Long-term care program for dual eligible seniors.

In 1995, Minnesota sponsored a Medicare demonstration for dually eligible seniors, which facilitated integration of Medicare and Medicaid service delivery across primary, acute and long-term care. This Minnesota Senior Health Options program merges financing systems using coordinated state and

Centers for Medicare and Medicaid Services managed care contracts with health plans, and features integrated enrollment, member materials, care coordination and administrative requirements. Participating health plans are approved as Medicare Advantage Special Needs Plans serving dual eligibles and are required to provide Medicare Part D prescription drug services. Dually eligible members receive drugs, as well as primary, acuteand long-term care services, under Medicare and Medicaid through their choice of health plan. Enrollment is voluntary.

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MSHO enrollment serves as an alternative to enrollment into a separate mandatory Medicaid-managed care program authorized under a 1915(b) waiver. About 70 percent of Minnesota's Medicaid seniors participate in MSHO, which is now statewide and serves about 36,000 people. Health plans receive separate Medicare payments from CMS and Medicaid payments from the state. Payments and coverage determinations are integrated at the plan level.

No special Medicaid waivers are required. The state uses existing Medicaid state-plan managed care authority for voluntary enrollment along with amendments to existing 1915 waivers for home-and community-based services. The Medicare demonstration ends in December 2007 because all participating health plans are now approved as Medicare Advantage SNPs.

The state contracts with nine SNPs to provide MSHO. All are nonprofit local HMOs that also participate in the state's other Medicaid managed care programs. Satisfaction has been high, disenrollments low and costs controlled. A similar program for people with disabilities, ages 18-64, Minnesota Disability Health Options, began in 2001.Minnesota is expanding integrated Medicare and Medicaid SNP options for people with disabilities.

A number of other states, including Wisconsin, Massachusetts, Texas, New York and Washington, are operating similar programs. The Center for Health Care Strategies is helping several states develop integrated programs. CMS is encouraging dual eligible SNPs to work with states.

State contracting with Medicare managed-care plans for dual eligibles has been under discussion for at least 15 years. Why are states still pursuing these programs and what is the future of state contracting with SNPs for dual eligibles?

Platform for Management of Chronic Conditions

Medicare and Medicaid services need to be managed together to provide a platform for efficient care for the dual eligibles with chronic conditions. The new SNP option under Medicare Advantage provides an opportunity to bring "siloed" Medicare and Medicaid service delivery systems and financing incentives closer. SNPs can be approved to focus enrollment only on dual eligibles, institutional residents or those with chronic and disabling conditions.

Dual eligibles typically have multiple chronic conditions and are the most costly population for both Medicare and Medicaid, with combined cost of more than $200 billion in 2005. States face huge challenges managing costs for soon retiring baby boomers, yet lack tools to influence the costs for the growing population of dual eligibles. With the new dual eligible SNP option, states can contract with selected Medicare SNPs interested in serving dual eligibles to provide Medicaid services, along with Medicare primary and acute care and drugs, creating a platform for chronic care management across both programs. States may also benefit from additional benefits that SNPs are required to provide to duals when there are savings resulting from the Medicare Advantage bid process.

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Coordinated Medicare and Medicaid Drug Coverage

Drugs are important for the chronic care conditions experienced by dual eligibles.Dual eligibles already had coverage under state Medicaid programs and have faced challenges in switching to Medicare PartD plans to obtain coverage. More than 90 percent of dual eligibles are enrolled in freestanding Prescription Drug Plans for Part D, many having been auto-assigned by CMS. Therefore, most dual eligibles must obtain drug coverage from three different sources: the PDP for Part D drugs, Medicare fee-for-service for Part B drugs, and Medicaid for the remaining Medicaid-covered drugs. This means a dual eligiblemay have to present three different cards to a pharmacy to access all coverage.

There are clear advantages to serving dual eligibles through coordinated SNP and state contracts. SNPs are already required to provide both PartD and Part B drug coverage for enrollees. States can work with contracted SNPs to ensure that Part D formularies and networks are appropriate for dual eligibles and to integrate for dual eligibles and to integrate remaining Medicaid drug coverage. It is simpler to produce only one card at the pharmacy and to deal with one entity for all drug coverage decisions.

Simplicity and Seamlessness for Beneficiaries

Minnesota's goal is to simplify access and coordination of services for dual eligibles. The system that provides Medicare and Medicaid pharmacy, primary, acute- and long-term care to dual eligibles has evolved over the last 40 years in response to a host of incremental program changes. With new tools provided by the Medicare Modernization Act and CMS, states and SNPs can work together under the current system to create integrated Medicare and Medicaid programs that appear seamless to enrollees and that greatly reduce the complexities most dual eligibles face.

