Story updated Aug. 4, 2017.
A federal experiment that tests better ways to manage benefits and care for low-income and disabled Americans is showing signs of saving money after struggling out of the gate.
Washington, which was one of the first states to launch a demonstration under the national alignment effort in 2013, has seen its initiative to improve care for people dually eligible for Medicare and Medicaid generate just over $60 million in Medicare savings over the first two years of the experiment, according to a federal evaluation.
The federal surveyors didn't have enough data to calculate Medicaid savings from the demonstration. Federal spending data show that Washington has seen a $93 million reduction in Medicaid spending on hospital services, which includes inpatient, outpatient and ER use from fiscal 2014 to 2016. It is unclear how much of the savings stemmed from the duals demonstration.
"This is like care coordination on steroids," said Alice Lind, manager of grants and program development for Washington's Medicaid agency. "We require a very detailed assessment, including a person-centered care plan, which means the client sets goals that are meaningful for themselves."
To date, there are 14 duals demonstrations in 13 states, and all but one of the initiatives were launched under an Affordable Care Act-created program. Duals often have chronic conditions and require costly care.
Although dual-eligible beneficiaries make up only 13% of the population, they account for 40% of total Medicaid spending and 27% of total Medicare spending.
But the voluntary duals demos have struggled with high opt-out rates. Some duals skipped out of the program on the advice of their doctors, who prefer fee-for-service programs, the CMS found. Insurance companies involved in the efforts have had trouble tracking down enrollees due to high rates of homelessness and frequent moving.
Earlier this year, the Trump administration made clear that the Obama-era initiative needed to generate real quality improvements and cost savings in order to continue or expand into other states.
The federal evaluators' findings paint a more promising future for the state care-coordination efforts, experts say.
"There has been a lag in the data, and people have been waiting to see this piece of it," MaryBeth Musumeci, an associate director at the Kaiser Family Foundation's program on Medicaid and the uninsured.
The CMS will weigh whether the experiments have saved money without adversely impacting quality of care, or if they saved money and improved care, as it considers replicating the programs, Musumeci said.
Unlike most other demonstration states, Washington used a managed fee-for-service model to offer duals a full range of services. Other states hired insurance companies to provide care.
Washington's health home model partners high-risk patients with multiple chronic conditions with a care manager who uses motivational interviewing, education in self-management, and other assistance to improve health conditions.
Massachusetts' duals demo is the next program slated for federal evaluation. That state's demonstration uses managed-care plans and also launched in 2013.
CMS officials previewed the Massachusetts evaluation findings at a meeting last month and said they were pleased with the results, according to Stephanie Anthony, a director of Manatt Health Solutions, which has advised states on duals demos.
The CMS didn't release numbers, but Anthony thinks Massachusetts' savings could be higher than Washington's since more services may be overseen under a capitation versus fee-for-service model.
It's still unclear how much the states' Medicaid programs are saving thanks to these experiments, and future reports must address that, according to Barbara Edwards, a former Ohio Medicaid director and principal at the consulting firm Health Management Associates.
States bear the startup costs on getting the demonstrations off the ground and some have already complained to federal evaluators that launching the programs was more expensive than anticipated.
"If you can't demonstrate cost-effectiveness for states it won't be sustainable," Edwards said.
An edited version of this story can also be found in Modern Healthcare's Aug. 7 print edition.
