Some Democrats Join Criticism (with Chart: Inpatient Utilization and Emergency Department Visits Are Lower for Mercy Care Dual Eligibles Versus Fee-for-Service)
Reprinted from AIS's HEALTH REFORM WEEK, the nation’s leading publication on the business implications of the massive changes for the health industry mandated by reform.
By James Gutman, Managing Editor
July 30, 2012 Volume 3 Issue 15
The likelihood that the giant new integrated care initiatives under the health reform law for Medicare-Medicaid dual eligibles will be delayed and perhaps even cut back appears to be increasing. And in an unusual election-year reform-law scenario, it is largely Democrats and liberals who are criticizing the Obama administration’s actions on the duals demonstration program, while several Republicans are defending them.
The situation is coming to a head now because the Federal Coordinated Health Care Office, known as the duals office and created by the reform law, intends to start selecting states as early as August to receive funding for large-scale demonstration programs designed to improve care and reduce costs for the duals (HRW 11/21/11, p. 1). But as shown in statements by a Democratic senator who helped author the law’s duals provisions and in a Senate Select Committee on Aging hearing July 18, some prominent advocates for duals want to slow the process down.
The latest and most specific call for that came at the hearing from Robert Berenson, M.D., a fellow at the Urban Institute and formerly vice chairman of the Medicare Payment Advisory Commission (MedPAC). “CMS should scale down this demonstration,” perhaps to 500,000 beneficiaries in eight to 10 states, Berenson told the hearing. Those figures contrast with 3 million beneficiaries — out of about 9 million duals nationwide — who would be covered if the duals office were to accept all 26 state applications it received by the deadline.
Later in the hearing, Berenson explained that one of his concerns is that the states will enroll all of their duals into managed care and make it virtually impossible to return to more flexible care arrangements if managed care proves to be a problem for this extremely vulnerable population. “I want to have a demonstration that’s not a fait accompli,” Berenson asserted. He also contended that the demonstration should have a control group that’s not in managed care to compare results with in a study.
Such a study perhaps coincidentally was released the same day as the hearing for Mercy Care Plan, an Aetna Inc.-run duals managed care plan in Arizona. An analysis of claims and demographic data conducted by consulting firm Avalere Health LLC showed that risk-adjusted rates for both hospital inpatient and emergency department utilization for the plan in 2009 were well below the rates for the national Medicare fee-for-service (FFS) duals population (see charts, p. 3), Avalere reported.
Earlier in July, Sen. Jay Rockefeller (D-W.Va.), who wrote the section of the law establishing the duals office, sent a letter to HHS Sec. Kathleen Sebelius asking her to “take immediate steps to halt this initiative as currently structured” and to “develop a well-designed and thoroughly evaluated care coordination model for dual eligibles.” He wrote that there is too much of a focus on cost savings rather than higher quality of care in the duals proposals so far. Moreover, the “passive enrollment” that the duals office said would be allowed “runs counter to federal law” and places an unsuitable burden to make an opt-out decision on frail and elderly beneficiaries, he said.
Rockefeller is not a member of the committee that held the July 18 hearing, and the hearing’s leadoff witness, duals office Director Melanie Bella, indicated it was sticking with the plan it outlined previously to fund state demonstrations that would cover up to 2 million duals. “We believe that is viable,” she said in response to a question from the committee, although Bella also noted that “we haven’t approved any demonstrations yet” and that there is no certainty the office will approve state proposals filling the full 2 million. She stressed that the office will reject state proposals that call for “lock-out” periods during which duals enrolled in managed care plans could not opt out and return to standard Medicare and Medicaid arrangements. The office intends to start approving some state proposals “soon” and will do this on a rolling basis, she added.
Bella Vows to Protect Beneficiaries
Replying to concerns about use of a passive enrollment model in which duals in states that request this will be automatically enrolled in managed care plans, Bella said “we will make sure” there is a “strong network” to serve those beneficiaries and that enrollees get counseled about their opt-out rights. Her overall stance drew an “I want to applaud you” comment from the hearing’s chairman, Sen. Bob Corker (R-Tenn.).
Bella did not show signs during the hearing of abandoning extensive use of managed care in the demonstration. “We have more stability and predictability with the capitation model” than is the case with the managed FFS model that states also can propose for the demonstration, she said in response to a question, for instance. Of the 26 state proposals to the duals office, Bella noted in her prepared testimony, “18 are pursuing the capitated model,” while six are proposing the managed FFS model and two are pursuing both.
More support for managed care came from another witness at the hearing, Shawn Morris, president of development and innovation at the HealthSpring unit of Cigna Corp. HealthSpring now has more than 122,000 duals in its traditional Medicare Advantage plans and MA Special Needs Plans. He sought to defend the company’s model, which he said has resulted in more preventive care and fewer hospital admissions for duals, from being eclipsed by Medicaid plans being given the full responsibility for duals demonstrations.
Specifically, Morris said, “In carrying out the Capitated Financial Alignment Model, we should not overturn this structure by preventing Medicare Advantage plans from participating or by requiring beneficiaries to relinquish the current coverage they have actively chosen.”
There also was testimony in favor of using Medicaid managed care as the basis for the duals demos. “Medicaid managed care for duals is not an experiment, but has proved to be a success in Arizona,” said Tom Betlach, director of the Arizona Health Cost Containment System, which has done this since 1992. There is no need for control groups in the new duals demo, he argued, since “we know what’s not working” and shouldn’t wait any longer to alter this.
But the growing opposition to several aspects of the demo is likely to bring at least some changes. The most recent chorus calling for a slowdown began June 19 with testimony at a House health subcommittee hearing from MedPAC Chairman Glenn Hackbarth. The duals office’s demo, he said then, is becoming too large to be valuable and instead should proceed more slowly and on a smaller scale. This, along with a stronger measurement system than now exists, would lead to more meaningful results, Hackbarth maintained.
His criticism of what he called a “program change” rather than a demo drew support from several subcommittee members, including Chairman Wally Herger (R-Calif.), who said the scope needs to be reduced and the rights of beneficiaries need to be preserved.
Some provider groups, who also are concerned about possible reductions in provider pay as a result of more managed care for duals, are pushing for a delay in the program. The American Medical Association last month argued that providers and patients need to get more knowledge about how the program would run and what effect it would have on doctor-patient relationships. And the California Hospital Association, reacting to that state’s proposed duals demo (HRW 4/9/12, p. 4), said “we have concerns that the proposal by the state frankly goes far beyond a pilot,” POLITICO reported.
Even CMS appears to be backtracking a bit. “Given the diversity and significant health care needs of dual eligibles,” spokesperson Brian Cook told HRW this month, “we recognize how critical it is to have beneficiary protections in place to achieve the highest-quality health care possible. We are taking the input from Congress, MedPAC and others very seriously going forward.”
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