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April 29, 2019

The 3 models states can use to integrate care for dually eligible beneficiaries

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    CMS Administrator Seema Verma on Wednesday invited states to participate in demonstrations designed to integrate care for beneficiaries who are dually eligible for Medicare and Medicaid by using one of three existing demonstration models.

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    States seek opportunities to integrate care for dually eligible beneficiaries

    Verma in a letter to state Medicaid directors wrote that a number of states have expressed interest in opportunities to continue, develop, or revise approaches for providing care to dually eligible beneficiaries—a population that accounts for a disproportionately large percentage of Medicare and Medicaid expenditures. According to Verma, dually eligible beneficiaries historically have represented:

    • 20% of Medicare beneficiaries, but accounted for 34% of Medicare spending; and
    • 15% of Medicaid beneficiaries, but accounted for 33% of Medicaid spending.

    Verma wrote that integrated care models for dually eligible beneficiaries offer states and the federal government an opportunity to "achieve greater value from … Medicare and Medicaid investment[s]." She noted that a lack of alignment between Medicare and Medicaid programs "can lead to administrative inefficiency, fragmented or episodic care for dually eligible individuals, and misaligned incentives for both payers and providers, resulting in reduced quality and increased costs."

    Verma details 3 demonstration models states can use to integrate care

    Verma in the letter described three existing Medicaid demonstration models states can use to integrate care for dually eligible beneficiaries.

    1. Capitated financial alignment model

    Verma wrote that, under this model, states can integrate care by entering a joint contract with CMS and health plans to provide dually eligible beneficiaries with a broad range of benefits for an established total payment amount, known as a capitated payment.

    Verma noted that there are nine states currently participating in a capitated financial alignment model to integrate care for dually eligible beneficiaries. According to Verma, those states have reported high levels of beneficiary satisfaction and have generated an average of 4.4% in savings. Further, Verma wrote that the demonstration also has allowed states to provide incentives for integrated plans to invest in better ways to care for dually eligible beneficiaries.

    As a result, Verma noted that CMS is offering multi-year extensions to the nine states currently running a capitated financial alignment demonstration. Verma wrote that CMS aims to use the extensions to collect additional data to help the agency decide whether to approve a demonstration certification that would no longer require CMS to make such extensions after 2023.

    Verma also wrote that states interested in participating in the capitated financial alignment model should consult with CMS and stakeholders to discuss the demonstration's proposed geographic scope.

    2. Managed fee-for-service model

    In addition to the capitated financial alignment model, Verma wrote that states can integrate care by partnering with CMS to share in Medicare savings generated from Medicaid fee-for-service (FFS) interventions, such as health homes that integrate acute, behavioral health, and primary care services for beneficiaries with two or more chronic conditions.

    Verma noted that CMS has seen promising results from Washington's managed FFS demonstration model, which uses Medicaid health homes to offer high-intensity care coordination for high-risk beneficiaries. Preliminary data from the demonstration's first three years show:

    • Gross savings of 11% for Medicare Parts A and B; and
    • Positive quality and beneficiary experience trends.

    Verma wrote that, based on the preliminary data, Washington received interim performance payments of more than $36 million from CMS. However, she noted that Colorado's managed FFS demonstration, which uses a broader set of Medicaid FFS interventions, has not seen the same results.

    3. State-specific model

    Verma also wrote that states can develop their own proposals to integrate care for dually eligible beneficiaries and partner with CMS to test their ideas. Verma wrote that states could consider integrating care by using a broad approach for all dually eligible beneficiaries or a narrow approach focused on specific populations, such as dually eligible beneficiaries who live in rural areas or are younger and have disabilities. 

    Verma wrote that states also can consider concepts designed to:

    • Build on demonstrations or delivery system reforms, such as value-based purchasing or bundled payment arrangements;
    • Generate savings for Medicare and Medicaid;
    • Increase access to coordinated care and incorporated Medicare and Medicaid services;
    • Improve quality of care by focusing on health outcomes;
    • Preserve beneficiaries' ability to choose providers and access all Medicare benefits; and
    • Promote dually eligible beneficiaries' independence.

    Verma wrote that each demonstration proposal will be subject to a 30-day comment period and federal approval.

    CMS is learning from past demonstrations, industry stakeholder says

    Georgia Burke, an attorney at Justice in Aging, said Verma's letter shows CMS is building on lessons from current demonstrations and intends to partner with states on both ongoing and new demonstrations. Burke said Justice in Aging hopes the new demonstrations will include beneficiary ombudsman programs, which in the past have helped identify systemic programs with demonstrations (Morse, Healthcare Finance News, 4/24; Livingston, "Transformation Hub," Modern Healthcare, 4/24; Commins, HealthLeaders Media, 4/24; Stein, Inside Health Policy, 4/24 [subscription required]; Verma letter, 4/24).

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