Insurers Gather in 'Dysfunctional' D.C. for Medicare, Medicaid, Duals Conferences

by George Lauer, California Healthline Features Editor

WASHINGTON, D.C. -- Alice Rivlin, a seasoned Beltway veteran, painted a bleak perspective for the nation's health insurers who met last week on the eve of some of the biggest changes in decades for the U.S. health system.

"I'm surprised you all are brave enough to come to Washington in this surreal moment," Rivlin said. "This is the most broken I have seen our decision-making process. We're seeing the most extreme partisan politics in my memory ... and health care and health care politics are caught right in the middle."

Rivlin, founding director of the Congressional Budget Office in 1975, is co-chair of the Bipartisan Policy Center's Domenici-Rivlin Debt Reduction Task Force and interim director of Brookings Institution's Engleberg Center for Health Care Reform. Across five decades, she's been an active player in Washington, D.C., with stints as vice chair of the Federal Reserve Board and director of the White House Office of Management and Budget under President Clinton.

"I've seen some dark times, but nothing like this," Rivlin said. "We might have a shutdown of the federal government in coming weeks -- maybe even this week. We're having a lot of talk about defunding or repealing a law passed by Congress, signed by the president and OK'd by the Supreme Court. And all this is happening when the whole world is looking to us for stability and leadership. So you might wonder, 'Have they lost their minds?'

"The answer is yes," Rivlin said to a resounding round of applause.

Rivlin was one of several notable speakers in a series of three conferences examining changes and trends in Medicare, Medicaid and dual eligibiles organized by America's Health Insurance Plans, the national lobbying group for health insurers. Rivlin was not the only speaker to mention the fractured political climate. The words "dysfunctional," "broken" and "gridlocked" were uttered frequently last week.

Progress Reports Mostly Upbeat

Despite the backdrop of political stagnation, progress reports from Obama administration officials were largely upbeat.

CMS Administrator Marilyn Tavenner and Deputy Administrator Cindy Mann gave broad -- and for the most part optimistic -- overviews of Medicare and Medicaid.  

Jonathan Blum, CMS' acting principal deputy administrator for Medicare and Medicaid services, said the outlook is positive for Medicare as a whole and for Medicare Advantage and Part D in particular.

"We think it's a phenomenally strong sign that Medicare spending is flattening out much more quickly than we could have predicted," Blum said. "We think this is a sign that many efforts like the star program, which is designed to push boundaries and to get feedback to the industry on best practices, are beginning to work."

The Affordable Care Act authorized CMS to pay bonuses to Medicare Advantage plans beginning in 2012 if they received four or five stars on the program's five-star quality rating system. CMS launched a demonstration project that allowed more plans to receive bonuses and increased the size of those bonuses to encourage plans to maintain or improve their rating.

Dual Eligibles Get Special Focus

In a daylong summit sandwiched between Medicare and Medicaid conferences, AHIP assembled speakers and panels to examine and make predictions about the relatively new effort to coordinate financing and care for beneficiaries eligible for both Medicare and Medicaid. Melanie Bella, director of the CMS Medicare-Medicaid Coordination Office, said the three-year-old duals effort is making progress.

"We have approved eight states total to move forward with demonstration projects -- six of them for capitated systems and two for fee-for-service. Oct. 1 we go live in Massachusetts," Bella said. California is one of the six capitated demonstration states.

Bella urged insurers to communicate with state and federal officials as the federal health system learns to coordinate care.

"We want these demonstrations to succeed. When we find areas of trouble, we want to make course corrections as we go," Bella said.

Calling herself "not a huge fan of fee-for-service" payment systems, Bella said she recognized the need for flexibility from state to state.

"What happens in California is quite different than what happens in my home state of Indiana," Bella said.

An audience member -- listing challenges ahead such as rising federal deficit, rising health care costs, an aging population and predictions of Medicare and Medicaid running out of money -- asked, "How bad is the mess we're in? Will we ever dig out?"

After a few seconds of silence, Bella answered.

"That's too big a question for me. All I'm worried about today is this little world of 10 million people in both programs. We have no choice but to make these two programs work together," Bella concluded.

California Perspective

California was at least mentioned -- if not made a focal point -- in each of AHIP's three conferences. In a panel examining the best ways to move dual eligibles into coordinated care plans, Bruce Pollack, senior director of L.A. Care Health Plan's project management office, said prospects are good for a smooth transition in the Golden State.

"In California, we think there will be virtually no change for people entering the pilot project," Pollack said.

L.A. Care Health Plan, with 1.2 million members, bills itself as the nation's largest public health plan.

"In one sense we're the biggest, but in another sense we're the smallest," Pollack said. "We only operate in one county. From a managed care perspective, Los Angeles is a two-plan model. There's HealthNet and L.A. Care."

In the duals demonstration project, Pollack said that "in-home support services, adult day care services -- all that care remains unchanged for first 18 months of the pilot."

Attendance, Interest Up

Although AHIP does not release official numbers, attendees said this year's events -- which for the first time included a duals conference -- attracted more participants than recent years. Close to 1,000 health insurance officials attended over the course of the three conferences, with numbers waning as the week progressed through Medicare, duals and finally Medicaid.

Attendees said that pattern makes sense, as insurers typically make the most profit from Medicare beneficiaries.

'It's Not Going To Be Pretty'

Shortly after Rivlin spoke early in the week, a few blocks away on Capitol Hill a freshman senator from Texas began a marathon diatribe against health care reform, postponing a vote on the budget and complicating efforts to avert a shutdown of the federal government. Sen. Ted Cruz (R-Tex.) eventually relinquished the floor for a vote but not before making headlines across the country and masterfully illustrating Rivlin's point.

"Our democratic processes are profoundly broken," Rivlin said. "We should be fixing them for our own sake as well as for the example we set in the world. We ought to get beyond party ideology. There's a lot of good health care work going on and we are making some progress. Health care spending is not rising at the scary rate it used to be rising. There are even a lot of members of Congress in both houses who are actually trying to get things done."

If Congress can't get out of the way so health care can move forward, "it's not going to be pretty," Rivlin said.

Frank Apgar
Jonathan Blum, CMS' acting principal deputy administrator for Medicare and Medicaid services, said ...."We think it's a phenomenally strong sign that Medicare spending is flattening out much more quickly than we could have predicted," Blum said. "We think this is a sign that many efforts like the star program, which is designed to push boundaries and to get feedback to the industry on best practices, are beginning to work." It would be useful to have a research study that examined the effects of changes in reimbursement models from FFS to capitation with appropriate severity of illness controls for the patient populations, to see if this was more of a primary determinant of the flattening of the cost trend curves in Medicare and Medicaid. There has been a massive movement of patients into managed care (Medicare Advantage plans by seniors and State MediCaid agencies moving members into managed care). I suspect that the changes in the reimbursement model has played a bigger role here.

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