Medicaid Vs Medicare - Both Sides of the Wheel

Transcription

1 THE MINNESOTA SENIOR HEALTH OPTIONS DEMONSTRATION IN REVIEW: DRAFT FINAL 1115 WAIVER REPORT

2 THE MINNESOTA SENIOR HEALTH OPTIONS DEMONSTRATION IN REVIEW: DRAFT FINAL 1115 WAIVER REPORT, By Pamela J. Parker, Project Director, Michael J. Zis, Health Policy Coordinator and Susan Westrich, Operations Coordinator Federal Project Officer: Linda Frisch Minnesota Senior Health Options, Minnesota Department of Human Services HCFA Contract No. 11-W-00024/5 July 2000 The statements contained in this report are solely those of the authors and do not necessarily reflect the views or policies of the Health Care Financing Administration. The contractor assumes responsibility for the accuracy and completeness of the information contained in this report. ii

3 TABLE OF CONTENTS I. EXECUTIVE SUMMARY 2 DEMONSTRATION OVERVIEW 2 PURPOSE OF THIS REPORT 3 SUMMARY OF RESULTS 4 Successful Implementation and Attracting Providers- 4 Reorganization of the Service Delivery System- 5 Reduced Administrative Duplication- 5 Seamless Point of Access to Primary, Acute and Long-term Care Services- 5 Meeting Enrollment Goals- 5 Increased Consumer Satisfaction- 6 Increased Access to Home and Community Based Services for Underserved Populations- 6 Reduced Institutional Utilization- 6 Single Point of Accountability- 7 Clinical Outcomes - 7 Policy Development- 7 Budget Neutrality- 7 II. MSHO FEATURES AND STRUCTURE 10 INTEGRATION AND THE DUAL ELIGIBLE POPULATION 10 Profiling the Dually Eligible Population- 10 Problems with the Current System- 10 Integration: Part of the Solution- 11 MSHO DEVELOPMENT 12 Background: Medicare Managed Care for Dual Eligibles in Minnesota- 12 Piggybacking Medicaid Benefits onto Medicare + Choice Plans- 13 Chronology of MSHO Development- 14 MSHO FEATURES 15 Federal Waiver Authority- 15 HCFA/State Partnership and Contracting Structure- 16 Relationship to PMAP- 16 MSHO Eligibility- 18 MSHO Service Package- 18 MSHO Contractors and Service Areas- 18 Enrollment Status- 19 County and Plan Enrollment- 20 Clinical Delivery Systems- 20 Care Coordination- 20 Geriatric Care Systems- 21 Health Plan s Role- 22 Enrollment Process- 22 Beneficiary Education and Marketing- 23 Quality Assurance and Oversight- 23 Quality Improvement System for Managed Care (QISMC) 24 Grievance and Complaint System- 26 iii

4 Ombudsman and Advocacy Program- 28 Technical and Educational Assistance Program- 28 Public Input: Advisory Committee- 28 MSHO Rate Structure and Rate Cell Determination- 29 Adjusted Cumulative Rate Proposals (ACRP)- 30 III. MSHO GOALS AND OBJECTIVES 31 ORIGINAL GOALS 31 ADMINISTRATIVE OBJECTIVES 31 CLINICAL PRINCIPLES AND EXPECTATIONS 32 IV. MSHO: ACCOMPLISHMENTS AND LESSONS LEARNED 34 SUCCESSFUL IMPLEMENTATION 34 ATTRACTING COMMITTED PROVIDERS 34 ADMINISTRATIVE SIMPLIFICATION 35 ALIGNING FISCAL INCENTIVES TO REORGANIZE DELIVERY SYSTEMS 36 Seamless Point of Access- 38 Care Coordination Case Studies- 38 INCREASED ACCESS TO COMMUNITY SERVICES FOR UNDERSERVED POPULATIONS 46 REDUCED INSTITUTIONAL UTILIZATION 46 ATTRACTING VOLUNTARY ENROLLMENT 47 Nursing Home Enrollments- 47 Nursing Home Certifiable MSHO Enrollees- 48 Conversion of Nursing Home Residents- 49 MSHO versus PMAP Demographics- 50 Low Disenrollment and Complaint Rates- 51 CREATING A SINGLE POINT OF ACCOUNTABILITY: ENROLLEE SATISFACTION 51 Improved Consumer Satisfaction- 52 Enrollee Focus Groups- 52 Consumer Assessment of Health Plan Satisfaction- 53 University of Minnesota Satisfaction Survey- 55 Additional Satisfaction Surveys- 58 CREATING A SINGLE POINT OF ACCOUNTABILITY:CLINICAL OUTCOMES 58 HEDIS Measures- 58 State Collected Utilization Data- 59 Comparable Benchmarks- 60 Medicaid External Quality Review Studies- 61 Other Quality Improvement Initiatives- 63 Barriers to Demonstrating Clinical Outcomes- 63 CREATING A SINGLE POINT OF ACCOUNTABILITY: MEDICARE-MEDICAID LINKED DATABASE 64 iv

