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.
Two proposals issued in the past month by neighboring — but quite different in managed care — states for Medicare-Medicaid dual-eligibles demonstration programs show some of the difficulties both Medicare Advantage and managed Medicaid plans figure to have in this huge new market. They help explain why at least one prominent securities analyst is cautioning that the market may develop more slowly than others are forecasting (MAN 3/1/12, p. 4).
Ohio issued its proposal, to be evaluated by the CMS duals office for funding by the agency’s Center for Medicare and Medicaid Innovation, on Feb. 27, and Michigan followed on March 5. While the states are next door, their approaches are miles apart, including Michigan wanting to keep behavioral health carved out while Ohio would fully integrate it. Ohio, which had 34% of Medicare beneficiaries enrolled in an MA plan in 2011 and did not get one of the 15 duals-office demonstration development grants last year, is proposing a managed care-focused demo and already has formulated specific regions and a rollout schedule for them. Michigan, with much lower MA representation but a recipient of one of the 15 duals-office grants, is proposing a more provider-focused demonstration and has not yet established regions for a rollout.
CMS may choose to fund both, one or neither of the proposals in the coming months. But what seems clear from the two states’ proposals is that what MA and/or managed Medicaid plans may want to do in one of these states might not fit with what they need to do in the other. And while both Ohio and Michigan hope to start their programs in 2013, their proposals indicate it is possible implementation dates may have to move back.
And this may be typical for the duals programs, suggests securities analyst Christine Arnold of Cowen & Co. in a March 12 research note. In general, she said, “the transition could take longer than anticipated and may not immediately result in duals placed in at-risk capitated managed care arrangements.” Citing an analysis by a Medicare expert whom she did not identify, Arnold said “moving this population [i.e., duals] to managed care will not be easy given resistance among advocacy groups, rural senators and even within CMS.” Among other things, she added, “CMS has been reluctant to share both current and historical [Medicare] data.”
Some of those factors may have influenced the proposal of Michigan, which has more than 200,000 duals who now cost the state and federal governments above $8 billion a year, the state Department of Community Health (DCH) said. While Michigan, like many other states, proposes to “passively” enroll duals into the new “integrated care system” (it does not call the new system “managed care”), it gives enrollees a two-month period to opt out.
DCH says it will propose “risk-based capitation rates with partial risk applied to management entities,” converting the entities to “full risk as the program matures and reliable risk adjustment methodologies are implemented.” The program, according to the proposal, would be “phased in by quarter starting in 2013” by region, but the state has not yet established the regions.
The proposal acknowledges that Michigan’s duals have been unable to elect to receive “physical health care” through Medicaid health plans in the state even though about two-thirds of the beneficiaries are enrolled in 14 managed care plans. And DCH notes that “Michigan has relatively low penetration of Medicare enrollees choosing to receive health care through Medicare Advantage plans.” Moreover, the proposal relies mainly on 2008 CMS data since DCH says it didn’t get newer Medicare claims files until very recently.
One of the aspects of the proposal that health plans may like least is its concept of two separate contracts, with one of them for all behavioral health services, which account for about 10% of Michigan’s duals spending. DCH explains that its objective is “to avoid destabilizing the current system and to recognize the value of existing service delivery structures. Michigan has a unique behavioral health and developmental disabilities system.” The department adds, “While integration with physical health and long-term care services is the challenge, it is important not to disrupt this system,” which is comprised of 18 public entities that get capitation payments for all Medicaid beneficiaries in the state.
Duals who opt out of the integrated care organizations (ICOs), as Michigan calls its non-behavioral health services suppliers, will continue getting some optional Medicaid services as well as “all state plan services,” but they won’t receive enhanced care management or such other services as dental and vision, DCH explains.
Although Michigan’s plan is to have all duals who don’t opt out enrolled in the ICOs by June 30, 2014, the proposal points out that “final decisions have yet to be made as to how the program will be operated on a day-to-day basis” regarding use of existing state staff and resources.
And DCH notes that “a contingent of stakeholders from the behavioral health and developmental disability advocacy community remain skeptical that an integrated care model could improve upon the current delivery system.”
By contrast, Ohio’s proposal is loaded with specific details on its plan to implement its Integrated Care Delivery System (ICDS) for duals in seven already- determined regions of three-to-five counties each in a program beginning in January 2013. The regions, the state notes, were chosen partly because of the presence of established MA plans in them.
The Ohio Department of Job and Family Services (DJFS) says that it had 196,369 full duals in fiscal year 2011 but is proposing to limit the demonstration to 122,409 of them, choosing to exclude those with intellectual or other developmental disabilities and duals under the age of 18, among others.
DJFS notes that only 2% to 3% of Ohio duals now are enrolled in MA Special Needs Plans. The state reports spending $3.7 billion on the ICDS target population last fiscal year.
Ohio’s proposal calls for a “comprehensive, fully-capitated” model for ICDS in which it will select two competing health plans in each region. Duals would be able to choose which of the two they want to be enrolled in, and may opt out of participation on the Medicare side, but they would stay enrolled in ICDS for Medicaid-covered services since “there will no longer be a fee-for-service Medicaid option” in the target regions.
There would be “no Medicaid benefit carve-outs” under the Ohio proposal, which includes behavioral health, long-term care and community support services. While DJFS acknowledges that some stakeholders had concerns about the impact of a “full-risk managed care approach” that could “cut out or reduce the role of the existing community-based infrastructure,” the proposal aims to deal with such concerns with a variety of methods.
One is a pay-for-performance program in which participating plans will be subject to an “increasing quality withhold” that they can earn back if they meet quality thresholds. And “there will be a requirement that at least 50% of the quality withhold is passed on to providers whose care leads to increases in the quality indicators,” the proposal states. The document also describes the specific responsibilities for the ICDS program of 11 named department officials.
The proposal details a tight and comprehensive timeline for the program beginning with a Request for Assistance to prospective contractors April 2, with bids due May 11. DJFS aims to pick plans in enough time to notify duals on Oct. 1 about their enrollment into the ICDS and automatically assign any targeted duals who have not picked a plan by Nov. 15.
Ohio “does seem further along in the process,” including its timeline and “engagement with CMS,” than is Michigan, Janet Grant, executive vice president, external affairs at CareSource, tells MAN. 900,000-member CareSource, which on March 20 unveiled an agreement for a strategic alliance with Humana Inc. to serve the duals population (see story, p. 1), has an ideal vantage point to compare the two approaches since it serves the Medicaid population in both states and has by far the largest market share for Medicaid in Ohio.
The differences in the two states, Grant says, reflect their unique characteristics. She says the providers are “more front and center” in Michigan, but both states are committed to working with providers in integration for duals. Pamela Morris, president and CEO of CareSource, adds that in Ohio the Medicaid agency has been very adept at including other stakeholders in designing its proposal.
“We are concerned” with Michigan’s desire to have behavioral health separate from other services in its duals program, Morris acknowledges to MAN, because “we really believe in totally integrated care.” However, she stresses that CareSource understands “the change for providers in these models is enormous, and many are threatened by this.” That’s why it’s so important to “engage the providers,” she asserts.
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Medicare Advantage News Managing Editor James Gutman moderated a recent webinar on this topic. Click here to listen On-Demand or get a CD of Dual Eligibles: State Initiatives and Growth Opportunities for Health Plans.