CMS Demonstration Projects for Dual Eligibles

Orlando—For years, the federal government and states have attempted to rein in costs associated with Medicare and Medicaid. Still, the expenses associated with these programs continue to grow, as the population gets older and more people are unemployed and need assistance to pay for their healthcare.

Recently, there has been an increased emphasis on how to handle dual eligibles—the people who qualify for Medicare Part A and Part B as well as some level of Medicaid benefits. There are 9.2 million dual eligibles in the United States and many are chronically ill.

As part of the Patient Protection and Affordable Care Act (ACA), the Centers for Medicare & Medicaid Services (CMS) implemented demonstration projects for dual eligibles that are scheduled to begin next year, although some are skeptical if this program will be in place by January 1, 2013, as intended.

“It is a very, very aggressive time frame considering what needs to be done,” said Rhys W. Jones, MPH, who spoke at the Spring Managed Care Forum in a session titled Dual Eligibles and Medicare/Medicaid Integration Demonstrations.

Mr. Jones, vice president of Medicare policy and market development at Amerigroup Corporation, said Medicare serves as the primary source of health coverage for 47 million people in the United States who are >65 years of age or are <65 years of age but have disabilities. He cited data from 2007 that indicated 46% of Medicare patients had incomes <200% of the federal poverty level, while 44% had ≥3 chronic conditions, 29% had cognitive or mental impairment, and 29% had fair or poor health. In 2010, there were $509 billion in Medicare payments, accounting for approximately 7% of the federal budget, according to Mr. Jones.

There are 4 components of Medicare: (1) Part A pertains to hospital insurance and covers hospitalizations, skilled nursing facilities, and home health; (2) Part B pertains to medical insurance and covers physician services, lab and x-ray services, durable medical equipment, and outpatient and other services; (3) Part C covers Medicare Advantage benefits through private health plans; and (4) Part D covers outpatient prescription drugs, home infusion drugs, and
mail-order drugs.

According to Mr. Jones, there are 5 categories of dual eligibles: (1) full benefit dual eligibles; (2) qualified Medicare beneficiaries; (3) specified low-income Medicare beneficiaries; (4) qualified disabled working individuals; and (5) qualified individuals. Mr. Jones said that approximately 77% of dual eligibles are in the full benefit category, which is defined as state coverage of Medicare Part B, Medicare cost sharing, and Medicaid benefits. People in the full benefit category are also able to join a Medicare special needs plan.

Of the 9.2 million dual eligibles, 55% live at or below the poverty level, 60% have multiple chronic medical conditions, 54% have ≥1 cognitive impairments, 15% live in long-term care facilities, and 41% are nonelderly individuals with disabilities.

Dual eligibles are costly to treat. Mr. Jones cited data from the Kaiser Family Foundation and CMS that indicated dual eligibles accounted for 16% of Medicare beneficiaries in 2006 but generated 27% of Medicare spending ($101 billion). Meanwhile, in 2007, dual eligibles accounted for 15% of Medicaid beneficiaries but 39% of Medicaid spending ($137.5 billion).

Mr. Jones said dual eligibles not only have a large impact on state and federal government budgets, but their care is fragmented and uncoordinated, which contributes to poor health outcomes and rising costs.

“We are trying to figure out how to integrate [Medicare and Medicaid],” Mr. Jones said.

Managed care could play a role in dealing with these issues, Mr. Jones noted. However, most dual eligibles are not in managed care: only approximately 10% of Medicare beneficiaries and 12% of Medicaid beneficiaries are in managed care. In all, 100,000 dual eligibles are in fully integrated plans. In many states, dual eligibles are excluded from managed care or participation is voluntary, he said.

There has been a renewed interest in Medicare special needs plans, which Mr. Jones defined as Medicare Advantage plans that can limit enrollment to groups such as dual eligibles or people who have specific chronic conditions or are eligible for nursing homes. There are 1.3 million people in Medicare special needs plans, and Mr. Jones indicated many states have embraced the plans, which he said could improve effectiveness, quality, and cost savings. Mr. Jones said that states are not interested in dual eligible integration and managed care because they believe the short-term savings benefit Medicare but not Medicaid.

The ACA’s passage in 2010 created the Federal Coordinated Health Care Office within CMS with the goal of integrating care and payment for full-benefit dual eligibles. The demonstration projects will last 3 years, but CMS has provided states with flexibility in designing the programs.

Mr. Jones said 38 states filed notices of intent to sponsor demonstration projects for dual eligibles by the April 2, 2012, deadline, with some choosing capitated demonstrations based on managed care plans and some selecting fee-for-service demonstrations based on state initiatives. If selected for demonstration projects, states will sign the contracts by mid-September. Dual eligibles will be notified of their enrollment options on October 1. CMS is hoping to have 1 to 2 million dual eligibles enrolled in the programs by January 1, 2013, and more enrolled by January 1, 2014.

Of the states applying for the demonstration projects, Tennessee is the most advanced in its preparations, according to Mr. Jones. Under Tennessee’s proposal, dual eligibles are required to be in a managed care program, but they are able to choose their plan during an open enrollment period that runs from October 1 through December 31. During that period, states can opt out of participating in the demonstration project. However, if they decide to participate next year, they can enroll in the demonstration project that begins in 2014.

Mr. Jones said California, Washington, and Ohio are also making progress toward being ready for demonstration projects by January 1, 2013, while New York, Texas, and Virginia will pursue demonstration projects that begin on January 1, 2014. Even though the programs will be different in each state, Mr. Jones said they would all need to include call centers that have similar standards. According to Mr. Jones, CMS and states will expect people working in the call centers to be knowledgeable about Medicare and Medicaid, and be prepared to answer questions about the demonstration projects.