5 TECHNICAL AND EDUCATIONAL ASSISTANCE PROGRAM 65 RAISING AWARENESS ON DUAL ELIGIBLE ISSUES 67 V. SEAMLESS TRANSITION OF MSHO FROM 1115 TO 1915(A) AND 1915(C) 69 VI. BUDGET NEUTRALITY 71 VII. REFERENCES 73 VIII. APPENDIXES 74 1A. Minnesota Senior Health Options Rate Structure 74 2A. Demographics for EW Clients and MSHO Nursing-Home Certifiable Clients: Calendar Years 1998 and A. Milliman & Robertson, Inc. Memo re: Actual to Expected Comparison for Minnesota Senior Health Options (Jun. 23, 2000) 74 4A. Minnesota Senior Health Options Enrollment by Health Plan, County, and Rate Cell Category, Jul. 1, B. Minnesota Senior Health Options Enrollment ( ) 74 4C. Minnesota Senior Health Options Cumulative, Unduplicated Enrollment July D. Minnesota Senior Health Options Enrollment, Jun A. EW Clients and MSHO Community Nursing Home Certifiable Clients: Number of ADL Dependencies in Calendar Years 1998 and B. EW Clients and MSHO Community Nursing Home Certifiable Clients: Case Mix Distribution in Calendar Years 1998 and C. Demographics for EW Clients and MSHO Nursing-Home Certifiable Clients: Calendar Years 1998 and A. MSHO Disenrollment Summary 74 7A. Memo: CAHPS Survey (Dec. 3, 1999) 74 8A. HEDIS 2000 Measures to be Submitted for MSHO Plans: Medica, MHP, and UCare 74 8B. HEDIS 1998 MSHO Submission Summary 74 8C. HEDIS 1999 MSHO Submission Summary 74 8D. PMAP HEDIS Use of Services Measures Summary: 1996 through 1998 Calendar Years 74 9A. Summary of MSHO Utilization Data 74 9B Top 10 Inpatient and Ambulatory Categories 75 9C Top 10 Inpatient and Ambulatory Categories 75 9D Top 10 Inpatient and Ambulatory Categories 75 10A. Utilization Data for the Elderly Dually Eligible in MSHO Counties 75 10B Medicare Utilization Data (MSHO QM Subcommittee) 75 11A. Letter to Linda Frisch (Dec. 10, 1999) 75 12A. Attachment to Original Special Terms and Conditions: LTCOP Waiver Cost Estimate 75 12B. Cost Analysis of the Long Term Care Options Project, Prepared for Draft Terms and Conditions 75 12C. Milliman & Robertson, Inc. Upper Payment Limit Analysis for Minnesota Senior Health Options 75 IX. LIST OF FIGURES 76 Figure 1. Mrs. Q 76 Figure 3. Features of Case Management vs. Care Coordination 76 Figure 4. MSHO vs. PMAP by Age and Living Arrangement 76 Figure 5. MSHO vs. PMAP by Age and Sex 76 v

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7 I. EXECUTIVE SUMMARY DEMONSTRATION OVERVIEW The Minnesota Senior Health Options (MSHO) demonstration integrates Medicare and Medicaid financing and acute and long-term care service delivery for dually eligible seniors in a seven county metro area in Minnesota. The State of Minnesota received HCFA approval to operate MSHO under Medicare 402 and Medicaid 1115 waivers in April 1995 and began enrollment in February Enrollment is voluntary. MSHO enrollment is available to elderly dually eligible beneficiaries, including those living in institutions, frail community enrollees who meet institutional placement criteria and other community enrollees whose needs do not meet institutional levels. MSHO currently has about 3,497 enrollees and has operating networks in six of the seven Metro counties. MSHO includes all Medicare and Medicaid benefits including home and community based waiver services and 180 days of nursing home care for community enrollees. Other nursing home services are paid fee-for-service (FFS). The Health Care Financing Administration (HCFA) and the State of Minnesota have entered into a modified Medicare + Choice contract which allows the State to contract with licensed non profit health care maintenance organizations (HMOs) to provide Medicare and Medicaid services to MSHO enrollees and facilitates Medicare payments directly to those approved HMOs. MSHO plans must be current Medicaid managed contractors but are not otherwise required to be Medicare + Choice contractors. Currently, three HMOs are participating in MSHO and all also serve substantial numbers of dually eligible enrollees under the State s Medicaid managed care system, the Prepaid Medical Assistance Program. One of the three does not participate in Medicare + Choice except through MSHO and a second contractor has notified HCFA that it will drop its separate Medicare + Choice contract participation in 2001). Medicare and Medicaid managed care requirements are merged under one contract managed by the State. Contract requirements address and resolve differences between Medicare and Medicaid managed care procedures. Enrollment processes, member materials and grievance procedures are merged. Enrollment is conducted by the State and approved by HCFA via monthly electronic communications. Marketing is overseen by the State and all marketing materials are approved by the HCFA Regional Office. Full encounter data on both Medicare and Medicaid services is collected by the State. MSHO plans often subcontract with geriatric care systems that may be sponsored by a variety of partnerships between physicians, hospitals and/or long-term care providers. MSHO enrollees have access to care coordinators who help them navigate the system and provide a more seamless point of access to primary, acute and long-term care services. Care coordinators integrate a wide range of home and community based and long-term care services with primary and acute care. They may work either directly for the clinics, care systems or the health plans. In addition, nursing home enrollees may have their primary care coordinated by geriatric nurse practitioners. 2

