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Virginia Demonstration to Improve Dual-Eligible Care Is Approved by Federal Officials

By Rebecca Adams, CQ HealthBeat Associate Editor

May 21, 2013 -- Virginia recently became the sixth state approved to participate in a national three-year demonstration to better coordinate care for people eligible for Medicare and Medicaid.

The Centers for Medicare and Medicaid Services (CMS) announced that about 78,600 Medicare-Medicaid beneficiaries in five regions of Virginia will be enrolled in managed-care plans when the demonstration begins in 2014.

Health plans are supposed to allow patients to continue to see their physicians as they transition into the program, which will be known in Virginia as Commonwealth Coordinated Care. The plans will oversee beneficiaries' primary care, preventive services, acute care, mental-health and long-term-care services.

The state expects to save about $11.3 million in Medicaid funding in the first year, Gov. Bob McDonnell said in a press release, citing preliminary budget estimates. That estimate may change somewhat when it is updated in the next budget cycle because the projections were done before negotiations with CMS over rates and over the way that the state and federal governments will share savings were completed.

"Some of Virginia's most vulnerable adults will now benefit from a program where their health care and long-term services and supports are better coordinated," McDonnell said in the statement. "This enhanced care model will improve and sustain the health of beneficiaries while allowing the state and federal government to realize cost savings as a result of increased care management."

The effort will be phased in, with the initiative starting first in February in the Central Virginia and Tidewater regions of the commonwealth, according to a CMS fact sheet.

Individuals will first be able to opt in to the program. Beneficiaries who do not make a choice about whether or not to join the program will then be enrolled through a process that is designed to match beneficiaries with the most appropriate plan for the individual's medical needs. Patients will be able to opt out of the initiative or switch plans at any time, CMS officials said.

"We look forward to working with the commonwealth to provide these beneficiaries with more coordinated, person-centered care," said Melanie Bella, director of the CMS Medicare-Medicaid Coordination Office.

Demonstration Scaled Back

So far, the five other states that have been approved are Massachusetts, Washington, Ohio, Illinois and California. One—Washington—will test out new models of managed fee-for-service, while the others will use health plans that receive capitated payments.

Soon after the demonstration projects were announced in 2011, some skeptics were concerned that the projects would move too quickly and involve too many people. Now, as the pace of the effort has moderated, the worries about whether the pilot was moving too fast have faded somewhat.

However, some lawmakers, such as Sen. Jay Rockefeller, D-W.Va., are still watching the program closely and want the demonstrations to test different models with small groups of beneficiaries before enrolling large populations.

"My concern is that we get it right—and use the demonstrations to teach us how to achieve the 'dual' goals of saving money and improving care," Rockefeller said in a statement to CQ HealthBeat. "It's not clear to me that Medicaid managed care organizations are the way to go. I'd like to see some of the demonstrations move duals fully into Medicare, and I think it's essential that we test different models with smaller populations, rather than experimenting too broadly too quickly. Seniors' health care is at stake here."

The announcement of Virginia's approval comes after a few of the 26 states that originally applied to participate dropped out or significantly altered their proposals. Arizona was the latest, sending an April 10 letter to Bella saying that the state wanted to withdraw its proposal to join the initiative.

The letter from Thomas J. Betlach, the director of the Arizona Health Care Cost Containment System, outlined a half-dozen challenges specific to the state, including the fact that Arizona is in the midst of two big initiatives involving managed-care plans this year. He also mentioned the structure of the current health plan system for dually eligible patients in Arizona as posing a challenge and noted that mental-health services are not yet integrated for some beneficiaries in the current system. In addition, he said that "significant political and operational challenges are involved" with implementing the health care law (PL 111-148, PL 111-152).

"In our decision-making process, we have had to weigh the impact of these challenges in combination with the significant Arizona related risks associated with the demonstration," wrote Betlach. "As we have previously highlighted, some of the risks for Arizona include: the implementation start date; the path forward after the three-year demonstration; and the issues surrounding capitation rates and supplemental benefits."

California also announced earlier this month that it would delay the start of its launch for three months until January 2014.

Tennessee and New Mexico have also withdrawn their applications to participate. And Hawaii told CMS officials that it would not be ready until 2015, which would probably be too late to participate in the initiative.

A few other states have reoriented their proposals. New York initially wanted to try out two different models, a capitated system and a managed fee-for-service model, but it has decided to stop pursuing the fee-for-service component. Two other states, Oregon and Minnesota, are working with CMS on other similar initiatives.

The roughly 9 million people who are dually eligible for Medicare and Medicaid consume about $300 billion per year in medical spending. They are typically among the frailest patients in the U.S. health care system.

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