MCOs must cultivate networks for long-term care

June 1, 2012

Managed care organizations need to look toward the future market in long-term care.

Key Points

"Providing managed care services for this population could be a great opportunity for the health plans and the members," says Sherry Rohlfing, principal, DeltaSigma, LLC, a healthcare consulting company, based in Littleton, Colo. "These are the people for which managed care can actually make a difference in regard to access, quality and the overall reduction in the cost of inappropriate care."

New competencies insurers might develop include collaborating with community advocacy groups and expanding their current provider networks to include specific long-term care providers. Not all organizations or practices will be used to working under managed care models. In some cases, reimbursement arrangements will need to be created from the ground up.

Fee-for-service Medicaid remains the largest payer of LTC services. Although half of all Medicaid beneficiaries are enrolled in managed care, payments to MCOs comprise only 20% of total Medicaid spending, according to a February report by the Kaiser Commission on Medicaid and the Uninsured. The disabled and elderly, who receive the most costly Medicaid services-including long-term care-are typically covered under fee-for-service.

According to Genworth Financial, care choices are increasing. In 2008, there were 9,200 certified home-healthcare agencies, but the number has grown to more than 11,000 today. At the same time, the cost of care in home, community and facility settings has shown five-year annual growth as high as 5.71%. Nursing home care in a private room has increased 4.23% over last year alone.

The need to manage care for the more costly segments of the population has become so urgent that lawmakers included a dual-eligible pilot program in the Patient Protection and Affordable Care Act (PPACA) that would allow 15 states to test ways to effectively integrate the care for duals.

As a commitment to the project, the Medicare-Medicaid Coordination Office has awarded contracts of up to $1 million to each of the 15 states to design "person-centered approaches" to coordinating care across primary, acute and behavioral health, and long-term services for dual eligibles. After the states complete the design phase, they will be eligible to apply for additional Innovation Center funds for implementation.

Funding is a significant factor in driving solutions. One dual pilot in California represents $150 billion over five years.

According to Gary A. Snider, chief operating officer for Center for Elders' Independence (CEI) health plan, the California pilot is "the single largest procurement in U.S. history." CEI is a not-for-profit health plan that participates in the national Program of All-inclusive Care for the Elderly (PACE), which is operated under a cooperative agreement with Medicaid and Medicare. After 40 years in existence, PACE has only 30,000 enrollees in 82 service areas across 29 states.

"The state and Feds want the managed care plans to take these people off their hands," says Snider.

CEI is participating in the pilot along with Anthem Blue Cross of California and Alameda Alliance in Oakland, Calif. He says many of the recent pilot project proposals seem to resemble the basic model of the PACE program. PACE's integrated and capitated financing mechanism has been shown to lower the cost of care by 10% to 20% compared to dual-eligible members in nursing homes. For example, PACE members require an average of fewer than three days of hospital care annually.