8 MSHO payments are made under a coordinated payment design that attempts to address conflicting financial incentives between the programs. Separate Medicare and Medicaid capitations are merged at the plan level. Plans are at full risk. There is no risk sharing arrangement. Medicare payments are 95 percent of the adjusted average per capita costs (AAPCCs) for community and institutional enrollees. The Program for All-Inclusive Care for the Elderly (PACE) risk adjuster of 2.39 is multiplied by 95 percent of the AAPCC for community frail who meet criteria for nursing home placement. Each plan completes an Adjusted Community Rating Proposal (ACRP) for Medicare benefits and submits it electronically each year. MSHO is currently exempt from the Principal Inpatient Diagnostic Care Group (PIP-DCG) risk adjustment methodology. MSHO plans are working to submit required encounter data elements directly to HCFA for exploration of risk adjustment refinements. Medicaid payments are based on FFS historical long-term care data and on current Medicaid managed care rates for dual eligibles enrolled in the State s Prepaid Medical Assistance Program (PMAP) under a separate 1115 waiver. The MSHO demonstration has been developed and supported with the assistance of the Robert Wood Johnson Foundation, Medicare and Medicaid Integration Program, administered through the Center on Aging, University of Maryland. PURPOSE OF THIS REPORT Working with HCFA s guidance, Minnesota requested to withdraw the 1115 waiver governing the Medicaid portion of the MSHO demonstration, in December of 1999, and requested to operate the Medicaid portion of the demonstration under 1915(a) and 1915(c) of the Social Security Act. Because enrollment in MSHO is voluntary and because MSHO does not expand Medicaid eligibility, it was determined that 1115 waivers were not required to operate MSHO. At the time MSHO began, HCFA had advised Minnesota to seek an 1115 waiver for MSHO. However, since then, HCFA has granted Medicare 402 waivers in combination with 1915(a) and 1915(c) for similar demonstrations. In addition, changes in the BBA of 1997 eliminated aspects of the need for an Subsequently, Minnesota submitted the required 1915(a) documentation and Upper Payment Limit analysis to the HCFA Regional office along with amendments to its existing 1915(c) waivers needed to operate the Medicaid portion of MSHO under 1915(a) and 1915(c). The HCFA Regional Office approved these amendments. In April 2000, HCFA notified Minnesota of the termination of the 1115 waiver effective May 1, 2000 and of approval of its request to operate the Medicaid portion of the waiver under Section 1915(a) and 1915(c) of the Social Security Act. MSHO is has been operating under this arrangement since that date. As a condition for closing the 1115 waiver, HCFA requested that the State of Minnesota submit a draft final report by August 1, This report was to include the following four elements: 3

9 1. A review of the original objectives and goals of the waiver; 2. What the State of Minnesota has learned from the demonstration to date, including qualitative outcomes where available; 3. How the transition from the 1115 waiver to the 1915(a) and (c) authority is seamless to beneficiaries; and a 4. Budget neutrality report. This document is being submitted in compliance with this requirement. In this draft final report, the authors use information gathered from the first three years of the Minnesota Senior Health Options demonstration to assess what the State of Minnesota has learned during the demonstration s first three years of operation. This information includes qualitative data gathered from meetings and focus groups with enrollees, advocates and providers as well as quantitative satisfaction survey and utilization data collected from enrollees and providers participating in the demonstration. The authors interpret this information in the context of the demonstration s original objectives and goals as expressed in MSHO s original Operational Protocol and subsequent HCFA reports: 1. Align fiscal incentives to support clinical practices and reduce cost shifting between acute and long-term care services and Medicare and Medicaid; and 2. Reorganize service delivery systems to reduce administrative duplication and provide a seamless point of access for enrollees; and 3. Create a single point of accountability for tracking total costs and outcomes of care across a full range of acute and long-term care services As illustrated in this report, these goals have been effectively met over the first three years of the demonstration. SUMMARY OF RESULTS Successful Implementation and Attracting Providers- In its first three years the MSHO demonstration has been successful in attracting and maintaining the participation of committed health plans and providers, implementing a viable payment structure for aligning Medicare and Medicaid s fiscal and clinical incentives, and merging Medicare/Medicaid contract requirements. Three health plans have contracted with the State to provide the package of benefits under the capitation. These plans offer a wide range of provider and care system choices and have been expanding their networks and service areas. MSHO has also effectively created smooth operational administrative mechanisms for payment and enrollment and provided administrative support to appropriate clinical delivery and care coordination at the health plan and care system level. 4

10 Reorganization of the Service Delivery System- The presence of integrated and capitated Medicare and Medicaid financing through MSHO has played a key role in stimulating market place changes that have effectively reorganized service delivery systems in the metropolitan area for many dually eligible seniors. Integration of Medicare and Medicaid financing has encouraged participating health plans to develop partnerships with primary, acute and long-term care providers to bridge separate financing and delivery silos through geriatric care systems. Capable of serving both the acute and long-term care needs of seniors, these care systems, or provider networks, have new financial incentives to work together to coordinate care across providers, settings and time. These care systems can efficiently provide a broad range of primary, acute, social and long-term care services to individuals with chronic care needs under subcontracts with MSHO and other Medicare + Choice health plans. These new care systems rely on MSHO s integrated capitated financing to provide additional risk screening, assessment and care coordination beyond what is normally provided under the Medicare or Medicaid. The integrated capitated financing also allow care systems the flexibility to meet individual enrollee needs in unique and cost effective ways. While not all MSHO plans utilize care systems these entities play a dominant role in direct service delivery to MSHO enrollees and all of the MSHO plans operate under geriatric care delivery principles. Reduced Administrative Duplication- The integrated contracts have reduced administrative duplication and conflicts between Medicare and Medicaid managed care requirements. For the health plans, MSHO is a cost-effective alternative to piggy backing separate Medicare and Medicaid enrollments because of integrated billing, integrated contract requirements, and streamlined communications. For enrollees, there is only one enrollment form, a single identification card, and one set of notices compared to different sets of each for the different programs. Enrollment forms, enrollment procedures, member materials and grievance procedures are also merged. Seamless Point of Access to Primary, Acute and Long-term Care Services- MSHO plans and care systems have developed active models of care coordination in which the care coordination function combines gate keeping and advocacy and in itself becomes a direct service intervention. MSHO care coordinator assistance in navigating the health care system has provided enrollees with a seamless point of access to primary, acute and long-term care services. Community based services are accessed without the long waits typical in the FFS system. All enrollees are screened and risk-assessed within 60 days of enrollment, many with face to face visits, facilitating preventive clinical strategies not present in other systems. The addition of the personalized relationship with a care coordinator has put a human face on the system for the enrollee and, in turn, reminded the system of the human face of the enrollee. Meeting Enrollment Goals- A critical factor in the success of integrated demonstrations is to attract enough enrollees to be viable. MSHO has been successful in attracting enrollees. Current enrollment in MSHO is 3,497 (July 1, 2000), making MSHO the largest integrated demonstration in the country. Enrollment growth has been remarkably steady and stable and has matched 5

