Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care.
By James Gutman, Managing Editor
December 20, 2012Volume 18Issue 24
The form of the big CMS demonstration program for Medicare-Medicaid dual eligibles crystallized some more Dec. 12 as the agency’s duals office approved an Ohio initiative calling for relatively modest savings. That is consistent with the Massachusetts initiative approved this summer as the first to get the agency’s blessing — and funding (MAN 9/6/12, p. 1). Moreover, the following day, Melanie Bella, the director of the duals office (technically the Medicare-Medicaid Coordination Office), furnished additional details about CMS’s approach on the demo in an hour and a half of testimony before the Senate Finance Committee.
The need for the initiative and Bella’s work on it drew widespread support from the committee in the hearing, but several members — mostly Democrats — raised specific concerns about aspects of the initiative. As previously, the strongest critic was Sen. Jay Rockefeller (D-W.Va.), who helped develop the duals-office concept in the health reform law but dislikes its initiative’s scope and the plans for its rapid implementation.
Perhaps the best indicator of where the initiative is going for health plans, though, lies in what has been approved on capitated proposals (the second approval, for Washington state, was only on managed fee-for-service so far), and Ohio sheds additional light on this. The estimated savings from the program as spelled out in the Memorandum of Understanding (MOU) between CMS and the state, notes securities analyst Brian Wright of Monness, Crespi, Hardt & Co., Inc., are 1% in the first year, 2% in the second and 4% in the third. State Medicaid Director John McCarthy says the program should save the state $243 million by the end of 2016.
Wright says that the “quality payment withholding percentages” for plans in the Ohio initiative also are “modest,” at 1% in the first year, 2% in the second and 3% in the third. “We believe these parameters are reasonable and achievable,” he asserts in a Dec. 13 research note, adding that “this should significantly reduce the operational risk associated with the expansion opportunity.”
Also consistent with the previous MOUs is slight slippage in the initially proposed implementation dates. The Ohio initiative, which will serve 115,000 duals, according to CMS, will be phased in during October, November and December 2013, depending on the region, compared with a phase-in start of April 2013 in Ohio’s proposal.
Ohio already has selected the plans for its program, based on their scores in the state’s evaluation of their proposals (MAN 7/19/12, p. 1) and a requirement that no plan may serve more than three of the state’s seven regions.
The accomplishments of Bella and the duals office drew praise from the Senate Finance Committee’s ranking minority member, Sen. Orrin Hatch (R-Utah). Commending what he called Bella’s “pragmatic” approach, he told the hearing that duals offer an area “in which we can achieve bipartisan agreement,” which he described as a different outlook than on other major topics being discussed in Washington these days.
And in her testimony Bella seemed to emphasize noncontroversial areas, reporting, for instance, that “CMS now has an integrated Medicare-Medicaid data set” and that the duals office is integrating the appeals process.
In response to questions from committee Chairman Sen. Max Baucus (D-Mont.) about payment levels in the demo, Bella said, “We don’t expect to have a negotiation with plans” on pay rates. CMS will set those risk-adjusted rates, she explained, using input from the state Medicaid department involved, and based in part on assumptions about how much money the demo will save. She added that there is not a national savings target because the primary objective is to improve care, not cut costs.
Rockefeller Says Demos’ Size Is Too Big
Her responses did not satisfy Rockefeller. “Why is CMS pushing for an arbitrary savings target for duals in each state, and why is that driving the model?” he asked without waiting for a response. “Where is the robust evaluation plan” for the dual demos? he continued. Rockefeller contended that when the state demos are as large as the ones planned for duals, they cease to be demos and instead “it’s the inevitable formulation of policy.”
Bella responded that the duals office has an outside evaluator — RTI — working closely with demo participants to establish appropriate comparison groups to study demo results. “We have to have a rigorous evaluation,” she asserted, adding that no state’s proposal will be approved without it. “Cost is the elephant in the room,” said Bella, but it’s not the driver of the program.
Later on, Rockefeller complained that only nine of the 25 states proposing dual initiatives under the program planned to have “independent advocates” to help beneficiaries make decisions about whether to participate in the demo. And he protested what he called a “lock-in” of beneficiaries enrolled in the Washington state demo.
“There is no lock-in in these demonstrations,” Bella responded, pointing out that beneficiaries can exit them or change plans monthly. She added that “we have 73 pages that show what states have to prove” before they can start the demo, along with “milestones” they must accomplish before being allowed to enroll beneficiaries in the next phase. Moreover, she said, states are expected to use an “ombudsman” to aid dual-demo beneficiaries, and there is a provision to that effect in the Ohio MOU.
Sen. Charles Grassley (R-Iowa) raised a different concern in his questions. Why, he asked, are duals being treated differently from people who are only Medicare beneficiaries but have multiple chronic conditions and functional impairments? Grassley said that of the highest-cost Medicare beneficiaries, more than half are Medicare only rather than duals and that it makes no sense to apply the new demonstration only to duals.
Bella responded that while Congress created her office to focus only on duals, she hopes that “what we learn” from the duals initiative will be transferable to the 57% of highest-cost beneficiaries who are Medicare only.
Two senators focused on the problem of duals being transferred from Medicaid-paid nursing homes to acute care hospitals for purported needed treatments and then back to the nursing homes, where they then qualify for the higher Medicare payment rate for an extended period.
“This is the poster child” for the need for duals programs, replied Bella, contending that the current system furnishes incentives for such unneeded transfers. The way to avoid this, she suggested, is to enable patients to get all the care they need at the initial facility, so “we need more care resources available at the facility.” Furnishing community-based services is another way to avoid such situations for duals, she added.
Two senators complained about factors they said were preventing their states from participating in the duals initiatives. Sen. Ron Wyden (D-Ore.) praised Bella but told her Oregon concluded it was not financially viable for the state to participate in the duals demo because it has relatively low fee-for-service costs and high Medicare Advantage payments that would put it at a disadvantage in calculating the baseline used in the duals program.
The duals office knew when developing the standards for the demo, responded Bella, that “it wouldn’t work for all states.” She cited Minnesota as a state in a similar situation, and said the duals office is working with it on “alternative approaches.”
Sen. Richard Burr (R-N.C.) complained that because his state just wants to expand its current “community care” Medicaid initiative to duals, it is precluded from participation in the initiative. Bella replied that North Carolina has been unwilling to go at risk in the demo, wanting only to share in the Medicare savings from it, and she said the duals office is working with state officials to find a resolution. Burr then suggested that the duals office “put new things on the table,” and after that maybe North Carolina would be willing to go at risk.
View a webcast of the hearing at http://tinyurl.com/d6mbc4v. View a fact sheet about the Ohio approval at http://tinyurl.com/d28ktj8.
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