Care Coordination for Dual Eligibles, ctd.

The June 2011 MEDPAC report provides important information about private insurance options to cover dual eligibles (persons covered by Medicare and Medicaid) amplifying yesterday’s post on care coordination.

The Medicare Modernization Act of 2003 created a category of Medicare Advantage plans called Dual-Special Needs Plans (D-SNP) that only cover dual eligibles. D-SNP are a subset of Special Needs Plans (SNPs) that are private insurance options for groups with unique and complex health care needs. SNPs have been created to cover Medicare beneficiaries living in a nursing home, or having chronic disabling conditions such as End Stage Renal Disease, HIV, and congestive heart failure. Table 5-2 (p. 128) from the MEDPAC report provides SNP enrollment:

There were around 1.05 million dual eligibles in D-SNP plans in February 2011 (11.4% of all duals), and nearly 1.3 million persons enrolled in all SNPs. SNPs differ from other types of Medicare Advantage plans in several ways (e.g. they must cover part D; you can enroll at any time and not only during open enrollment windows if such a plan is available in an area). Several quick thoughts:

  • The problem being addressed is the high cost and potentially non-optimal quality of the care provided to the dual eligibles.
  • The goal of proposals to federalize the Medicaid costs of the duals, as well as to move duals into private plans are to incentivize and empower one payer to decrease costs while improving quality for dual eligibles.
  • Austin and Aaron have pulled together lots of evidence showing that public payers have done a better job at restraining costs over time than private ones. Most of this literature predates D-SNPs. Studies showing slower cost inflation in Medicare than private insurance were obtained with the dual eligibles (a very expensive group) being cared for by FFS Medicare.
  • MEDPAC says that most of the D-SNP plans (p. 128) do not provide fully integrated and coordinated care to the degree believed to be optimal to duals, typically because they do not coordinate Medicaid benefits. Standards and regulation for these plans will expand due to aspects of the Affordable Care Act that will require quality assessments of plans (2012), and a requirement that D-SNPs have state contracts with Medicaid for the coordination of and provision of services (mostly LTC, by 2013).
  • There are other types of coordinated activities for dual eligibles described in the MEDPAC report that are implemented outside of the D-SNP approach (PACE, state carve outs, other demonstrations p.124-26 ). Overall, MEDPAC says 2% (p. 124) of dual eligibles are in fully integrated plans. This is not a subset of the D-SNPs but includes other options as well.
  • Finally, Austin’s point from last week that lowering spending may not be the appropriate question to ask about whether expanding private insurance options in Medicare is a good one to remember. It would be great to improve quality and reduce costs, but doing both will be hard. The current default for how care is financed for dual eligibles leaves room for improvement on both counts and we need to try and evaluate different options.


Care Coordination for Dual Eligibles

Ken Thorpe has a new study funded by AHIP out in white paper form that suggests that moving all dual eligibles (covered by Medicare and Medicaid) into private plans using care coordination could save the federal government and states $125 billion over 10 years. Thorpe notes that CBO projects that combined Medicare and Medicaid spending on the duals will be $3.7 trillion over 10 years by default, owing to their multiple health care needs (over half have 5+ chronic conditions and many reside in nursing homes). The 9 million dual eligibles are among the most sick and vulnerable members of society.

Thorpe proposes defaulting dual eligibles into private plans who will have strong incentive to reduce costs since they would be responsible for all care; similar incentives for Medicare and Medicaid are now reduced owing to the ways they share the cost of caring for the duals. A few details:

  • All dual eligibles would be enrolled in a health plan with an opportunity to opt out. All covered Medicaid and Medicare services would be provided through the health plans.
  • States can innovate and design their own approaches, but must have an evidence based design.
  •  Health plans would be responsible for coordinating the multiple needs of their patients, including contracting with other entities such as community health teams (defined in section 3502 of the Affordable Care Act) or medical homes.

The paper includes a rich literature review that suggests costs can be reduced while improving quality, and he includes a simulation of potential 10 year savings if all duals were in private plans: $80.9 billion for Medicare and $44.6 billion for Medicaid, around $35 billion of which would be savings to the states (clearly upper bound estimates):

I have suggested that dual eligible costs should be federalized (essentially making Medicare responsible for their total cost), with the main point being to put one payer in charge of all their care in order to incentivize cost reduction while increasing quality. Thorpe’s idea would achieve the same general goal using private insurance. There are many relevant details to discuss about Thorpe’s proposal (how would premiums for private plans be set?, what are realistic uptake estimates?, etc.), but it is clear that the current approach to caring for the dual eligibles is wanting both in terms of cost and quality. The only question is what changes should be undertaken to better care for them?