11 projections used for rate setting. Enrollment has grown, despite the difficulty of marketing this type of product to a very frail population with a high degree of institutionalization. In its original cost projections, DHS projected that MSHO would serve an average monthly caseload of 3,143 enrollees by the third year of the demonstration. MSHO has exceeded that goal. About 24% of eligible seniors in the demonstration service area are now enrolled in MSHO. Over 6,359 unduplicated individuals have now participated in the program, with a low two to three percent voluntary disenrollment rate. Increased Consumer Satisfaction- Enrollee focus groups indicate a high degree of satisfaction with the program, particularly with the addition of the role of care coordinators which is not available in the PMAP program. Satisfaction levels as measured by the Consumer Assessment of Health Plans Study (CAHPS ) survey for non- institutional enrollees are high, with MSHO enrollees generally ranking their health care higher than a control group of PMAP senior enrollees in the same counties. There have been no formal complaints thus far. Health plans and care systems have been responsive in working out any issues informally with enrollees and their families. The PMAP Ombudsman program is also available to MSHO enrollees. Increased Access to Home and Community Based Services for Underserved Populations- MSHO has been effective in providing increased access to home and community based services for community members with diverse racial and cultural backgrounds. For example, 20% of MSHO community frail enrollees are African American compared to 10% of the FFS Elderly Waiver program in the Minneapolis-Saint Paul, seven county metropolitan area. Eighteen percent of MSHO s community frail enrollees are Asian compared to 5% in the FFS Elderly Waiver program in the same counties. In addition, MSHO community frail members are slightly more impaired than EW clients in the same counties are. Reduced Institutional Utilization- Financial incentives for reducing long-term institutional use are an important part of the MSHO demonstration. Because they are at risk for the first 180 days of nursing home placement, MSHO plans are encouraged to reduce nursing home use and to provide community services. MSHO data on the number of enrollees who are permanently placed in nursing homes indicate that MSHO plans are successfully managing this aspect of the demonstration. Overall, rates of institutionalization under MSHO have been lower than projected under FFS. While MSHO plans have rates of nursing home admission that are the same or slightly higher than historical FFS placement rates built into payment rates, the length of stay of those admissions is significantly (21-41%) lower than FFS. This represents a reduction of 35 to 39 days from expected rates based on actual FFS data. This data is consistent with the expectation that nursing home use for short-term sub-acute stays may increase, while long-term stays would be avoided. 6

12 Single Point of Accountability- Integration of Medicare, Medicaid and long-term care services under each health plan provides for a single point of accountability from which the State can better assess the total impact of care for dual eligible beneficiaries. Quality Assurance oversight and collection of various sets of utilization data for both acute and long-term care services are merged under MSHO. Encounter data for all Medicare and Medicaid and acute and long-term care services is also collected. In addition, for the first time, an integrated research database merging Medicare and Medicaid information about dually eligible elderly and disabled beneficiaries in Minnesota, has been developed under contract with JEN Associates, Inc (JAI). Clinical Outcomes - Data collected on utilization show that each of the three health plans has very different patterns of utilization due primarily to a different mix of enrollees and suggests the strong need to adjust utilization data by case mix (i.e. institutional, community nursing home certifiable and community well categories). State collected utilization measures do include these adjustments; however, the HEDIS measures collected for MSHO enrollees are less useful because they are not adjusted for case mix differences and because cell numbers are often too small for analysis. Evaluation of the demonstration s effect on clinical outcomes and cost effectiveness is still premature. The data collected so far are, essentially, baseline measures during a start up period. More utilization data will be collected and analyzed over the next two years of the demonstration. Until recently, it was not possible to conduct analyses of encounter data, however this situation has changed and analyses of MSHO encounter data are currently underway. In the meantime, MSHO has initiated inclusion of elderly dual eligibles into several major clinical studies undertaken by the state on the topics of diabetes, urinary incontinence, and access to mental health services. Policy Development- As a trailblazer in the area of integration, the MSHO demonstration has attracted national attention from other states, policymakers and policy researchers as well as consumer organizations, providers and others interested in integration of acute and long term care services and the dually eligible population. The Bipartisan Commission on Medicare Reform conducted a site visit to the project during the summer of MSHO staff has provided congressional testimony and has been interviewed extensively by the General Accounting Office and the Kaiser Commission for forthcoming reports on integration of Medicare and Medicaid. In addition, the Robert Wood Johnson Foundation implemented an initiative to provide $8,000,000 in grants to up to 10 states to develop integrated Medicare and Medicaid projects. In response to this interest, MSHO staff has appeared at conferences or panels around the country to share information and ideas on the challenges of integrating financing and delivering for dually eligible Medicare/Medicaid beneficiaries. Budget Neutrality- 7

