Risks, Rewards Higher for Managing Dual Eligibles

by George Lauer, California Healthline Features Editor

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Lessons learned in a year's worth of managing care for Medi-Cal seniors and persons with disabilities will help inform the process of moving California dual eligibles and other seniors into managed care plans, according to health plan officials. Medi-Cal is California's Medicaid program.

The state is working to shift older, low-income Californians eligible to receive Medi-Cal and Medicare -- known as dual eligibles -- into managed care plans, hoping to coordinate and improve care, as well as save money. The state also is shifting Medi-Cal beneficiaries participating in the Multi-Purpose Senior Services Program into managed care.

About 70% of Medicaid beneficiaries nationwide already are enrolled in some form of managed care, but most of that 70% are relatively healthy, young people, according to the National Association of Medicaid Directors.

About 60% of the 7.6 million people covered by Medi-Cal are in managed care plans. That majority -- about 4.5 million people -- accounts for less that 25% of the state's spending on Medi-Cal, according to state officials. The most-expensive Medi-Cal beneficiaries, many of them older with multiple chronic conditions, are still in fee-for-service plans.

But that is changing.

"That was the case until last year, when they started moving ABDs (aged, blind and disabled) into managed care," said Howard Kahn, CEO of L.A. Care Health Plan, the largest public health insurer in the country and one of the plans participating in the state's dual eligibles pilot project.

"In June we started getting 9,000 or 10,000 members in that category each month, so we have some experience now with this population," Kahn said.

"Now that we've started the process in moving seniors and disabled into managed care, duals are the logical next step. They are a similar group in many ways health-wise, but have different insurance coverage," Kahn said.

Managed care for "high-touch," high-cost populations -- dual eligibles, seniors and persons with disabilities (referred to as both SPDs and ABDs), and those in the Multi-Purpose Senior Services Program -- is part of a deal California made with CMS in 2010 -- the section 1115 waiver known as California's "Bridge to Reform." The waiver is expected to bring about $10 billion in federal funds to California over the next five years to invest in the state's health care delivery system and to help pay for changes required by the federal health reform law.

Folding dual eligibles into managed care has extra financial incentive because Medicare generally reimburses providers at a higher rate than Medicaid. Although the risk is greater for managed care plans taking on older, sicker dual-eligibles, the potential rewards are greater as well.

Money in Managed Care

While one of the main objectives of managed care is saving money, the expansion of Medicaid under the Affordable Care Act, coupled with the evolutionary growth of coordinated care, means there is money to be made by offering managed care in government-subsidized programs.

Two kinds of health plans are going after this new batch of customers: commercial insurers, such as Molina Healthcare and Health Net, and public insurers, such as L.A. Care, CalOptima in Orange County, Contra Costa Health Plan and other county-based public plans.

"Both types of companies bring different strengths to the table," said Richard Chambers, president of Molina Healthcare of California and a member of MACPAC -- the Medicaid and CHIP Payment and Access Commission, which advises Congress and HHS.

"County plans are owned by the community, whereas publicly traded companies have access to capital and other advantages in the marketplace," Chambers said.

Chambers, the only West Coast representative among MACPAC's 17 commissioners, has seen managed care from multiple perspectives -- as CEO for nine years at CalOptima in Orange County and as a CMS administrator for 27 years before that.

Molina Healthcare, one of the eight health plans participating in California's dual-eligibles pilot, deals only with managed care plans for government-subsidized programs such as Medicaid and Medicare. The publicly traded company headquartered in Long Beach saw its annual revenue almost double over the past five years to about $4.8 billion. Founded in 1980, Molina's managed care plans have about 4.3 million members in California and 15 other states.

Beneficiaries, Advocates Worried

Senior advocates and beneficiaries in fee-for-service Medi-Cal coverage worry that some services and supplies -- such as respite care, incontinence supplies and household upgrades to increase mobility -- might not be covered by managed care plans. In many cases, the state previously covered home-based services and supplies in an effort to keep people out of expensive nursing homes.

A report released last week by National Senior Citizens Law Center pointed to ratings by the state Department of Health Care Services that gave seven of the eight health plans in the dual-eligibles pilot project one out of five stars for overall Medi-Cal performance.

Critics said the low performance ratings raise questions about whether the health plans are ready to take on fragile, elderly patients.

"We understand beneficiaries are fearful, but generally everything that was covered in fee-for-service will be covered in managed care," said Patricia Tanquary, CEO of Contra Costa Health Plan.

"I know there's often a lot of apprehension with something new -- like managed care will be for some people. But most people once they realize what managed care really means appreciate it," Tanquary said. 

"We took on about 11,000 SPDs (in managed care) over the past year and over that time we had less than 1% complaints. We're really proud of that."

Tanquary pointed to a survey conducted by the state that showed that after several months in Medi-Cal managed care, 80% to 84% of seniors and persons with disabilities were "more satisfied today than in fee-for-service."

The survey -- which encompasses responses from 5,000 calls made in both February and March -- also showed that 87% of respondents reported that they experienced "improved ability to make appointments."

Health plan officials say it will make the same financial sense for managed care companies to provide the kinds of services that keep patients at home and not in nursing homes.

"If it's necessary to get bathtub bars or other kinds of services to keep people living in their own homes, we'll figure out ways to do it," said L.A. Care's Kahn.

'Understanding is Key'

"Understanding this small but expensive group of beneficiaries is key to our efforts to slow the growth of Medi-Cal spending, including in managed care," said Department of Health Care Services spokesperson Norman Williams.

"Our proposed dual demonstration and expansion of managed care will effectively target high-cost beneficiaries through new approaches that better integrate physical health, mental health, and long-term care services and supports, as well as improve the coordination of care for low-income seniors and persons with disabilities who are dually eligible for Medicare and Medi-Cal," Williams said.

California's shift to managed care is happening under three specific models defined by the state -- the county-organized health system, geographic managed care and two-plan models.

Coverage details differ from model to model and the dual eligibles demonstration project, with the addition of Medicare requirements and funding, has its own separate guidelines.

For instance, if a Medi-Cal beneficiary in managed care needs nursing home care, the procedure and financial responsibility varies under the different models.

In the county-organized health system model, the managed care plan is responsible for the nursing home benefit. In the geographic and two-plan models, health plans pay for nursing facility care for the month of nursing home admission and the following month; then the beneficiary returns to fee-for-service coverage.

In the dual-eligibles demonstration, the plans will be responsible for all care, including home- and community-based care and nursing home care.

Frank Apgar
As a former Chief Medical Officer of a Medicare Advantage plan that focused on covering underserved secondary markets, inclduing dual elgibibles and "Special Needs" members, I can attest to the significant needs of dual eligible individuals. When done properly, the careful management of ALL of the individuals needs, not only from a conventional medical coverage standpoint, but also from the social needs standpoint, can markedly improve the quality of life and health that these individuals experience. This also comes at a reduced cost. A significant, and unresolved challenge however may well be the level of access to care for these individuals whan moving form an unmanaged fee for service model to a managed care model. To do it right takes an extraordinary amount of comprehensive care management focusing on all of the needs of the individual.

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