Resistance builds to managed care for dual eligibles

Physicians are speaking out as states look to a vulnerable and expensive population of patients as a target of budget cuts.

By Emily Berry, amednews staff. Posted April 9, 2012.

IOphthalmologist Victor Gonzalez, MD, stood in front of a crowd of hundreds of physicians and patients in McAllen, Texas, and spoke in stark terms about what is happening as the state changes and cuts coverage for dual-eligible patients: those old or disabled enough for Medicare, and poor enough for Medicaid.

A move to put those 320,000 patients in Medicaid managed care, along with other cuts that result in a 20% reduction in payment for dual eligibles, has put “the future health of our elderly, of our uninsured and Medicaid population … seriously at stake,” said Dr. Gonzalez, president of the Hidalgo-Starr County Medical Society, at the March 27 rally.

With cuts to physician pay, he said, doctors “have really reconsidered and have left the area.” He and others called for doctors and patients to press legislators to reverse the changes, which went into effect March 1.

Texas is one of many states where physicians are wrestling with the effects of — and fighting back against — the expansion of managed care into the poorest, oldest and often sickest population of patients. Bringing in managed care is designed to clamp down on costs and adds a private sector intermediary for medical decisions.

Dual eligibles were largely left out when states dramatically increased the use of managed care for Medicaid enrollees beginning in the 1990s. Medicaid managed care programs are approved through a waiver process by the Centers for Medicare & Medicaid Services, so expansion has been on a state-by-state basis and has built over time.

In 2010, about 39 million Medicaid beneficiaries were enrolled in managed care — about 71% of the total, according to the Kaiser Family Foundation. As of 2009, only about 12% of dual eligibles were enrolled in managed care. In the past, federal and state officials have expressed concern about putting a vulnerable population of elderly poor into managed care.

Dual eligibles are 15% of the Medicaid population but account for 39% of spending.

However, state budgets have come under severe strain, and with the passage of the Patient Protection and Affordable Care Act in March 2010, the federal government encouraged states to experiment with ways to control spending on dual eligibles. The health system reform law established the Medicare-Medicaid Coordination Office at CMS, tasked with improving the quality of care and controlling spending.

Together with the CMS Center for Medicare and Medicaid Innovation, the Medicare-Medicaid Coordination Office gave states incentives to try new ways to improve the clinical quality of dual eligibles’ care and control the cost of that care. At stake is $300 billion in annual spending across Medicare and Medicaid for a group that makes up 15% of the Medicaid population but accounts for 39% of the program’s spending, and 21% of Medicare’s enrollment but 36% of Medicare spending.

Growing trend

Twenty-four states and the District of Columbia have moved at least some dual eligibles into managed care, according to the Kaiser Family Foundation. Many of those states are considering expanding the dual-eligible population in managed care, while others are taking the first steps toward moving those patients there. In April 2011, CMS gave 15 states $1 million grants to assist in designing managed care initiatives that would reduce costs and improve the clinical quality of care for dual eligibles. Twelve of those states already had some dual eligibles in Medicaid managed care, but three — Connecticut, Oklahoma and Vermont — did not.

By moving dual eligibles to managed care, states hope to save money on what Medicaid covers, which mostly are the out-of-pocket expenses associated with Medicare deductibles. Texas, for example, hopes to save $475 million over two years with the changes it has made to dual-eligible coverage. Texas requires anyone on Medicaid older than 21 to be in the state’s managed care program, Star-Plus. Dual eligibles moved into the program in full as of March 1. That was only two months after the state cut coverage to dual eligibles.

71% of Medicaid beneficiaries were enrolled in managed care in 2010.

“The people who are affected are our most fragile, our elderly, our poor, the ones who are unable to fend for themselves,” C. Bruce Malone, MD, an orthopedic surgeon from Austin, Texas, president of the Texas Medical Assn., said at the March 27 rally.

The start of a new year of Medicare deductibles, the state’s payment rate cuts and a technical glitch in claims processing meant that some Texas physicians have been paid nothing for caring for some of their neediest patients since the beginning of 2012.

As many as half of the patients who come to the family practice of Javier Saenz, MD, in La Joya, Texas, are dual eligibles. In March, he had to take out a line of credit at the bank, because he had run through his savings trying to keep his practice open. It was the first time since opening his practice 26 years ago he had been forced to borrow money for operations.

The state’s effort to shift his patients into managed care plans has reduced his time with patients and added to his administrative burden, he said. He has to call managed care companies for approval for common diagnostic tests.

“They’re taking time away from us,” Dr. Saenz said. “We’re asking [the health plan] to approve certain services, and we’re talking to somebody 300 miles away.”

The Texas Health and Human Services Commission is looking for ways it can mitigate the pay cuts’ impact on physicians whose care is most vital, department spokeswoman Stephanie Goodman said.

24 states and the District of Columbia have at least some dual eligibles in managed care.

The momentum of managed care for dual eligibles is growing, despite the backlash. Not only do states feel they can save money by doing that, but health plans also believe they can make money in that business by helping states save on their Medicaid budgets. A 2011 research paper funded by the insurance trade group America’s Health Insurance Plans found that under the best-case scenario, managed care for dual eligibles could save $150 billion during the next 10 years.

In California, Gov. Jerry Brown is pushing for more managed care enrollment for its 1.5 million dual-eligible Medi-Cal enrollees, and California is one of 15 states with a CMS-approved managed care demonstration project in the planning stages, expected to launch in January 2013.

Ted Mazer, MD, an otolaryngologist from San Diego who serves on a Medi-Cal advisory committee, believes there are better approaches to saving money on Medicaid.

“I think there’s a population of [dual eligibles] here whose care is badly managed,” said Dr. Mazer, vice speaker of the California Medical Assn.’s House of Delegates. “But they are no different than any Medicaid patient who is not well-managed. If you want to identify all of those folks and put them into case management, that would be much more sensible.”