13 MSHO Medicaid rates have been developed by the actuarial firm of Milliman and Robertson (Milwaukee office.) Extensive actuarial sensitivity testing was conducted on the rates to assure their appropriateness. The rates themselves are designed to be budget neutral. They are entirely based on fee for service experience and reflect no more than the costs that would be incurred for the same mix of enrollees under FFS Medicaid. Rates are risk adjusted for enrollment mix through the use of four basic rate categories: institutional, community, community nursing home certifiable and conversions (those discharged from a nursing home after a stay of at least six months.) Rates are also adjusted by the appropriate age, gender and geographic factors. The Medicaid portion of the rates includes three basic components: acute care costs, nursing home costs and home and community based costs. Acute care rates are paid for all four categories and are the same as rates set for elderly enrollees under the State s PMAP program which have been discounted by 5% from FFS (fee for service) costs in a base year. The home and community based rate component is paid only for enrollees who meet nursing home level of care as determined through the use of the state s preadmission screening tool and level of care criteria used in the 1915(c) waiver. This includes the community nursing home certifiable and conversion categories. This component for the community nursing home certifiable category is based on average historical FFS payments from 1993 and 1994 for the State s 1915(c) waiver for the elderly trended forward using the same or lower trend factors as applied to the FFS program and discounted by 5%. Conversions are paid at twice the average FFS diversion payment (approximately the same as conversion costs reflected in the HCFA 372s) to encourage conversion of difficult cases. The nursing home rate is pre-paid for those who enroll while in the community (community and community nursing home certifiable categories). It includes a stoploss at 180 days. It is designed to encourage health plans to manage nursing home utilization and reduce long term placements. The nursing home rate component is based on FFS costs, admission rates and length of stay taken from FFS data (recently re-based to ) with the same trend factors as were applied in the FFS program. Nursing home costs for enrollees who are living in the nursing home upon initial enrollment are paid FFS as are nursing home costs for community based enrollees after 180 cumulative days. In addition, the same MSHO rate methodology, along with rates for the 2000 contract year and an upper payment (UPL) analysis as prepared by actuaries from Milliman and Robertson were submitted to the HCFA Regional Office as part of the requirements for the transition from 1115 to the 1915(a). The Regional Office found the UPL analysis to meet the requirements of federal Medicaid regulations governing the UPL at 42CFR MSHO costs have not exceeded budget neutrality projections over the first three years of the demonstration. While it was not an original objective of the demonstration to result in initial cost savings, MSHO costs have been lower than original projections over the 8

14 first three years of the demonstration. Analysis prepared by the actuarial firm of Milliman and Robertson indicates that total MSHO Medicaid expenditures during the first three years were $201,755,447. Expected demonstration expenditures as projected in 1995 were $ ,945. Expected without demonstration costs projected in 1995 were $212,369,234. Therefore, total MSHO Medicaid expenditures have been $10,613,787 less than projected costs and well within the budget neutrality parameters of the original Terms and Conditions. 9

15 II. MSHO FEATURES AND STRUCTURE INTEGRATION AND THE DUAL ELIGIBLE POPULATION Profiling the Dually Eligible Population- About 7 million low-income elderly and disabled individuals are dually eligible for both Medicare and Medicaid in the United States. Though a relatively small proportion of the total Medicare-Medicaid eligible population, dual eligibles account for a much larger share of each program s spending. In 1997, these dual eligibles accounted for 28 percent of Medicare spending and 35 percent of Medicaid nationwide despite representing only about one-fifth of each program s enrollment (Komisar, Feder, and Gilden 2000). In a study of dual eligibles in four states, Komisar, Feder, and Gilden (2000) found that average Medicare spending per person for senior Medicare-Medicaid enrollees was 68 percent great than all Medicare enrollees -- $694 per month [for senior Medicare-Medicaid enrollees], compared with $413 [for all Medicare enrollees]. Since dual eligibles are a rapidly growing, frail and costly population with many chronic care needs, improving the efficiency and clinical effectiveness of their care should be a priority for both the States and HCFA. In Minnesota, there are proportionately less elderly and disabled dual eligibles who qualify for Medicare and Medicaid than in other states. Nationally, 13.1 percent of all Medicare beneficiaries were, in 1997, dual eligibles (The Kaiser Commission on Medicaid and the Uninsured, 1999). By contrast, 8.7 percent of Medicare beneficiaries, in Minnesota, were dual eligibles for the same year (The Kaiser Commission on Medicaid and the Uninsured, 1999). As is true nationally, Minnesota s dual eligible population is expected to grow faster in the years ahead, as the baby boomers age, medical costs rise and employer-sponsored, retiree medical coverage recedes. Problems with the Current System- Though Minnesota offers a generous array of Medicaid services to dual eligibles, the current system contains little coordination between primary, acute and long-term care services and between the Medicare and Medicaid programs. Conflicting financial incentives between Medicare and Medicaid and an overlap in service coverage between the programs can impede efficient clinical practices and result in cost shifting behaviors among providers. Communication links between long-term care providers and hospitals, clinics, and physicians responsible for the management of acute care services are often lacking. This lack of clinical care coordination among providers and across care settings creates problems for dual eligibles who experience the system. Bullen, Perrone, and Parker (1998) note the lack of appropriate clinical coordination means that primary care physicians or specialists are frequently unaware of their patients admittance to nursing facilities, or that home care case managers are not informed of their clients hospitalization. 10

