Future of dual eligible demonstrations questioned due to low enrollment

There are growing worries about the future of an ambitious federal demonstration aimed at improving coordination of care for millions of low-income and disabled Americans who are dually eligible for Medicaid and Medicare.

Health plan leaders and state officials expressed concern during a webinar event on April 16 that current federal-state demonstrations in 11 states may not yield the cost savings the Obama administration and the states hoped for – at least in the projected time frame.

“We're seeing that getting the mandated cost savings that were projected on the front end may be more difficult to reach than CMS anticipated,” Richard Bringewatt, co-founder and chair of the SNP Alliance, which represents special needs health plans, said during an Atlantic Information Services webinar about the demonstrations. Several of the alliance's member plans are involved in the initiatives.

The main reason why states are struggling to achieve their cost-savings goals is that beneficiaries' participation is optional and many are deciding to opt out, the plans say. Out of the 1.7 million people eligible to participate in the 11 states, 343,355 have signed up as of April 1, according to at Community Catalyst, a consumer advocacy group based in Massachusetts.

Some states are struggling with the opt-out problem more than others. “We have seen a pretty high opt-out rate of about 50%, which is higher than we had hoped,” Mari Cantwell, director of California's Medi-Cal program, said during the webinar. “The two major reasons for the opt-out are a general fear and concern about changes in healthcare. We've also struggled with some coordinated efforts by different types of providers… who have been concerned about rates.”

The demonstrations were authorized by the Affordable Care Act to improve care and reduce costs for the more than nine million dually eligible beneficiaries, many of whom have severe chronic conditions and physical or behavioral disabilities. Under the three-year Financial Alignment Initiative, led by the CMS' Medicare-Medicaid Coordination Office, participating states are responsible for coordinating the Medicare and Medicaid benefits and spending for the dual-eligible beneficiaries through contracts with private managed care plans. 

The states receive a capitated payment combining Medicaid and Medicare, minus agreed-upon savings. The plans, which are paid a risk-adjusted capitated rate, generally are responsible for providing the full range of care, including long-term care, though each state's program is somewhat different.