The seamlessness of the program as viewed by the clinician and enrollee has been a primary benefit of the program.

The Role of Long-Term Care Services

The most challenging part of implementing integrated programs is the inclusion or exclusion of long-term care services. If nursing home and home- and community-based services remain fee for service, cost shifting from SNPs to Medicaid may occur. SNPs that understand how to substitute fee-for-service Medicaid services, such as short-term nursing home and home health care, for costly Medicare hospitalizations, may benefit at the expense of Medicaid if they bear no risk for these services.

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Ideally, states and CMS would look at all expenditures and experience across both programs to get the best care at the best price. Accountability and chronic-care management opportunities are increased when health plans have incentives to manage risk across the full range of benefits, providing the best service in the least costly manner. If rates are carefully set, states may be able to obtain cost efficiencies from these arrangements.

However, inclusion of long-term care benefits under SNP arrangements poses challenges that are often state specific. SNPs may not have experience in managing long-term care services and may lack understanding of their non-medical nature. SNPs may lack care management resources and seek to work with existing agencies, but community agencies with experience are not used to working with health plans. Even with encouragement, these agencies may not wish to work with SNPs. Advocates may object to including long-term care services for some groups but may support it for other groups. Providers may fear that rates and payments are now controlled by health plans. Investment in stakeholder education and involvement in design are essential.

The best care-management models may not even include such "marriages" between existing resources and SNPs. Clinics that add community care managers and nurse practitioners to physician practices or care management organizations connected to disability communities may be more effective at serving the total chronic care needs of dual eligibles than traditional case managers. Successful models for rural areas may differ from those in metropolitan areas. SNPs serving seniors in Minnesota typically contract with counties in rural areas for care coordination for seniors, but in metro areas there is more use of "care system" models involving clinics and affiliated providers, or care management organizations such as AXIS HealthCare or Evercare.

It is possible for states to be successful in including long-term care services under SNP arrangements. Minnesota implemented integrated programs that include long-term care for seniors statewide. However, under legislative direction, programs without long-term care for people with disabilities are also being expanded. Arizona, Texas, Massachusetts and Wisconsin have all had success including long-term care under SNP arrangements, and several other states have models in place or in development.

Next Steps for Integrated Programs

The future of SNP and state contracting still looks challenging. CMS has approved 476 SNPs, including more than 300 that exclusively serve dual eligibles. However, few are contracting with states to provide Medicaid services. Enrollment in many dual eligible SNPs is low, with 276 SNPs having fewer than 500 members.

Reasons for the few relationships between SNPs and states may include lack of state resources for contracting, concern over market instability, early exit by plans that do not understand these populations, lack of interest by SNPs in working with states, and continued perceived barriers or difficulties in coordination. While capitation payments for this population may appear high and thus may be attractive to plans, special needs and challenges in serving this group well are also high.

States have reason to be concerned over SNPs entering their market areas without experience or demonstrated commitment to serving dual eligibles. SNPs that have not expressed interest in working with states may not understand or care about simplification of access for members and improved chronic-care management.

CMS Medicare and Medicaid policy for dual eligibles has only recently begun to be coordinated. Lack of clarity about operational details of integrated SNP/Medicaid programs, along with too few resources within CMS to address such issues, maybe barriers to the simplifications needed to make integrated programs more attractive.

Further, CMS authority for SNPs sunsets in 2008 and must be renewed by Congress, even though CMS still expects a number of new SNPs to enter the market in 2008. Evaluations of SNPs are under way but are not likely to reveal conclusive information prior to any extension of authority.

In spite of all these concerns, more and more states are examining the potential of contracting with SNPs, and this interest is likely to persist and increase as more SNPs approach states with creative ideas for better serving dual eligibles. CMS appears to be making more demands on SNPs to show how they are "special," requiring detail on clinical programs designed to serve each SNP population. CMS has cited the demonstrations in Minnesota, Wisconsin and Massachusetts as important models for how states and SNPs can work more closely together to improve service delivery for dual eligibles.

The SNP extension legislation is an opportunity to ensure that SNPs wishing to serve dual eligibles in coordination with state Medicaid programs are clearly authorized to continue to operate. In addition, a provision in the legislation which would give CMS the flexibility to resolve conflicts between Medicare and Medicaid managed-care requirements would foster closer coordination between the two and reduce confusion over the myriad operational details. With these minor program changes, CMS, states and SNPs would be able to improve care for dual eligibles for years to come without new mandates and without disturbing the framework of the Medicare and Medicaid programs.

Pamela Parker is manager of Special Needs Purchasing at the Minnesota Department of Human Services, where she has been responsible for development and oversight of integrated Medicare and Medicaid managed care programs since 1992.