16 Payment incentives between Medicare and Medicaid are not aligned, sometimes impeding good clinical practice. Providers may make service decisions that are reimbursement-driven and not always in the best interest of the patient. Cost shifting is especially a problem for benefits partly covered by both Medicare and Medicaid, such as some home health and nursing facility services. States may lack control over their own Medicaid costs due to interactions with Medicare. Medicaid is not able to participate in primary and acute medical care decisions where Medicare is the primary payer, yet Medicaid is often responsible for increased long-term care costs resulting from clinical decisions and practice patterns related to incentives in the acute care system. On the other hand, States also lack incentives to initiate efficiencies that could save Medicare money, since those measures may increase Medicaid costs without access to any corresponding Medicare savings. As a result, the dually eligible beneficiary often faces duplicative and conflicting systems that are frustrating and confusing. Because the beneficiary is enrolled in two or three different programs, they have to try to navigate two or three often conflicting systems with different rules, case managers, telephone numbers and identification cards and paperwork requirements. Integration: Part of the Solution- Bullen, Perrone and Parker (1998) note that, with integration of Medicare and Medicaid financing and acute and long-term care service delivery, providers can improve the quality of care for dual eligibles by designing a program to include: a comprehensive service package that recognizes the interaction of acute and chronic needs, as well as the dynamic nature of these relationships (Stone and Katz, 1996); the flexibility to provide the most appropriate services for the beneficiary, including the option to expand the availability of community-based longterm care services or to provide services not otherwise covered by Medicare or Medicaid that prove to be cost-effective, such as access ramps in the home; initial and ongoing risk screenings, accompanied by early intervention and greater prevention; emphasis on providing more coordination across providers and settings, including the coordination of medical services with social support services, such as meals and non-medical transportation; a reduction in the amount in the amount of or paperwork associated with Medicare claims; and one-stop shopping for persons using an array of services, possibly including a single number to call for services. Managed care and capitation are tools that can align the fiscal incentives between separate Medicaid and Medicare primary, acute and long-term care delivery systems to support sound clinical practices. Integrated capitations potentially enable providers to be proactive in designing care plans that meet individual needs, and flexible, 11

17 comprehensive service packages that include acute and long-term care as well as appropriate social support services. MSHO DEVELOPMENT Background: Medicare Managed Care for Dual Eligibles in Minnesota- Most dual eligibles in Minnesota receive Medicare services under the fee for service payment system. Though dual eligibles, like all Medicare beneficiaries, have the option of enrolling in Medicare + Choice plans for their Medicare services where those plans are available, relatively few are enrolled. Dually eligible beneficiaries, unlike other Medicare beneficiaries, have little financial incentive to enroll in traditional Medicare managed care plans because Medicaid programs already cover beneficiary co-payments and deductibles. Dually eligible beneficiaries are also less likely to rollover from commercial managed care plans into Medicare managed care plans, since few have employer-sponsored health coverage prior to becoming Medicare eligible. In addition, many health plans are typically concerned about adverse selection of large numbers of frail elderly, such as dual eligibles, and have not developed the specialized services that would be required to serve them. Minnesota s managed care marketplace is such that the long-term viability of Medicare + Choice is questionable. Medicare + Choice plans are not widely available in Minnesota and choices are limited. There are only three Medicare + Choice plans operating at full risk in Minnesota and they operate primarily in the seven county metro area. One of those plans has given notice that it will drop its Medicare + Choice risk product next year. Medicare + Choice rates for Minnesota HMOs are considerably below the national average. The average reimbursement rate paid to HMOs in 1999 operating in the Minneapolis-Saint Paul metropolitan area was $439 per month for each Medicare member enrolled in the HMO (Green, et al. 1999). By contrast, HMOs in the Miami metropolitan area receive $778 per month (Green, et al. 1999). Thus, Minnesota s Medicare + Choice HMOs premiums are relatively high and extra benefits are limited to items like preventive dental and eyeglass discounts. Premiums with the inclusion of prescription drug coverage run over $200 per month. Not surprisingly, Minnesota has experienced a highly unstable Medicare + Choice marketplace over the last 10 years, with reductions in service areas, a large decline in the percentage of seniors enrolled in Medicare Risk plans and two of four plans dropping out of the market altogether. The most recent withdrawal was announced by Medica, the first plan in the country to participate in Medicare managed care. Enrollment in Medicare HMOs in Minnesota dropped from 173,000 in 1986 to 47,000 today (Hewitt, 2000). 12

18 Piggybacking Medicaid Benefits onto Medicare + Choice Plans- Dual membership in the same health plan s Medicaid and Medicare + Choice managed care products could help coordinate services for dually eligible seniors who enroll in both products. A number of states and HCFA are pursuing this arrangement as a way to integrate Medicare and Medicaid without requiring waivers. Minnesota has many years of experience with simultaneous membership of dual eligibles in separate Medicare and Medicaid products within the same plan. Minnesota s senior dual eligible population, age 65 years and older, must enroll in managed care for their Medicaid services (where PMAP is available). Three of the State s nine PMAP plans also offer a Medicare + Choice risk plan and two PMAP plans have also offered cost contract plans (one of these plans is dropping their risk contract and will begin a cost contract next year). All of these plans have had experience with enrollment of dual eligibles simultaneously in both their Medicare and Medicaid products. Minnesota also had a Medicaid contract with a Social Health Maintenance Organization (SHMO) site that served about 250 dually eligibles until it ceased operation in Minnesota has experience with the problems that arise in using simultaneous enrollment in separate Medicare and Medicaid products to integrate services for dual eligibles (referred to here as piggybacking ). Under these piggyback arrangements, Medicaid and Medicare services are governed by two separate contracts with two separate government entities under two separate programs. While the State has had good experience with piggyback arrangements with some plans and care systems, such as EverCare, officials from those programs also articulated many needless inefficiencies, conflicts and duplication between Medicare and Medicaid managed care policies and administrative requirements that impeded their efforts. Furthermore, there is no mechanism for assuring communication between the State, HCFA and the health plans regarding the interaction between the two products. Medicare s requirements make it more confusing for dual eligibles who are enrolled simultaneously in Medicare and Medicaid managed care. Members enrolled in both a Medicare plan and a Medicaid plan may face conflicting networks. They must go through two different enrollment processes, signing two separate sets of forms. There are separate enrollment accretion and deletion dates for Medicare and Medicaid so the effective dates of coverage are different for each set of services. Two conflicting sets of member materials are required. Medicare member materials are often misleading for dually eligible members. For instance, it is correct to list the amount of co-payments and deductibles that beneficiaries must pay for the Medicare-only enrollee. But this information is confusing to the dually eligible beneficiary, who does not have to pay for either especially when enrolled simultaneously in a piggyback arrangement. Information about Medicare non-covered benefits such as SNF care beyond 100 days, custodial nursing home care and other home care services, and prescription drugs are also misleading since additional coverage is available to dual eligible beneficiaries through Medicaid. Payment incentives between Medicare and Medicaid also may make these piggyback arrangements difficult. The lack of appropriate Medicare + Choice risk adjusters for 13

