Cutting costs of patients with dual eligibilities

Individuals eligible for both Medicare and Medicaid represent unique challenges for health plans. 

“This is a patient pool that tends to be sicker than the average Medicare beneficiary and a good number of these patients are living in nursing homes or have a mental impairment,” says Ash Shehata, a principal with KPMG. As a result, the costs of caring for these so-called dual-eligibles can be quite high. 

Adding to the cost issue is the lack of coordination between Medicare and Medicaid, often making it difficult for patients to avoid duplicate or unnecessary tests, procedures and hospitalizations, all of which drive up the cost of care.

Health plans are searching for the best way to manage this patient population and its care costs, as well as their own risks. For example, health plans can develop a good sense of their risks by gauging and tracking the functional status of dual-eligibles over time. The focus on such a risk assessment is measuring how well reimbursements match up with the costs of care, says Shehata.

State and federal governments are also looking for answers as they fund pilot programs and demonstration projects designed to test new approaches to care management and integration, as well as managing the financial aspects of the dual-eligible patient. For example, dual-eligible special needs plans (D-SNPs) are designed to help change the delivery of care, while reforming the financing and payment approaches for that care.

Coordinating care

The nature of care for dual-eligibles is unique. Therefore, any solution for improving care and reducing costs for this population must recognize and reflect that uniqueness. 

“The dual-eligible population is the poorest and in most need of quality and affordable healthcare,” says Ben Quirk, CEO of Quirk Healthcare Solutions. “[It also] faces the most challenges obtaining it.” 

Click to enlageBecause of their personal situations, social and community support is almost as important for dual-eligible patients as healthcare. Therefore, solutions designed to reduce hospitalizations and admissions to skilled nursing facilities must incorporate that aspect of care. 

“Often the reason these patients go into a nursing home is because no one will pay for what they need to stay out, such as personal assistance, help with grocery shopping or providing rides to the doctor,” says June Simmons, founder of the Partners in Care Foundation. 

For projects involving dual-eligibles, a key focus will be on identifying individuals who are likely to need these types of home- and community-based care, and taking steps to help those individuals to avoid nursing homes whenever possible, while also reducing hospital stays and emergency department usage. 

However, this integrated community support/healthcare model can be difficult to maintain. SCAN Health Plan had run its own “social HMO” for several years, however, the plan was unable to quantify its success in terms acceptable to payers, according to Eve Gelb, the plan’s senior vice president of healthcare services. 

“You are spending Medicare money to save Medicaid money and vice versa,” she says. 

For example, using Medicaid funds to provide home-delivered meals might prevent hospitalizations, but any reduction will primarily generate savings for Medicare. 

“Unless you look at the data across both spectrums, it is very hard to prove the savings,” she says.

Gelb sees similar challenges for the dual-eligible demonstration projects going on now. She noted that integrating payment and delivery of the full-spectrum of care using both Medicare and Medicaid funds is difficult. For example, until these demonstration projects have developed a good combined Medicare/Medicaid data set, which can take a couple of years, it will be difficult to set an appropriate rate. 

“For the first few years, the primary work of the demonstration project in California will be in forming a more integrated delivery network,” says Gelb.

Simmons sees promise in some type of partnership between health plans and community organizations. 

“Community organizations can identify the dangers and risks and opportunities for a solution, then set up the program and hand it off to the health plan to manage and monitor it,” she says. “That would be a significant change.”

Managing care

Managing healthcare itself remains a key focus. Health plans are using more aggressive disease management and case management to ensure dual-eligibles are getting needed preventive care services, as well as proper access to primary care and specialty care as needed with the overall goal of reducing hospitalizations. 

“Case managers and disease managers are now being put in the field to make in-person visits to members and address their needs,” says Shehata. “One metric payers should constantly be evaluating is what percentage of their population is actively being managed by some form of case management or disease management.”

Dual-eligibles have traditionally received care from medical “silos,” where providers address one specific area, but there is not overall coordination of the patients’ care. When pilot programs have introduced a level of care coordination, results have been overwhelmingly positive. 

“Even small amounts of care coordination can yield strong results initially,” says Shehata. “These patients need to be looked at holistically, so that entails examining not only their medical history, but their home environment and social setting, such as family support. This level of attention initially might seem like a lot, but this upfront investment can reduce the number of hospital visits.”

Quirk recommends segmenting the dual-eligible population by the type of care needed and the setting in which it is delivered. 

“This yields subgroups of dual eligibles for whom a particular type of intervention has been relatively successful, suggesting that savings are more likely with this sort of targeting,” he says.

Financing care

When it comes to financing care, there are pros and cons for both fee-for-service (FFS) and capitated rates. On the one hand, FFS models are often seen as rewarding providers for volume of care that could lead to unnecessary procedures and lower quality of care. In a capitated model, the pre-determined lump sum providers receive does not always account for all of the risks in a given population. Refining these models or creating new risk-based rates could be a step in the right direction. 

“We have base capitation from the state based on population subset categories, each with its own rate,” says Gelb. She suggests that the model could be even more finely tuned with a funding scale based on population risk rather than using two or three categories. Still, she says, “that model works better than fee-for-service because it provides an incentive to reduce costs by keeping people healthy and independent.”

Others suggest alternative approaches to financing care for dual-eligibles. 

“While fee-for-service models can be effective when tightly managed and capitated models help reconfigure provider incentives, both are of limited effect without outcome and quality-based incentives,” says Shehata. 

Because of the complex nature of dual eligibles, plans can develop incentives that push providers to spend adequate time addressing all of the needs of dual-eligible patients and ensuring these individuals receive appropriate preventive care. 

“Risk sharing models appear to be the most effective because [they give] providers the greatest incentives to change behavior,” says Shehata.  

Joanne Sammer is a freelance writer based in Kansas City.