Update: There has been lots done on TIE about private v. public plans and cost control and the evidence tilts toward public doing better than private at controlling costs [FAQ and podcast]. Most Dual Eligibles have not been in private Medicare plans, so the balance of the evidence does not include them. However, the special needs plans do cover duals. There was some interesting tweeting yesterday about distribution of dual eligibles in such plans; I will try and track down a linkable source and blog about these issues more over the next week. Finally, by noting in the first sentence of the post that this is a ‘white paper’ that means it has not been subjected to peer review.

Health Costs of Working Age Disabled Adults

There are around 19 million disabled persons between the ages of 18 and 64 in the U.S. (6.4% of all persons in this age range), and the federal government and states spent around $425 billion on assistance to them in 2008 according to a new paper in Health Affairs.* This paper focuses on the proportion of this assistance that goes for health care as compared to the other aid components. Health care costs for this group are increasing rapidly, while spending on education, training and employment is declining.

Around half of the disabled working age adults in the U.S. have their health care costs paid for by three programs: the Veterans Administration, Medicare and Medicaid (some are dual eligibles, covered by Medicare and Medicaid due to their disability/poverty status). Health care expenditures were both the largest and fastest growing component of assistance provided to working age disabled persons from 2002 to 2008. A limitation noted by the authors is their inability to provide per capita expenditures for persons by program, eligibility for multiple programs, and reason for disability. This would be especially useful for the dual-eligible patients. Such persons are a part of the roughly 6 million persons nationally who are eligible for Medicare and Medicaid who are not age 65 or over and are a part of what I call “the third Medicaid program (with low income non disabled persons being program 1, and elderly dual eligibles being program 2).

This “third program” in Medicaid–non elderly dual eligibles is the most diverse portion of the Medicaid population due to the many reasons for their disability. More clarity on the reasons for the qualifying disability could be useful to identify strategies to address patient needs in the most efficient means possible, as well as to inform any potential reform strategies for how to best care for such persons.

The need to better understand the needs of these groups is heightened by the looming expansion of Medicaid as part of the Affordable Care Act. Expanded access to Medicaid under the ACA will likely serve to increase the differential eligibility (lag between Medicaid eligibility and Social Security and Medicare disability)  for the variety of programs for which disabled working age adults may be eligible. There are likely issues of duplication and of unmet need, and certainly of timing. Similarly, persons with disabilities that prevent them from working but who are now ineligible for programs due to the degree of their disability will presumably be added to the ranks of the insured via income based subsidies (if incomes are above 133% of poverty).

Care coordination issues abound for disabled persons of working age and these issues require more attention.

*Gina Livermore, David C. Stapleton, Meghan O’Toole. Health Care Costs Are a Key Driver of Growth in Federal And State Assistance to Working-Age People with Disabilities. Health Affairs 2011;30:9:1664-72.

update: added the link to the paper

Rebalancing Medicaid financed long term care

Continuing upon my post last week making the point that Medicaid is really 3 distinct programs:

  • Program 1: covers mainly pregnant women and children for acute services. There are around 45 Million such persons. The ACA would expand this portion of the the program greatly. This is the group that experienced barriers to access in the recent study, and this is where most of the debate is centered. Such beneficiaries are numerous, but are relatively inexpensive on a per capita basis.
  • Program 2: covers long term care, most notably nursing home care for Medicare beneficiaries who are also poor and therefore covered by Medicaid. Such persons are know as Dual Eligibles, because they are covered by both Medicare and Medicaid). There are 9 Million duals, around two-thirds of them are eligible for Medicare because of age, the remainder due to permanent disability. This relatively small number of persons are extremely costly to both Medicare and Medicaid.
  • Program 3: covers long term care and acute specialized services for persons younger than 65 who are disabled, but not eligible for Medicare; There are 5.9 Million such persons, who are more difficult to describe because of their variety of needs.