19 frail elderly in the community may conflict with state goals to reduce long-term nursing home placement rates. Plans also may not be attracted to such projects for fear of adverse selection. In addition, the instability of the Medicare + Choice market place makes it difficult for States to rely on Medicare + Choice plans to retain the long-term commitment needed for investment in a product which includes long-term care benefits. For instance when Minnesota s SHMO site decided to withdraw, there was no mechanism to inform the state of this in a timely manner in order to make appropriate plans to transition the 250 dual eligibles affected under the State s separate Medicaid contract. The State was notified after the fact and had to agree to rolling those affected into another product offered by that plan, rather than allowing members the choice of other plans. Since then, two other Medicare + Choice plans, both of which used to serve a number of dual eligibles under piggyback arrangements in Minnesota have chosen to leave Medicare + Choice. Thus, depending on market place dynamics, States who pursue the option of piggy backing may risk increased disruption for dual eligibles, rather than stabilizing coordination of their primary, acute and long-term care services. These issues and others led Minnesota to approach HCFA to explore other options for integrating financing and service delivery for dual eligibles. Chronology of MSHO Development- Minnesota has required enrollment of dually eligible seniors in PMAP managed care plans since 1985; however, most long-term care benefits are not included in PMAP and, as discussed above, Medicare benefits for most PMAP enrollees are paid FFS. So, in 1990, Minnesota began working with providers on a model to integrate Medicare and Medicaid and acute and long-term care financing and services for the elderly including dual eligibles. Minnesota submitted a waiver request to HCFA in 1991 and a funding proposal to the Robert Wood Johnson Foundation (RWJF) to support this model. While both HCFA and RWJF rejected that initial proposal, they conducted a joint site visit to Minnesota in March of 1992 and expressed interest in supporting a development project to revise the model, offering the assistance of consultation from Peter Fox, PDF, Inc. In September 1992, the DHS received a $250,000 planning grant from RWJF to develop a Medicare and Medicaid financing and delivery demonstration project (originally named The Long-term Care Options Project or LTCOP). With the assistance of consultant Peter Fox, LTCOP was designed to facilitate the integration of primary, acute and long-term care services for dual eligibles under a capitated managed care framework. Upon the advice of consumer focus groups the project was eventually renamed Minnesota Senior Health Options (MSHO). The RWJF grant enabled DHS to submit a draft waiver proposal to HCFA in January A final waiver proposal was submitted to HCFA in April Subsequently, Minnesota worked closely with HCFA project officer, Melissa Hulbert and a special team within the HCFA Regional V Office led by Pamela Carson, to resolve a myriad of administrative details to make the project operational. 14

20 While DHS already had broad legislative authority to develop integrated demonstrations, in March of 1995, the Minnesota Legislature also enacted specific authorizing legislation governing integrated demonstrations for the elderly and people with disabilities. State authorization for the program can be found in Minnesota Statutes, section 256B.69, subdivision 23. The legislature did not assess any expected cost savings to the MSHO demonstration though the demonstration was expected to demonstrate efficiencies and be at least budget neutral. HCFA approved Medicaid and Medicare waivers in April In August 1995, RWJF provided Minnesota a $1,240,130 grant to support the administration of the demonstration. This grant was matched by Medicaid administrative funds through HCFA and by state funds from Minnesota. In March of 1996, DHS issued a Request-For-Proposals (RFP) outlining all Medicaid and Medicare requirements for MSHO. Proposals were received from all five of the metro area s PMAP plans. Proposals went through an extensive review process. MSHO staff met with managed care, public health and social services staff in each of the seven metropolitan counties and consulted with the HCFA project officer who also reviewed the submissions. Based on decisions made at this review process, DHS sent invitations to begin contract negotiations to three plans: Medica, Metropolitan Health Plan (MHP) and UCare Minnesota (UCare). Two other plans, Health Partners and Blue Plus were not prepared to participate in contract negotiations at that time. The Baltimore and Regional V Offices of HCFA conducted a three-day joint site visit and readiness review of MSHO in November The site visit covered components of an innovative readiness review guide for the demonstration that had been developed by the Regional Office. At that time, the State had the opportunity to demonstrate that it was able to meet the components required (during a previous HCFA site visit, HCFA heard presentations by each prospective MSHO plan). MSHO FEATURES Federal Waiver Authority- The MSHO demonstration operates under federal Medicare 402 and, until May 2000, Medicaid 1115 waivers from HCFA. The authority for these waivers is found under 1115 of the Social Security Act and 402 of the Social Security Amendments of 1967 (P.L ). Medicare 402 and Medicaid 1115 waivers allow MSHO to combine the purchase of Medicare and Medicaid services into one contract managed by the State. They permit MSHO to contract with smaller HMOs and Community Integrated Service Networks (CISNs) who are not currently Medicare risk plans. The waivers also allow MSHO to offer participating health plans a Medicare risk adjustment payment for frail, dual eligible elderly living in the community. As of May 1, 2000, Medicaid State plan services for MSHO enrollees are being provided under 1915(a) of the Social Security Act and home and community-based 15

