Late News: Backing out

Reality is squeezing down what had been a massive pilot project targeting the disproportionately expensive care for Americans enrolled in both Medicare and Medicaid.

More than half of the states that applied to participate in the controversial CMS demonstration have either dropped out or delayed their programs, according to the CMS and health policy experts.

Among the 26 states that applied to enroll 3 million beneficiaries in the CMS Financial Alignment Initiative, six have dropped out or opted for different “customized” plans and nine have delayed their start dates. The ambitious program was authorized by the Patient Protection and Affordable Care Act.

Dual-eligibles make up 15% of Medicaid enrollees and consume 39% of its expenditures, said Melanie Bella, director of the Medicare-Medicaid Coordination Office at the CMS. Likewise, dual-eligibles account for 18% of Medicare beneficiaries and 31% of its budget.

Advocates for beneficiaries and providers have criticized the state projects for their size, scope and aggressive timeframes, which had some starting as soon as early 2013 and the rest by January 2014.

But none may launch this year and few by early next year. “The timelines were always too ambitious; it's taking even longer to get stuff set up than they thought it would,” said Kevin Prindiville, deputy director of the National Senior Citizens Law Center.

Three states—Arizona, New Mexico and Tennessee—officially announced they are dropping out of the program, said Caroline Pearson, vice president at Avalere Health. Meanwhile, Oregon, Minnesota and Wisconsin are looking to change their proposals into ones that might fit other CMS projects, a CMS official said.

Nine other states have acknowledged publicly or to health policy experts that they will delay their programs, including three of the six that have received CMS approval to start: California, Massachusetts and Washington. Meanwhile, Hawaii, Iowa, Michigan, Missouri, New York and Vermont have not received approval but also plan to delay their start dates, according to sources tracking the demonstration.

A common reason cited for the delays is the rate-setting process for insurance plans that would be responsible for managing dual-eligibles' health to improve care while reducing spending. “It's taken a long time to figure out what the rates are going to be, and that's an ongoing issue,” Prindiville said.

Insurers disagreed. Joe Moser, interim executive director of Medicaid Health Plans for America, said in a written statement that the delays chiefly stemmed from negotiations between states and the CMS. “Working out the paperwork, setting the rules, communicating the rules to health plans, and then making sure the health plans are ready to provide coverage has taken longer than some had hoped or expected but is not surprising to us given the scope of the undertaking here,” Moser said.

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