Most policy attention is paid to the reform of Program 1 above. This post focuses on reform of the most expensive aspect of the Medicaid program—long term care—which is the primary concern of Program 2 (dual eligibles) and Program 3 (disabled persons younger than 65 not eligible for Medicare) above. A key policy question is where should services be provided to elderly and disabled Medicaid beneficiaries? Charles Milligan and Cynthia Woodcock addressed this issue during their presentation “Rebalancing Long-Term Services and Supports: Progress to Date and a Research Agenda for the Future” at AcademyHealth’s Annual Meeting Long Term Care Colloquium last week in Seattle.

Around 75 LTC researchers and policy makers attended this 3-hour session (presentation of paper, discussants and general discussion) that focused on the desirability of “rebalancing” LTC services away from institutions (esp Nursing Homes) and toward home and community based services (HCBS). Milligan and Woodcock show evidence from Medicaid waiver programs in the State of Maryland documenting reductions in per member, per month Medicaid costs when moving persons from institutions to community-based settings via waiver programs that typically allow for the provision of non-standard benefits for persons covered by Medicaid.

What is missing from this assessment is the outcome, or quality of services provided. The need to better link different service models with outcomes was roundly noted as a tremendous research and policy need. However, from a preference perspective, patients are far more favorable to community based, as compared to institutional settings, which is no surprise.

There has been steady movement from institutional toward HCBS in Medicaid over the past decade and a half. In 1997, around 75% of total Medicaid long term care expenditures were for institutional care (mostly nursing homes), while it had dropped to around 66% in 2009; the remainder of the LTC was delivered in HCBS. The are very large state differences in how Medicaid programs have spent long term care dollars, which would make clearer linkages with outcomes even more potentially informative. For example, New Mexico is now spending around 7 in 10 Medicaid LTC dollars spent on dual eligible and disabled persons on HCBS; at the other end of the spectrum, Rhode Island and Tennessee are spending less than 1 in 10 Medicaid LTC dollars on HCBS.

The most interesting aspect of the discussion following Milligan and Woodcock’s excellent presentation and the formal discussant remarks was the degree of pushback from the audience against the notion that it is self evident that rebalancing away from institutional toward HCBS is always the best policy. There was a general refrain of ‘it depends, we need to know more.’

In particular, there were concerns that we do not know as much as we should about the relative outcomes of particular sites/types of care provided to disabled Medicaid beneficiaries, be they dual eligibles or persons included in “program 3” noted above. This information is needed in a clearer fashion to be able to determine the correct mixture of institutional versus HCBS in Medicaid-financed LTC. The need to determine the appropriate setting for long term care services (institutional v. home and community based) will intensify, as the movement of the baby boomers into retirement years and the fact that the national nursing facility occupancy rate is around 85% (according to the commissioned paper by Milligan and Woodcock that is not yet publicly available). The figures shown above include dual eligibles (program 2 above) and disabled persons who were not also eligible for Medicare (program 3).

A few thoughts about Medicaid reform in light of this conference and discussion:

  • A classic Medicaid worry around developing community-based services (not Nursing homes) is the wood work effect, meaning that persons will be more likely to seek eligibility and to use services if they do not have to reside in a nursing home to do so. Such an effect could offset the reduced per capita cost of non institutional settings. Whether there were a net increase or decrease in overall costs is ambiguous, and would depend upon the degree of woodwork effect and per capita savings as compared to placement in a nursing home.
  • A further Medicaid worry is back fill in nursing homes, meaning as you transition patients out of nursing homes to HCBS, will other patients simply end up in nursing homes, on the route to spend down to Medicaid eligibility?
  • The potential woodwork effect would seem to be a bigger issue with program 3 above, in part because the population at risk and in need of services is harder to define. We don’t know how many people need such services, while the number of Medicare beneficiaries who are spent down to Medicaid is clearer. Another way to describe an increase in covered persons that may be termed woodwork effect is the provision of care to those in need. An increase in beneficiaries covered by Medicaid who fall into Program 3 is consistent with both narratives.
  • For program 2, the dual eligibles, the wood work effect could still exist from Medicaid’s perspective, but not from Medicare’s. Medicare is on the hook for the acute care cost of the dual eligibles no matter what, and poor quality long term care could be expected to increase those costs. Likewise, there are incentives of providers who bill Medicaid for the care of dual eligibles (like Nursing homes and bed hold payments) and the states to send patients to hospitals for non-productive care in times of high patient acuity that results in a shifting of cost from the states to the federal government. Small changes in such nursing home admissions could be expected to improve quality of life for patients in a way that held net costs constant or reduced them (on a per capita basis).

