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Skeptics Question Federal Official About Plan to Move Frail Patients into Managed Care

By Rebecca Adams, CQ HealthBeat Associate Editor

May 1, 2012 -- The federal official who oversees care for those eligible for both Medicare and Medicaid faced tough questions last week about an Obama administration plan to allow states to move up to 2 million patients into managed care.

States are eager to try the program because if it saves money, they get to keep part of it. So far, 27 states have asked to participate. The program, which will affect 2 million of the 9 million beneficiaries who are dually eligible for Medicare and Medicaid, will start in January.

But critics told Melanie Bella, director of the federal Medicare-Medicaid Coordination Office, that she is moving too quickly to shift this population into managed care. Bella spoke at a panel discussion at the American Enterprise Institute.

"These people have rights," Federation of American Hospitals president and CEO Chip Kahn told Bella. The beneficiaries have paid payroll taxes into Medicare, Kahn said, and should be able to choose how to get their care just as other Medicare seniors do. In Medicare, beneficiaries typically can choose whether to stay in the traditional fee-for-service Medicare program or enroll in a Medicare Advantage managed care plan.

"This is really a version of premium support," Kahn said, referring to a contentious plan to cap spending for Medicare beneficiaries. House Budget Committee Chairman Paul D. Ryan, R-Wis., has proposed a particularly controversial version of the idea that critics say would significantly cut future beneficiaries' benefits.

Kahn's argument was backed by an unlikely ally, panelist Judy Feder, a Democrat who doesn't always agree with Kahn.
"Chip's point—that this low-income population is being treated differently because it is a low-income population—is without dispute," said Feder, a Georgetown Public Policy Institute professor.

Earlier in the discussion, Bella addressed similar concerns that were raised at an April 5 Medicare Payment Advisory Commission (MedPAC) meeting. MedPAC commissioners suggested that later in the year they might send a letter to federal officials about their concerns.

"Wherever I go, I get a group of people telling me we're moving too slow and a group of people telling me we're moving too fast," Bella said. "We're not going nationwide in these next two years but we do feel some urgency," a sentiment that Bella said lawmakers share.

Bella said that in some states, seniors might be automatically enrolled. But, all of the beneficiaries will have a chance to opt out of the program if they wish.

She also said that it is clear that the current system isn't working well for the group that receives both Medicare and Medicaid. The population is the sickest, frailest population in the federal health programs. Their care accounts for a disproportionately large amount of spending, about 80 percent of which is paid by the federal government. Dual eligible beneficiaries include nursing home patients with several chronic conditions and younger people who have severe illnesses or are developmentally disabled.

Some of these patients have to navigate three separate systems, with different rules and even different identification cards: Medicare, Medicaid, and the Medicare Part D prescription drug program.

"It doesn't feel like there are very many protections in a fragmented fee-for-service system" that the patients use now, Bella said. Different medical providers who care for the same patient don't share information, she said, and the structure of the current system doesn't ensure that beneficiaries will have access to care.

The goal of the new program is to give patients more seamless and integrated care, she said. If the program succeeds in coordinating patients' care better, that could prevent medication errors or avoidable hospital admissions.

Bella also took issue with the idea that states are only interested in using the new program in order to reduce their Medicaid spending.
"I'd caution against assuming this is all being driven by savings," Bella said. "It really is about rebalancing the system."

States can use either capitated managed care or managed fee-for-service plans. This summer, Centers for Medicare and Medicaid Services officials will sign memos of understanding with the states, which will provide more details about how the programs will work in each area. Beneficiaries are expected to get information about their options in October.

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