Obama More Flexible on Medicare Than Rhetoric Suggests

By Margot Sanger-Katz
NationalJournal, September 8, 2012

In his convention speech in Charlotte, President Obama vowed to block the Republican Medicare reform plan because “no American should ever have to spend their golden years at the mercy of insurance companies.”

But back in Washington, his Health and Human Services Department is launching a pilot program that would shift up to 2 million of the poorest and most-vulnerable seniors out of the federal Medicare program and into private health insurance plans overseen by the states.

The administration has accepted applications from 18 states to participate in the program, which would give states money to purchase managed-care plans for people who are either disabled or poor enough to qualify for both Medicare and Medicaid.

Obama’s 2010 health reform law allows experimentation in delivering health care at lower cost through demonstration projects. Many states would like permission to shift their entire population of so-called dual-eligible beneficiaries into the new plans. HHS has indicated that it will enroll about 2 million beneficiaries, out of about 7 million who qualify for full benefits from both government health programs.

California is already counting on more than $500 million in budget savings from its own program this year.

Potential cost savings are a big incentive for states. Patients who qualify for both federal health programs are a costly population and include many who need nursing-home care or other expensive services. About 40 percent of Medicaid’s costs go toward patients who are also eligible for Medicare. Advocates of the pilot program also say it could lead to better coordination of care for patients who often struggle to navigate the two different programs.

To get approval, states must guarantee that both Medicare and Medicaid would save money. They must also agree to accept a fixed payment to cover all care for each patient. While rules say the private plans must cover all standard Medicare benefits, they also waive many Medicare rules and leave insurer selection to the states.

Still, there is powerful opposition to the pilots among doctors, hospitals, nursing homes, patient groups, and key lawmakers, including Sen. Jay Rockefeller, D-W.Va., who wrote the provision in the health law that created the office in charge of the pilot program.

“I urge you to take immediate steps to halt this initiative as currently structured and to take the time necessary to develop a well-designed and thoroughly evaluated care coordination model for dual eligibles that meets the standards outlined in the law,” Rockefeller wrote in a letter to HHS.

The Medicare Payment Advisory Commission, a group of experts who advise Congress on Medicare policy, has also weighed in with an 11-page letter to HHS, warning that the speed and scope of the program raised questions about whether patients would receive the care they need.

The managed-care industry is gearing up for the expansion. Three large insurers have purchased companies that insure Medicaid beneficiaries. For years, states have been moving Medicaid patients into managed-care plans, with mixed results. But this pilot represents a new market: It is the first large program that would pool Medicare and Medicaid benefits in a single, state-administered plan.

“The problem with this population is that all the strategies that the health plans have been used to using historically are going to backfire,” said Chris Duff, executive director of the Disability Practice Institute, an umbrella organization for small programs that provide coordinated care to dual-eligibles. He warned that slashing provider rates, limiting visits, and using other conventional cost-control measures could lead to expensive hospitalizations for frail dual-eligible patients.

But the states are enthusiastic about the pilot programs and believe they will be able to provide better care at lower cost.



Assessing the Quality of California Dual Eligible Demonstration Health Plans

National Senior Citizens Law Center
May 2012

California has proposed a three-year demonstration project to enroll individuals dually eligible for Medicare and Medi-Cal (dual eligibles) into managed care. An analysis of both Medicare and Medi-Cal quality ratings for the eight health plans selected by the California Department of Health Care Services (DHCS) for the first phase of the project raises cause for concern.

Approved health plans in participating counties would be responsible for providing enrolled dual eligibles with all Medicare and Medi-Cal benefits and services, including all needed medical care, long-term services and supports, and behavioral health care, beginning in January 2013.

According to a DHCS report assessing the quality of health plans in the Medi-Cal Managed Care (MCMC) Program, seven of the eight plans received a global health plan rating of 1 out of 5 stars.

Looking at Medicare evaluations, two of the plans selected have received a notice of non-compliance from the Medicare program. One of those has been marked as a low-performing plan for three consecutive years and is at risk for termination of its Medicare contract. Another plan was recently sanctioned by Medicare as a result of beneficiary access problems. Medicare continues to restrict enrollment of dual eligibles into that plan. All eight proposed demonstration plans were found to be low-performing on a least one composite Medicare quality measure.


President Obama is currently campaigning against the Republican proposal to privatize Medicare through a voucher program that would move Medicare patients into private plans. Yet, based on provisions in the Affordable Care Act, the administration is moving Medicare patients whose coverage also is supplemented with Medicaid (dual eligibles) into private managed care plans.

California has been a leader in health care financing innovations. Look at the head start that they have on this program. Seven of the eight plans they have selected to initiate the program have a global health plan rating of only 1 star out of 5!

These plans greatly limit patients’ choices of their providers and will undoubtedly impair access by eliminating choices of most other health care providers within the state. Having to transfer buses three times when you are very ill can make you question whether you have the access that the state has promised to you. And quality ratings? Forget it.

These low-income patients, under the law, have more coverage than do traditional Medicare patients… more, but worse. We can do far better. We can improve Medicare so that it includes the additional benefits provided by Medicaid. Then you wouldn’t need a special “dual eligible” program.

If the improved Medicare program included everyone, then you wouldn’t have to herd patients into inferior managed care programs just to save money (precisely what this new dual eligible program is designed to do). As a beneficent public monopsony, the improved Medicare program would save us all money while being in a position to demand quality throughout the health care delivery system. We couldn’t ask for more – for all of us!