From Medicare Advantage News

Fallon Will Exit Mass. Duals Demo, Citing Financial Results; Others Seek More Help (with Table: Massachusetts Duals-Demo Enrollment As of May 1, 2015)

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By James Gutman, Managing Editor
July 2, 2015Volume 21Issue 13

In an unsurprising decision but one that raised new doubts about the viability of the huge CMS-backed demonstration program for Medicare-Medicaid dual eligibles, Fallon Total Care said in mid-June that it would exit the Massachusetts duals demo for financial reasons on Sept. 30. This would leave only two plans in a state that initially selected six insurers to participate in the nation’s first CMS-funded duals demo but in which three of those chosen dropped out before the program began in late 2013 (MAN 7/25/13, p. 1).

Both of the plans — Commonwealth Care Alliance (CCA) and Tufts Health Public Plan — remaining in the Massachusetts demo tell MAN they intend to stay in despite their initial losses, although neither seems to want to add on major portions of Fallon’s membership in the near future. And both plans praise the CMS Medicare-Medicaid Coordination Office (MMCO) for having taken and continuing to develop steps to assist the demo plans in dealing with certain problems unique to the Massachusetts demo.

However, they also say the Fallon pullout underscores the need to resolve remaining issues promptly, including showing a clear path for continuation of the demo beyond the three years authorized in the Affordable Care Act (ACA).

Fallon Decides to Exit Mass. Demo

There now are about 340,000 duals enrolled in the demo nationwide, with more to come as states starting up this year complete their rollouts. There are 65 health plans participating in the demo, including multiple units of the same parent organizations.

CMS would not comment on the Fallon departure. But MMCO and CMS as a whole are known to be actively seeking additional ways to help demo plans succeed. The actions being considered include streamlining reporting requirements and administratively implementing steps to ensure the demo continues beyond the initial period. Other possible steps include perhaps even changing the current risk-adjustment system that lumps for payment purposes the full duals served by the demo in the same category as less-expensive partial duals served by other plans.

Any of those actions, of course, would come too late for Fallon, which with about 5,500 members in One Care, as the Massachusetts demo is known, has been the second largest plan there. The entire state demo had 17,637 members as of the May enrollment report from One Care (see table, p. 7), well below the 27,396 eligibles who have opted out of the initiative in a state that has large and powerful provider systems not fully enamored of the demo. There are 97,987 Massachusetts beneficiaries eligible for the demo, according to One Care.

‘Participation Was Not Economically Sustainable’

Parent organization Fallon Community Health Plan said in a prepared statement that it had “decided reluctantly” to withdraw from the demo after exploring alternatives with both the state and CMS. Fallon “ultimately determined that our continued participation was not economically sustainable,” the statement added. The company declines to elaborate on its financial results in the demo or on why it needed to leave when the other two participants, also not-for-profits, are staying.

The Massachusetts Executive Office of Health and Human Services, known as MassHealth, was similarly limited in its comments. “MassHealth is committed to the One Care Program, which provides coordinated care for a population with complex needs,” spokesperson Michelle Hillman tells MAN. “We will work with Fallon Total Care members to ensure a smooth transition and continuation of coverage under another One Care plan or through MassHealth and Medicare directly.”

It is not clear yet whether the state will seek to assign Fallon Total Care’s members to the two remaining One Care plans, notes Kit Gorton, M.D., president of the public plans division of Tufts Health Plan. Regardless of what is done, Gorton tells MAN, Tufts Health Public Plan (the new moniker for the duals plan formerly called Network Health) does not expect any “deleterious impact” of the Fallon withdrawal on its own duals operation.

Gorton says Tufts’ decision to start slowly and have “measured, methodical growth” in the demo has proved helpful to its plan. The unit is breaking even on a “run-rate basis,” he says, although he acknowledges that if One Care ends after the now-authorized three-year term, “we will not have recovered our original investment.”

Tufts Seeks Modest Expansion in Demo

Tufts had a total of just 1,832 duals-demo members in two counties as of One Care’s May enrollment report. Its current game plan, notes Gorton, is to expand next into Suffolk County to get at least 1,000 additional enrollees and then into Norfolk County, which would complete a “southern ring” around Boston and bring its One Care total membership to more than 3,000. To make this feasible, he stresses, the demo would need to be extended beyond the current three-year scope.

The Fallon withdrawal decision is “not surprising” but nonetheless disappointing since its duals plan has done “good and important work,” he asserts. As for Tufts itself, Gorton adds, “we have no plans to withdraw from the demo at this time,” although he wouldn’t rule out such an action in the future “if anything changes” since Tufts is a not-for-profit with limited financial resources.