21 services are being provided under 1915(c). As a condition for closing out the 1115 waiver, HCFA requested that Minnesota submit a draft final report by August 1, HCFA/State Partnership and Contracting Structure- Under the unique terms of the 402 waiver granted by HCFA, the Minnesota DHS Medicaid Director signed a modified Medicare 1876 (now updated to Medicare + Choice) contract with HCFA and submitted an operational protocol outlining details of the demonstration. The Terms and Conditions include variances from certain 1876 (and Medicare + Choice requirements) determined by HCFA and the State to be duplicative or in conflict with the goals of the demonstration. The State contracts with health plans that meet the relevant Medicare + Choice criteria. Plans do not have to be Medicare + Choice participants but must participate in PMAP to be eligible. The initial RFP, protocol and responses for plan participants were reviewed and approved by HCFA. The State manages a single contract with each plan for both Medicare and Medicaid services. Contract details address and resolve administrative differences between Medicare and Medicaid managed care requirements. All contracts are also reviewed by the HCFA Regional Office and the Baltimore Office of Strategic Planning. Subcontracts are also submitted to the State and are available to the Regional Office. Member materials for both Medicare and Medicaid are merged. All educational and marketing materials are reviewed and approved by the State. The materials are then submitted to the Regional Office for final review and approval. There is a single integrated enrollment form and process for both Medicare and Medicaid. Enrollments are submitted to the HCFA Baltimore office by the State electronically each month via the Social Security Information System through the Network Data Mover (NDM). HCFA verifies the eligibility and returns updated enrollment data. The State s managed care accretion and deletion schedule is used to simultaneously enroll for both Medicare and Medicaid. Medicare payments are made through the HCFA Baltimore office directly to the MSHO health plans. An Operations Manual outlines details of the HCFA-MSHO enrollment processes and HCFA-MSHO payment mechanisms. Relationship to PMAP- Since 1985, Minnesota has operated a prepaid capitated program for Medical Assistance (or Medicaid) participants under separate 1115 waiver authority. The Prepaid Medical Assistance Program (PMAP) enrolls recipients, including dually eligible seniors, in 56 of Minnesota s 87 counties. PMAP covers approximately 170,000 low-income persons, including about 29,000 seniors. Enrollment in PMAP is mandatory though certain populations, such as the disabled, are exempt from enrollment. In PMAP, recipients are required to choose a participating health plan and receive all Medicaid covered services, except long-term care services, through that plan. Services provided to seniors under PMAP include Medicare deductibles and co-insurance, physician visits, medical supplies, medical supplies and equipment, dental, 16

22 hospitalizations, therapies (physical therapy, occupational therapy, etc.), prescription drugs, eyeglasses, hearing aides, medical transportation, and translator services. PMAP also includes state plan home care services including skilled nurse visits, private duty nursing, home health aide and personal care attendant services. Although Medicare coinsurance and deductibles are paid through the health plans, Medicare pays providers directly for the remainder of Medicare covered services. 1 PMAP does not capitate most long-term care services, like home and community based services and nursing home services. For PMAP enrollees also receiving home and community based services through the state s 1915(c) waiver for the elderly, there is some conflict around this split in home care benefits because state plan home care benefits must be accessed through the health plans and 1915(c) services through the county. These benefits are also not discrete, often substituting for each other and leading to conflicts on who should cover what. In addition, since PMAP plans are not at risk for nursing home placements, they have less incentive to assist in avoiding institutional placement, a primary goal for the state s long-term care system. MSHO has operated under a separate 1115 authority from PMAP. While many administrative aspects of the programs are closely coordinated with PMAP, contracts and enrollments are separate. However, all MSHO plans must participate in PMAP in any county where MSHO operates. Basic differences between MSHO and PMAP are laid out in Figure 2 below: Program MSHO PMAP Enrollment Voluntary Mandatory Contractors PMAP plans Licensed HMOs and counties Nursing home liability Services covered under capitation 180 days of risk for community-based enrollees who enter the nursing home Medicare/Medicaid state plan services and home and community-based services 90 days of risk for community-based enrollees who enter the nursing home Medicaid state plan services, only (home and community based services are FFS) As Figure 2 shows, MSHO enrollment is offered as an alternative to mandatory enrollment in PMAP for dually eligible seniors in the seven county metropolitan area. These seniors may voluntarily choose to enroll in MSHO or in any other Medicare + Choice product. According to PMAP rules, while they are enrolled in MSHO or any other Medicare +Choice plan, they are exempt from PMAP. However, once they disenroll from MSHO or another Medicare + Choice plan, they again are required to enroll in PMAP where they would still be receiving home and community-based services, fee-for-service. 1 For dually eligible beneficiaries, Medicare pays for any Medicare-covered services before Medicaid is billed, since Medicaid is always the payer of last resort. PMAP enrollees only pay out of pocket costs for Medicare if they use out-of-plan services that are not the result of a medical emergency, require urgent care or require temporary approval for out-of-area use. 17