LeadingAge Magazine · November/December 2013 • Volume 03 • Number 06

Providers Find Their Place in Managed Care for Medicaid and Dual-Eligibles

November 08, 2013 | by Debra Wood, R.N.

As states work to put Medicare beneficiaries and dual-eligibles into managed care models, providers of long-term services and supports are working to adapt to the new approach. Here is how some are faring.

Striving to reduce health care costs, states and the federal government are turning toward managed care and greater coordination to meet the triple aim of better health at less cost and with an enhanced patient experience.

“Fee-for-service tends to encourage more utilization of service and less coordination,” says Michael Fassler, president of CenterLight Health System in the Bronx, NY. “Managed care is here to stay.”

Medicaid managed long-term services and supports (LTSS) programs are gaining in popularity among state governments, increasing from eight in 2004 to 16 by 2012, with the Centers for Medicare & Medicaid Services projecting, based on submissions of formal proposals or applications, an increase to 26 by 2014. Half of the states with current programs require Medicaid recipients to enroll in a managed-care plan; in seven, enrollment is voluntary, and one has both types of enrollment.

State Medicaid programs pay contractors, often large insurance companies, capitated payments designed to be less than what would have been paid for fee-for-service services. In 15 of the 16 states, the managed care organization is at risk for some or all of the cost of institutional services.

Increasingly, states are developing Medicare/Medicaid dual-eligible managed care plans, which will provide a capitated payment, and the contractor will be responsible for providing care under both government programs, including medical, hospital and long-term-care costs. Many of the states are still in the process of negotiating contracts.

“Providing managed care for dual-eligibles is a seismic shift in our world,” says Jade Gong, senior vice president, strategic initiatives, at Health Dimensions Group in Arlington, VA. “The dual plans are where the change is the most dramatic, and everyone is planning for it.”

Programs of All-Inclusive Care for the Elderly (PACE) provide managed care to dual-eligibles on a smaller scale than the proposed plans. Gong says PACE programs save money on the Medicare side by reducing hospital admissions and emergency department visits but spend their funds on supportive long-term-care services. Now the question is, can this be done on a larger scale and succeed in achieving PACE-level quality outcomes?

Plans will not only have to provide necessary services for less money but also meet quality targets. The states also are setting standards for care management and staffing ratios, Gong explains.

In New York, some providers have obtained insurance licenses and are offering managed care plans. However, in other states, not-for-profit providers have not had the time or inclination to enter the insurance side of the health care business.

“The vast [majority] of LeadingAge members are not going to be able to become health plans,” Gong says. “However, they can step up and fill the needs of a variety of at-risk payers, including health plans, and go beyond the traditional silos of service to think about managing care across the continuum.”

New York State began transitioning Medicaid patients into managed care programs in 2011, after the state’s Medicaid Redesign Team recommended care management for all as a means of reducing costs while maintaining quality. Medicaid recipients of long-term care moved into managed care in 2012. Now the state is looking at enrolling Medicare/Medicaid dual-eligible beneficiaries in Fully Integrated Duals Advantage (FIDA) plans in 2014.

Several LeadingAge members—including CenterLight, Visiting Nurse Service of New York and ArchCare—offer provider-sponsored managed care plans, essentially becoming insurers. All have experience in managing chronically ill older adults.

“Those organizations offering managed care plans are seeing an opportunity to parlay their expertise in care management into a risk-based arrangement,” says Dan Heim, executive vice president of LeadingAge New York. “Risk-based arrangements—particularly in a mandatory managed care environment—create added challenges and opportunities for not-for-profit plan sponsors. Additionally, member providers are negotiating with managed-care plans to provide services to people who need long-term care services and supports. This creates a dynamic environment for both providers and managed care plans. There is a lot of change.”

Providers seeking subcontractor status have had to change how they deliver services and adapt to managed-care organizations’ expectations and pricing, Heim says.

Managed-care organizations cannot pick and choose who to enroll. The state also may randomly assign members who do not select a provider on their own.

CenterLight has jumped into managed care in a big way. It began in the 1980s with a PACE program, currently serves about 15,000 members and has set a goal of 25,000 members. A large volume helps the organization spread administrative cost and insurance risk and allows it to negotiate from a position of strength with vendors, but Fassler considers case management the key to success.

“We have the experience of coordinating care, and it’s a great opportunity to do it for more patients,” Fassler says. “The risk is you are growing more rapidly than you want to. We weren’t built to serve this many people. We are increasing capacity while taking patients in, and there are more competitors.”

Growing capacity has included upgrading information technology systems to track outcomes and better manage services, and adding staff to serve an increasing number of members and handle billing. Managed care now represents 80 percent of the organization’s budget. CenterLight provides nursing services and is beefing up its attendant staff to provide more of the services itself, so it can maintain a high level of quality.

At the same time, major insurers such as Humana, Aetna and WellPoint have entered the market. To compete, CenterLight focuses on its well-established ties to the community and continues to target and modify its program to the needs of small ethnic niche populations. People know about CenterLight, which is driven by a mission and not just a profit.