Federalizing the Medicaid/LTC costs of the dual eligibles (program 2 above) and making Medicare responsible for all of the care of the dual eligibles seem to be more clearly warranted than federalizing the care of disabled Medicaid beneficiaries who are not eligible for Medicare (Program 3 above). Making Medicare responsible for all of the care of the dual eligibles seems to provide the best hope of getting the appropriate level of care for elderly, disabled persons, many of whom are living in nursing homes. And since Medicare is already responsible for acute care services for these patients, federalizing Medicaid for dual eligibles would remove the issue of cost shifting from states to the federal government under the current situation which is almost certainly not associated with the best care for patients.

How to best reform program 3, the disabled, non-dual eligible Medicaid eligible patients is trickier, and it remains unclear to me of the best way forward to care for such persons, many of whom will need specialized care for years or even decades. I am not opposed to federalizing this portion of Medicaid, I just need to know more. I think that moving ahead to federalize Medicaid for the dual eligibles makes sense. In any event, more information is needed on the benefits, quality and cost of care provided across different LTC settings for both of these ‘programs’. Moving to federalize Medicaid for the dual eligibles would likely help produce such information since one would payer would be responsible and have a clear incentive to find the answers.



Should Medicaid be Federalized?

My friend and colleague Peter Ubel thinks so, and he makes some good arguments. I think that he is partly correct. I believe we should consider federalizing the long term care portion of Medicaid, but would favor transitioning acute care Medicaid beneficiaries into private health insurance purchased in exchanges, with full premium support. My view is informed by a mixture of policy concerns and political realities as I understand them.

There is nothing fatally flawed about the structure of Medicaid with respect to providing access to acute care for beneficiaries. The latest study that has everyone buzzing about Medicaid (more: Austin | Pollack |Gardner) showing reduced access to specialists for Medicaid beneficiaries (children) could easily be reversed. Just raise the payment levels and make Medicaid the BEST payer instead of the worst (lower than private insurance and Medicare). That would fix the problem of reduced access for beneficiaries overnight. Of course, that will not happen.

Medicaid serving as the best payer seems far fetched, a fact that shows how disconnected from reality much of the Medicaid debate has become. Because in the the nursing home sector, Medicaid is, if not the best payer in terms of highest rate, the most predictable and predominant payer of such care. The ‘Medicaid debate’ we tend to have is is incomplete and misleading, because most of the ‘debate’ focuses on acute care Medicaid, and doesn’t even acknowledge that the most expensive part of the program is long term care, mainly nursing home care. The figure below, from a presentation by Charles Milligan and Cynthia Woodcock at the recent AcademyHealth meeting on Medicaid drives this reality home:

Medicaid pays for 16.2% of total health expenditures in the U.S., but 40.6% of the national NH expenditures.  While Medicaid is considered a poor payer for acute care services (physician, hospital), it is viewed as a much better payer of nursing home care, as compared to other sources, primarily because there are fewer other sources. There is little private long term care insurance, and very few persons have enough savings to pay for even a few months in a nursing home, so Medicaid ends up paying a large chunk of the bill. If you are in the nursing home business, then unless you are a boutique provider, you are in the Medicaid business, as shown in another slide from Milligan and Woodcock (Note that Medicare only pays for up to 90 days in a skilled nursing facility if the stay is linked to an acute medical event). In total, Medicaid is the primary payer for two-thirds of persons living in a nursing home.

What should we do? To try and get a handle on what next for Medicaid, the first step is to realize that it is really three insurance programs (at least):

  • Program 1: covers mainly pregnant women and children for acute services. There are around 45 Million such persons. The ACA would expand this portion of the the program greatly. This is the group that experienced barriers to access in the recent study, and this is where most of the debate is centered. Such beneficiaries are numerous, but are relatively inexpensive on a per capita basis.
  • Program 2: covers long term care, most notably nursing home care for Medicare beneficiaries who are also poor and therefore covered by Medicaid. Such persons are know as Dual Eligibles, because they are covered by both Medicare and Medicaid). There are 9 Million duals, around two-thirds of them are eligible for Medicare because of age, the remainder due to permanent disability. This relatively small number of persons are extremely costly to both Medicare and Medicaid.
  • Program 3: covers long term care and acute specialized services for persons younger than 65 who are disabled, but not eligible for Medicare; There are 5.9 Million such persons, who are more difficult to describe because of their variety of needs.

