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Pressure Growing on CMS to Rein in Duals Demo

By John Reichard, CQ HealthBeat Editor

June 19, 2012 -- Lawmakers joined a top outside adviser to the Medicare program last week in suggesting that a demonstration program to move "dual eligibles" into managed care plans is moving too fast. The growing criticism of the pace of the test, set to be launched in January, could force Centers for Medicare and Medicaid Services (CMS) officials to scale it back.

Another potentially major Medicare change—redesigning the benefits for all beneficiaries—also drew a cautious if not cool response at a House Ways and Means Health Subcommittee hearing. Lawmakers expressed concern about redesigning benefits for all Medicare enrollees to cap their out-of-pocket costs while at the same time establishing a surcharge on Medigap coverage. Medicare Payment Advisory Commission (MedPAC) is behind that idea. But lawmakers worried about the cost impact on seniors of taxing Medigap plans. They wondered whether it would cause beneficiaries to skip needed medical care because they either would drop their gap policies or if they kept them would have to pay higher premiums and then have less money for other medical expenses.

MedPAC Chairman Glenn Hackbarth told the lawmakers that the demonstration program to test enrolling those eligible for both Medicare and Medicaid in managed care plans is growing too large to be useful and should be developed more slowly and on a smaller scale.

Health Subcommittee Chairman Wally Herger, R-Calif., agreed with that assessment. He said after the hearing that the demonstration program to be launched by the states under the direction of CMS needs to be more limited. Herger was non-committal about whether he would pursue legislation to make that happen.

The so-called duals demo is one of the most closely watched recent developments in health policy. The duals market is huge, accounting for a big share of Medicare and Medicaid spending. Duals themselves are extremely vulnerable, accounting for the sickest and frailest population in Medicare.

The demo holds the allure of both improving care of the duals by better coordinating their complex treatment services and of lowering the costs of caring for them.

But controversy is growing over tactics under consideration by states for moving the duals into managed care. Under one such strategy, "passive enrollment," individuals are enrolled in a specific plan without their approval, but with the right to opt out if they decide they don't want to be in the plan. Another concern is about a lack of measurement tools to accurately assess the quality and cost of care in the demonstration program.

Hackbarth noted that state interest in the demonstration program has mushroomed to the point that more than three million of the 9.9 million duals could be enrolled in the demo. "That is not by our reckoning a demonstration project but a program change," he said.
Moving at a slower pace with a stronger measurement system than now exists would be better, he said. It would allow changes to be better understood before they are adopted widely, he suggested.

"We think real care needs to be taken before anyone is passively enrolled," Hackbarth added. The concern is that a dual moved into a new plan will lose access to doctors, drugs, and other treatments not included in the new plan.

Hackbarth said that if a state chooses the passive enrollment route it must take pains to clearly communicate not only to the dual but also to his or her doctor and family the switch to the new plan so care is not disrupted with potentially dangerous consequences. Hackbarth also suggested that for a period of time existing doctors may have to be included in the new plan's network in order to assure a safe transition.

Beneficiaries Need Choice

Republicans Diane Black of Tennessee and Vern Buchanan of Florida joined Herger in expressing concern about the pace of the demo and the need to preserve the rights of beneficiaries to choose their care.

Herger said better coordination of the care of the duals is clearly needed, "but I am concerned that the administration's unilateral actions to address this population's needs may undermine the protections guaranteed to all Medicare beneficiaries."

Democrats weren't anxious to criticize the administration but they too have concerns. The panel's top Democrat, Pete Stark of California, told Hackbarth in his opening statement that he looked forward to hearing his ideas for improving the demonstration. He also took a swipe at Republicans and how the duals would fare under their proposals for overhauling Medicare. "This is a large and vulnerable population that is associated with high program costs," Stark said. "I am extremely wary of the Republicans' solution to give them all a voucher."

State Medicaid directors have been enthusiastic about the demo as have many policy analysts anxious to test better coordinated care. But providers such as the Federation of American Hospitals have said the demo threatens the rights of duals to choose their providers.

MedPAC recommended the other potential change, the benefit redesign, in its June report to Congress. The added charge for Medigap plans would lead a number of people who now have the supplemental coverage to drop it, thus leaving them more exposed to the costs of care and more judicious about seeking treatment, the commission says. It says that Medigap encourages overuse of services. At the same time, beneficiaries would be protected financially in that out-of-pocket expenses would be capped.

But Stark expressed worry that Congress would choose to establish a charge for Medigap plans as a cost saving measure but not cap out of pocket expenses. Buchanan asked whether seniors would drop the coverage and skip needed care, as did Rep. Sam Johnson, a Republican from Texas. Johnson said he didn't like the idea of making Medigap coverage more costly.

But the MedPAC proposal would generate Medicare savings at a time when it needs to find ways to economize. And Hackbarth suggested that seniors would save money in the long run from the cap on out-of-pocket costs.

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