts have raised concerns about the demonstration, which is much larger and more complex that the usual CMS pilots. Hospitals and physicians fear that efforts to eliminate duplication of services could curb access to care for needy patients, along with revenues. The Alliance of Specialty Medicine and other interest groups propose that CMS scale down the pilot and delay the Jan. 1, 2013, implementation date to better resolve these issues.

BENCHMARKING RESULTS

Robert Berenson of the Urban Institute similarly says that the size and scope of the demonstration makes it more like a waiver program. Evaluation will be difficult, he says, because shifting a state's entire dual population into the demo without any controls means that the approach can only be compared to the previous program.

MedPAC also raises concerns about whether enrolling a state's entire dual-eligible population into a health plan will yield useful information on alternative means for caring for the beneficiaries. Many health plans lack experience with capitated systems that assume risk for providing both Medicare and Medicaid benefits, the Commission says, and the large size of the initiative makes it more like a broad program change than a way to test a new coverage approach.

Larger, commercial plans stand to gain from this new initiative, despite broad uncertainty about how three-way contracts will be negotiated, how upfront savings will be calculated, and what standards and quality measures will apply. Insurers support the proposed "passive enrollment" process, but others fear it will be confusing to patients and providers.