I suggest we move to transition Program 1, the largest group of Medicaid beneficiaries, into private insurance purchased in exchanges to be set up in the ACA. This will be more expensive than covering them in Medicaid, certainly initially. However, many conservatives seem to dislike Medicaid intensely because it is a government program, and many liberals are very worried about barriers to access for beneficiaries, which result from low payment rates and/or stigma associated with ‘poor people’s insurance’. Providers don’t like Medicaid because it doesn’t pay as much as private insurance or Medicare. If we are going to try exchanges and more persons buying their own insurance, lets try it. This approach would mainstream low income persons into the private insurance market, would expand (more than double) the potential of competition in the exchanges by adding more consumers to purchase insurance in these markets, and states could directly provide additional assistance navigating care that they decide low income persons needed. This approach assumes moving ahead with the general direction of the ACA.

I suggest we federalize the Medicaid cost of Program 2 noted above; this would primarily mean federalizing the nursing home costs of dual eligibles who are covered now by Medicare and Medicaid. There are numerous problems with the interaction between these two payers that cause problems for dual eligibles, that could best be addressed by having one payer responsible for their care. Two examples of policy reasons that could best be addressed by federalizing the Medicaid portion of dual eligibles.

  • Bed hold payment. In some states, Medicaid pays for a bed to be ‘held’ for a beneficiary who goes to the hospital. In the case of dual eligibles, hospital care is paid for by Medicare. This creates an incentive for nursing homes to send patients to the hospital, thus shifting their care burden to the hospital and Medicare (and away from states), while still receiving bed hold payments and receiving the patient back after a hospitalization, often for reasons that could have been dealt with in the nursing home setting. Having one payer responsible for all the care of the now dual eligibles is that best way to sort this out.
  • Reduced access to hospice benefits. Around 42% of non dual-eligible Medicare decedents received some hospice care prior to death. For dual eligibles (see pp.144-47), many of whom died in nursing homes, the figure is lower (36%), even though their need and potential to benefit from such services would be expected to be higher. The interaction of Medicare and Medicaid rules in some states impose a barrier to the receipt of hospice for dual eligibles. Medicare does not pay for room and board payments when someone receives hospice at a location that is not an inpatient hospice (most beneficiaries receive care at home, and Medicare doesn’t pay rent; if you are not in an inpatient hospice, you are expected to pay your own rent). In some states, if the Medicare hospice benefit is elected, then a patient may lose Medicaid’s payment for room and board, which is the majority of the charges for a stay in a nursing home. This would impose a tremendous cost on poor beneficiaries, that results in their not electing to use Medicare hospice benefits. These perverse rule interactions can reduce care options for very sick, elderly patients and could best be addressed if there was one payer responsible for the care of dual eligibles.

I am not sure what we should do for persons in Program 3, as they are a more complicated group to care for since they are younger than 65, but not eligible for Medicare. They suffer from a variety of physical, mental and intellectual disabilities, are among the most vulnerable members of society, and could need specialized services for years or decades. Medicaid could remain to care for such persons only, or other transitions may be more obvious to persons who know more about the needs of these populations than do I.

The bottom line is that Medicaid is really multiple programs, and this reality tends to be lost in most debates about the program. Most attention is focused on the more numerous (45 Million) low income persons covered for acute care services, missing the long term care aspect of Medicaid. I think we should move toward moving this large group of persons into purchasing private insurance in exchanges. The motivations for this suggestion are mostly political, as they could address key concerns of conservatives and liberals, and could aid in reaching some sort of consensus on how to move ahead in health reform by setting up insurance exchanges. Federalizing the Medicaid portion of the dual eligible’s care is more clearly indicated for a variety of policy and coordination of care issues; I gave only two brief examples, but there are more. I will blog on some of the other long term care realities that must be considered in any reform of the Medicaid program. And of course there will be difficulties and problems with any fix. However, these general directions seem the best course to take from my perspective.

Update: To clarify, three main points. First, the Medicaid debate needs to acknowledge the  ‘three’ programs which it typically doesn’t. Second, federalizing Medicaid for dual eligibles is the best way I see to address some of the inefficiencies that lead to poor quality and higher cost among dual eligibles. Third, transitioning Medicaid into premium support so that low income persons would buy private insurance in exchanges would be a huge change that would face many practical issues that I haven’t addressed; in that sense, what I put forward is an idea or direction in which to move, and not a plan.