To date, there are 10 states that have signed a memorandum of understanding with the CMS to launch dual-eligible demonstrations under the agency's Financial Alignment Initiative, which was established by the Patient Protection and Affordable Care Act to better coordinate care and reduce costs for the nation's 9 million low-income and disabled dual eligibles. Enrollment is about to start or has already begun for these programs. But each state's demonstration is different, with some targeting all their dual eligibles and others signing up only segments of the population such as seniors or those needing long-term care.
An inability to demonstrate savings could give healthcare providers a basis for arguing that the fee-for-service model— which has been criticized for leading to fragmented care for this sick and vulnerable population—should be continued instead of moving to a managed-care model.
Other experts agreed that the CMS will not have an easy job in evaluating whether the state programs achieved savings. Not only are the states focusing on different populations, they also are using different ways of measuring the quality of care being received.
One of the goals of the Financial Alignment Initiative is to reduce costs for the very expensive dual-eligible population, which currently totals about $350 billion a year in federal and state spending. It's hoped establishing better coordination of care and benefits will reduce hospital admissions, emergency department visits and admissions to nursing homes. Many experts see better management of dual eligibles as one of the keys to controlling costs in Medicare and Medicaid.
Under the demonstration, participating states receive a capitated payment combining Medicaid and Medicare Parts A, B and D, minus agreed-upon savings. For instance, New York and South Carolina have agreed to cuts of 1% in year one, 2% in year two and 3% in year three.
Experts say another challenge is that most of the participating states have made enrollment in the demonstrations voluntary. In Massachusetts, for instance, it's estimated that more than 95,000 residents are eligible for One Care, its dual-eligible demonstration program, but only 13,191 people had signed up as of April 1.
Many dual-eligible beneficiaries may decide to opt out of the demonstrations because they have never been in managed care before and may be satisfied with the ad hoc network of providers they are seeing, said MaryBeth Musumeci, associate director of the Kaiser Commission on Medicaid and the Uninsured.
Beyond the dual-eligible demonstrations, there are several other ways that states are trying to coordinate care for Medicaid patients and dual eligibles, such as accountable care organizations and health neighborhoods, which are built on physician-led teams providing convenient, evidence-based care. It's possible that a dual-eligible beneficiary could opt out of a Financial Alignment Initiative demonstration and participate in one of these other coordinated programs, said Margaret Murphy, associate director of the Center for Medicare Advocacy, a consumer-based group for seniors. That could make it even harder to evaluate cost trends for dual eligibles, she said.
A CMS spokeswoman said the agency will separately evaluate each state demonstration and that each will be assessed for its effectiveness in improving quality and reducing costs. She said findings may vary across different demonstrations due either to design differences or different local market dynamics.