“We adjust and adapt more easily than a big insurance company,” Fassler says. “We try to capture the hearts of the communities we serve.”

CenterLight has been approved to participate in the FIDA demonstration. That will increase risk, since a hospital stay or nursing home admission will consume the monthly per diem.

“It gives you incentive to see what you can do ahead of time to prevent them from getting worse,” Fassler says. “The hospital is where the big dollars are spent.”

ArchCare announced this year that the New York State Department of Health had selected it to participate in a FIDA demonstration project.

“Many of these concepts are largely untested,” Heim says. “There has not been any large-scale enrollment of Medicare/Medicaid long-term care recipients into dually capitated managed care arrangements. We don’t have a precedent. We have PACE programs, but they are relatively small.”

Ultimately, though, Heim indicates the programs offer opportunities for providers willing to get into the managed care business and to think creatively about how they can work with insurers.

“Challenges and opportunities is the big message,” Heim says. “If it works as it is supposed to, there should be a more seamless delivery system, but we have a lot of work to do before we get there.”

The changing marketplace offers opportunities for providers to contract with managed-care plans to provide services.

Several LeadingAge members participate in Tennessee’s TennCare CHOICES program, started in 2010, contracting with one of three entities: two multistate insurers and a Blue Cross Blue Shield licensee.

Senior Citizens Home Assistance Service in Knoxville, TN, provides primarily in-home services to between 250 and 300 people, and a dozen people needing assisted living, who participate in the CHOICES program. Tim Howell, CEO, reports the agency experienced rapid growth when the program began, but that has leveled off.

“The number of hours served to each participant seems to be decreasing, but the number of participants seems to be increasing,” Howell says. “Therefore, I believe the total will be less in the future. I have concerns that assisted living [will not] be an option for people in the future as well.”

Mark de Fluiter, administrator at Asbury Place Johnson City, reports CHOICES has addressed the needs of many older adults, but he also identified challenges associated with the time lag from application to assignment of a case manager, and the state’s action to increase the activities of daily living requirement, which decreased the number of CHOICES members receiving skilled nursing care at his community.

Appalachian Christian Village (ACV) in Johnson City, TN, also has expressed difficulties with the pre-admission evaluation process, calling it cumbersome and time-consuming.

“However, we do find that once we get through the burdensome process of approval for services and payment, administration on an enrolled participant tends to run smoothly, but in many cases we have gone through numerous departments, appeals and resubmittals to get to that point,” says Myra Paessler, chief financial officer of ACV.

Ultimately, Paessler considers the program beneficial to older adults and her organization, since it allows seniors who have exhausted their financial resources to live out their lives with the best possible care, designed to meet their needs without the worry of financial burden, and provides ACV the opportunity to continue to serve these elders.

“As more of our potential residents outlive their financial resources, it will become necessary for them to utilize CHOICES,” Paessler adds.

Rather than simply providing services for managed-care plans, long-term care providers can partner with them, as Miami Jewish Health Systems in Miami, FL, has done with Molina Healthcare of Florida. The partnership begins Dec. 1, 2013, and includes case management services for current participants of home- and community-based Medicaid waiver or diversion programs, as well as nursing home residents who choose Molina as their long-term managed care plan provider in Miami-Dade and Monroe Counties, FL.

Miami Jewish has about 2,500 community-based clients moving into managed-care plans. As the current case manager for those people and residents of its nursing community, Miami Jewish is responsible for helping them enroll in the managed-care plan of their choice. Clients not selecting Molina will receive a new case-management provider.

“We were highly motivated to find a partner who would allow us to work with them to use the skills we had built up over 25 years to keep nursing-home eligible individuals living in the community,” says Cliff Bauer, senior vice president at Miami Jewish. He expects people happy with current services will choose Molina and stay with Miami Jewish.

Miami Jewish subcontracts with other organizations to provide most of the hands-on personal care, home health services, assisted living and adult day services. But it will also contract with Molina to provide some of those services as well as skilled nursing and hospital care. Molina will continue working with Miami Jewish’s provider network.

“We want to make this as seamless a transition for the frail elderly as possible,” Bauer says.

Additionally, anyone in certain geographic areas of the community choosing Molina will be assigned for case management to Miami Jewish. Case managers will assess each client’s needs, during a home visit within 72 hours of enrollment, and arrange services, such as homemaker or meals services, which will allow the resident to live safely in a non-institutional setting. They try to reduce clients’ declines in health.

“Case management is the critical factor,” Bauer says. “Case managers are the quarterbacks and gatekeepers.”

Moving forward, Bauer expects providers will have to assume more financial risk associated with providing services in a cost-effective manner.

“We encourage others to look at managed care with a partner, not just as a contracted provider,” Bauer advises. “If an organization is not familiar with managing risk, do it in a conservative manner. Don’t jump in head first; walk into the shallow end and as you get more comfortable, it may make more sense.”