Feds OK Calif. move to put dual eligibles into managed-care plans

California on Wednesday became the fifth state—and by far the largest—to win approval of a CMS demonstration project that will put beneficiaries dually eligible for Medicare and Medicaid into managed-care plans.

The agreement between the California Department of Health Care Services and the CMS (PDF) will provide a single, capitated monthly payment for providing services for about 456,000 dual-eligible enrollees, beginning in October. While that figure is significant, it is about half as much as Democratic Gov. Jerry Brown requested in early 2012.

The CMS drew heavy criticism last year for the scope and pace of the Financial Alignment Initiative, which stems for the Patient Protection and Affordable Care Act and seeks to find a way to rein in costs for a disproportionately expensive population of patients.

Dual eligibles are among the highest-cost users of healthcare services in California's Medicaid program, Medi-Cal, accounting for 25% of its spending, according to DHCS.

California appears more aggressive in its implementation of its program, known as Cal MediConnect, compared with the other four states—Illinois, Ohio, Massachusetts and Washington—that have also signed agreements with the CMS for the pilots. The Golden State, for example, will start with passive enrollment, meaning dual eligibles will automatically get transferred into the program. However, Illinois, which brokered an agreement with the department this month, will start with voluntary enrollment in October, followed by passive enrollment in January 2014.

California's three-year agreement will affect dual eligibles in Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo and Santa Clara counties. Enrollment is expected to take 12 months to complete in all counties, except for Los Angeles, where it will take 15 months. Enrollment in Los Angeles County is capped at 200,000.

Some groups remain concerned that vulnerable enrollees will suffer as the experiment plays out.

“The agreement between DHCS and CMS reveals that significant work remains to be done to ensure that low-income older adults and persons with disabilities will be protected,” Kevin Prindiville, deputy director of the National Senior Citizens Law Center, said in a prepared statement. “The combination of complexity, size, speed and cost savings raises serious concerns about how beneficiaries will fare in this new system.”

Robert Berenson, a fellow at the Urban Institute, said he is pleased the number of dual eligibles impacted is far less than originally proposed and is evidence that the CMS is listening to concerns raised by critics. “It's still too big, but it's a lot less too big,” he said.