Making Sense of Healthcare Reform: Dual Eligibles

By Kindred Healthcare

Dual EligiblesDual Eligible Demonstration Programs

Individuals referred to as “dual-eligible” are those people who are eligible for coverage by both the Medicare and Medicaid programs – most often low-income seniors or younger individuals with severe disabilities.

According to the Medicare Payment Advisory Commission (MedPAC), “They tend to be poor and report lower health status than other health beneficiaries, and cost Medicare about 60 percent more than nondual eligibles.”

The health and cost challenges of the dual-eligible population are further complicated by the variation in coverage and payment policies offered by 50 separate and unique Medicaid policies.

Dual Eligibles on the Rise

The dual-eligible population is large and growing rapidly – currently, there are more than 9.6 million beneficiaries that are eligible for both programs. As baby boomers celebrate their 65th birthdays, we see an estimated 10,000 individuals becoming eligible for Medicare covered services each day. This fact, coupled with the expansion of Medicaid eligibility in many states will likely result in a much larger dual-eligible population in the near future.

Need for Better Care Coordination

As a result of the complex and costly health needs of this population, dual-eligibles have been the focus of several initiatives with the goal of providing better care coordination and improved clinical outcomes at a lower cost. One such initiative was included in the healthcare reform law; the program is the Financial Alignment Initiative for Medicare-Medicaid Enrollees and is administered by the Centers for Medicare and Medicaid Services’ (CMS)so-called Innovation Center.

Presently, CMS is testing two different models in several states to determine how to best align the financing of Medicare and Medicaid and better coordinate the vast array of medical care and long-term services and supports for dual-eligible beneficiaries. As defined by CMS, the two models are:

  • Capitated Model: A State, CMS, and a health plan enter into a three-way contract, and the plan receives a prospective blended payment to provide comprehensive, coordinated care.
  • Managed Fee-for-Service (FFS) Model: A State and CMS enter into an agreement by which the state would be eligible to benefit from a portion of savings from initiatives designed to improve quality and reduce costs for both Medicare and Medicaid.

To date, CMS has entered into agreements with 11 states to pursue the proposals they laid out in their demonstration proposals that meet the standards and conditions of the initiative. These states are: California, Colorado, Illinois, Massachusetts, Michigan, Minnesota, New York, Ohio, South Carolina, Virginia, and Washington.

Enrollment in the first demonstration became effective in July 2013, with others following in late 2013 and in early 2014. Each of the demonstrations is set to be in effect for three years.

Challenges to Dual Demonstration Success

Initially, many states were eager to engage with CMS and participate in the dual-eligible demonstration initiative, but in seeing some of the early challenges, seven states withdrew their original proposal to participate.

Additionally, while many stakeholder and advocacy groups support the goal of the dual-eligible care coordination initiative, they have continued to raise significant concern over the designs of the state-specific plans. One of the greatest concerns is over the passive – or automatic – enrollment of beneficiaries into the demonstration program. Several states began the auto-enrollment process on May 1, 2014. This varies greatly from Medicare’s voluntary opt-in enrollment approach. While all beneficiaries have the ability to opt-out after they have been auto-enrolled, opposition to this provision has contributed to delays in program implementation in some states.

Another outstanding potential challenge to the dual-eligible initiative is whether the managed care organizations participating in the demonstration will be able to engage enough physicians and other providers to meet the needs of the very challenging and costly dual-eligible patients. This leads to questions as to whether plans will be able to produce the cost-savings projected within their proposals to CMS.

The Future of Coordinated Care for Dual-Eligibles

The challenges in the start-up to the dual-eligible demonstration program reflect that the move required a total change in the delivery, payment and care-coordination efforts necessary to provide positive outcomes for a very challenging patient population. The demonstrations are still in very early stages, and are meant to be an opportunity to learn what works best in coordinating quality-driven care for dual-eligible beneficiaries – and what approaches would be unsustainable in a national effort.