There are some unique aspects of the Massachusetts demo, Gorton explains, that have complicated the situation for the duals plans there. “Going first comes with risk,” he says, partly because there weren’t other demo plans from whose experience the Massachusetts participants could learn. Perhaps a bigger issue, though, is the fact that the state’s CMS-backed demo is the only one exclusively for an under-65 population, he points out.

This has meant that about 60% of its target population has mental health issues, compared with the “single digits” that would be the norm in a Medicare Advantage population, according to Gorton. He says Tufts in its demo thus has had to deal with major substance-abuse and homelessness problems among its population and the need for expensive acute care to stabilize those duals before programs to improve their care can take effect. Add to this the lack of a “delivery system” in Massachusetts for the kind of “step-down” services needed, and the task becomes even more difficult, he maintains.

But he also is quick to cite successes Tufts already has had in the demo, including sharp reductions in the number of its duals in “yo-yo” situations of going back and forth with hospitalizations. Some of the duals it has helped avoid this, via such means as finding housing for them, won’t be fully stable by the scheduled end of the duals demo, says Gorton, partly because true managed care services for them can’t start until perhaps more than half of the demo period is over. And this brings him to where he thinks more government help is needed.

Gorton lauds the actions MMCO has taken in the Massachusetts demo, such as extending risk corridors to the second and third years and lowering savings expectations, which has the effect of boosting pay for the demo plans (MAN 3/26/15, p. 1). “Those things were enormously important,” he asserts, but Gorton says there are additional steps the government could take that would help the plans accomplish the important goals set out for them in the demo.

He cites as a specific problem now having to submit encounter data in two different formats, one for CMS and one for Massachusetts. Similarly, he points out, there are two sets of regulations for handling appeals and grievances, two sets of timelines to meet and the continuation of a system by which the Medicare claim must be paid before Medicaid will act on “what’s left” in the claim.

MMCO Acting Director Tim Engelhardt is aware of these continuing problems and doing what he can to remedy them, Gorton emphasizes, but in some cases MMCO doesn’t have the resources or authority to do everything that’s needed. While Tufts’ medical experience in the demo so far has been worse than expected, its administrative expenses, including compliance costs, have been “much worse,” he observes.

The other remaining plan, CCA with 10,305 enrolled duals as of May, also praises MMCO and Massachusetts officials and would like the government to do more on remaining problem areas. But the current duals-demo focus of CCA President Lois Simon is more on “risk protection” and Medicare Part D-related payment issues than on administrative matters.

Under the current structure, Simon tells MAN, CCA has high up-front Part D medication costs that take 12 to 18 months to be reimbursed, and that “is a genuine hardship” for the not-for-profit plan given the high pharmaceutical costs the under-65 duals have. She suggests that duals-demo sponsors should get an initial capitation payment for these expenses plus “more rolling reconciliation” and interim payments. CCA has raised this issue with CMS, and the agency is looking into it, Simon says.

The other major issue she cites is continuing risk- protection programs such as the risk corridors through the whole length of the duals initiative rather than just the initial three-year demo as is now the case. This assumes, of course, that the demo will be extended, which Simon says needs to occur to get the major clinical and other outcomes improvements the demo has targeted.

The Fallon pullout itself, she says, is “disappointing,” especially since “Fallon has done a fine job,” but understandable. CCA itself is “very committed” to staying in the demo, which constitutes the “essence of our mission,” and has seen improvement in its financial results in the program, although “we’re still challenged.” Simon declines to disclose specifics about those results.

She does make clear that CCA does not want any substantial portion of Fallon’s duals membership for the near future. “We’ve expressed concern about our capability to take on additional membership,” especially since CCA now is at its “clinical and operational capacity,” aside from financial factors, and therefore does not anticipate any big increase after Fallon’s September withdrawal, Simon tells MAN.

MMCO, as well as CMS as a whole, is known to be aware of all these issues and working on them. Aside from the agency’s statements in the final 2016 MA payment notice that it will look into whether partial and full duals should be treated differently for payment purposes (MAN 4/9/15, p. 1), CMS has made clear it knows it will have to say soon what will happen to those demos such as Massachusetts’ that are nearing the end of their three-year authorization. The agency reportedly is convinced it has the authority to take some administrative action to extend the life of demos that show progress in meeting the quality and financial goals set for them in the ACA.

Massachusetts Duals-Demo Enrollment As of May 1, 2015

Total Enrollment by Rating Category*

















Total Enrollment by Plan

Commonwealth Care Alliance


Fallon Total Care


Network Health (Tufts)




*F1=Long-term care facility-based care; C3B and C3A=High community services needs; C2B and C2A=High behavioral-health community services needs; C1=Individuals in community who don’t meet criteria for other classes.

SOURCE: One Care May 2015 Enrollment Report from Massachusetts Executive Office of Health and Human Services.

© 2015 by Atlantic Information Services, Inc. All Rights Reserved.

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