There are growing worries about the future of an ambitious federal demonstration aimed at improving coordination of care for millions of low-income and disabled Americans who are dually eligible for Medicaid and Medicare.
Health plan leaders and state officials expressed concern during a webinar event on April 16 that current federal-state demonstrations in 11 states may not yield the cost savings the Obama administration and the states hoped for – at least in the projected time frame.
“We're seeing that getting the mandated cost savings that were projected on the front end may be more difficult to reach than CMS anticipated,” Richard Bringewatt, co-founder and chair of the SNP Alliance, which represents special needs health plans, said during an Atlantic Information Services webinar about the demonstrations. Several of the alliance's member plans are involved in the initiatives.
The main reason why states are struggling to achieve their cost-savings goals is that beneficiaries' participation is optional and many are deciding to opt out, the plans say. Out of the 1.7 million people eligible to participate in the 11 states, 343,355 have signed up as of April 1, according to at Community Catalyst, a consumer advocacy group based in Massachusetts.
Some states are struggling with the opt-out problem more than others. “We have seen a pretty high opt-out rate of about 50%, which is higher than we had hoped,” Mari Cantwell, director of California's Medi-Cal program, said during the webinar. “The two major reasons for the opt-out are a general fear and concern about changes in healthcare. We've also struggled with some coordinated efforts by different types of providers… who have been concerned about rates.”
The demonstrations were authorized by the Affordable Care Act to improve care and reduce costs for the more than nine million dually eligible beneficiaries, many of whom have severe chronic conditions and physical or behavioral disabilities. Under the three-year Financial Alignment Initiative, led by the CMS' Medicare-Medicaid Coordination Office, participating states are responsible for coordinating the Medicare and Medicaid benefits and spending for the dual-eligible beneficiaries through contracts with private managed care plans.
The states receive a capitated payment combining Medicaid and Medicare, minus agreed-upon savings. The plans, which are paid a risk-adjusted capitated rate, generally are responsible for providing the full range of care, including long-term care, though each state's program is somewhat different.
The impetus for the demonstration is that even though dual-eligible beneficiaries make up only 13% of the population enrolled in both programs, they account for 40% of total Medicaid spending and 27% of total Medicare spending. Experts say the lack of coordination results in poor quality care and unnecessarily high costs and that addressing this is one of the biggest opportunities for Medicaid and Medicare savings.
But advocates for low-income and disabled patients have urged that enrollment be voluntary and that the coordinated-care programs be phased in gradually because of the medical, social, and economic vulnerability of this population, which includes severely disabled adults of all ages. "The status quo is really unsustainable,” said Renee Markus Hodin, program director at Community Catalyst, a consumer advocacy group. “Improvement in quality matters a lot, and that will ultimately result in savings -- just not in this short time frame.”
But Bringewatt said early evidence from states that are the furthest along in the demonstrations indicates that the demonstrations may not reach the savings goals negotiated with the CMS. He cited Massachusetts as an example. In 2011, Medicare and Medicaid spending on duals in Massachusetts totaled $3.85 billion. As a result of the state's demonstration that launched in 2013, the CMS expected a 1% spending reduction by the end of 2014, 1.5% in 2015 and 4% in 2016. The state recently revised the 2015 savings goals to 0.5% and the 2016 goal to 2%. It's unclear if it met the first year goal.
California's demonstration has also been struggling to achieve savings. California Gov. Jerry Brown flagged the demonstration in his annual budget proposals as costing rather than saving the state money. He said "if these factors are not improved by January 2016, the (demonstration) would cease operating effective January 2017."
State officials and health plans say one problem is that some healthcare providers have told their dual-eligible patients they will stop serving them if the patients enroll in the managed care demonstrations. “They are trying to reinforce that fee-for service is more beneficial,” John Wallace, chief operating officer of L.A. Care Health Plan, said during the webinar.
Various managed care plans participating in the dual demonstrations around the country also have reported trouble locating and contacting beneficiaries who did not opt out and were passively enrolled. That has made it difficult or impossible to conduct an initial medical assessment and create a care plan for the members.
“It is critical that plans get an assessment done on a many new members as possible,” said Tom Standring, vice president of Medicare at Molina Healthcare, Inc. “It's been difficult to reach members. We're getting a file and many times the information is incorrect or incomplete.” Molina is participating in demonstrations in California, Illinois, Ohio, South Carolina and Texas.
Despite the struggles, plans and state officials say they hope the CMS will acknowledge that quality of care has improved for dual-eligible patients for whom the plans have been able to manage care and services. The plans say they have experienced a high retention rate. “Once members are in managed care and providers are able to get their arms around them, they are noticing a better quality of care,” said Martha Smith, chief dual program officer at Health Net.
Late last year, the National Association of Medicaid Directors sent a letter to the CMS asking about the future of the demonstrations. “We believe federal policymakers must begin to engage with states to plan for the next steps for demonstrations," the Medicaid directors wrote. "States are eager to understand CMS' long-range work plan for the demonstrations."
The CMS replied in January that it was “too early to make any conclusions about the success of the demonstrations.” The agency said it plans to release evaluations of demonstrations in Washington state and Massachusetts in the first half of 2016.