The CMS now intends to increase payments in 2016 for health plans that cover people who are dually eligible for Medicare and Medicaid and are enrolled in one of the 12 state-administered demonstration programs intended to improve their care.
Late last month, the CMS revealed that it had been underpaying health plans that enroll large numbers of so-called dual-eligibles and solicited feedback on ideas for paying the plans more accurately. However, the agency noted at the time, any bump wouldn't come until 2017.
But now the CMS office that handles dual-eligible beneficiaries wants to move faster and is developing a strategy to increase pay sooner for plans participating in the Obama administration's demonstration program intended to better coordinate benefits for the duals population, who are eligible for both programs because they are both low-income and either disabled or elderly.
Most of the state-administered demonstration programs launched under the Affordable Care Act initiative rely on private health plans to administer benefits and coordinate care for enrollees.
Health plans participating in that Affordable Care Act program, the Financial Alignment Initiative, would see higher rates starting next year, according to a Nov. 12 notice (PDF) from the agency. All other plans with duals will still have to wait until 2017.
The announcement came just days after the CMS announced it wanted to develop a separate star-rating system for health plans participating in duals demos, which have enrolled about 400,000 people in 12 states. There are 9.1 million dual-eligible beneficiaries in the U.S.
“These changes will be a boon to the stability of the duals demonstration programs,” said Meg Murray, CEO of the Association for Community Affiliated Plans, a trade group.
John Baackes, CEO of L.A. Care Health Plan, which is participating in the demonstration in California, said a rate increase would "help make these important programs that are breaking new ground with integrating Medicare and Medicaid benefits for our highest cost members more financially sustainable."
Others plans, however, said they remain concerned that they will receive no immediate financial relief for their other products that enroll large numbers of the same population of patients.
“We would support applying that methodology to all plans serving large proportions of duals in the 2016 plan year,” said Elizabeth Goodman, WellCare's vice president of public policy and government affairs. Otherwise, she said, the policy would result in "a substantial payment inequity" between the two types of plans.
The CMS is still working out the logistics of providing the pay bump to plans in the Financial Alignment Initiative, so the increase won't take place until after Jan. 1. When it arrives, the agency plans to retroactively enhance payments back to the beginning of 2016, according to the notice.
The plans have struggled with high opt-out rates that have made it difficult for them to get a return on the millions they invested to launch the coverage. Only 25% of the beneficiaries eligible to participate have enrolled.
The financial squeeze has caused some plans to drop out of the programs or abandon plans to participate.
The Obama administration appears to be working hard to keep the initiative afloat. Even though duals make up less than 8% of the 120 million people enrolled in Medicare and Medicaid, they account for 35% of all dollars spent by the two programs.
“They want to make it more viable for plans to stay in the program and have it be successful,” said Tom Kornfield, a vice president at the healthcare consulting firm Avalere who previously worked for the CMS and helped develop rates for the dual-eligible demonstrations.