What We Didn’t Hear During the Senate Hearing on Dual Eligible Beneficiaries

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AUTHOR – Allison Rizer

Authors: Allison Rizer, ATI Advisory 

Date of Publication: February 16, 2022

The Senate Special Committee on Aging held a Hearing on Medicare-Medicaid integration last week, sponsored by Senators Casey (D., PA) and Scott (R., SC). As a health policy professional who spends a lot of time focused on the 12 million individuals dually eligible for both Medicare and Medicaid, I was enormously excited to tune in.

The lack of coordination between Medicare and Medicaid creates barriers to access, poor health outcomes, and cost-shifting between the payers. It also creates considerable stress for dual eligible beneficiaries and their caregivers. Policymakers have sought to address this fragmentation for several decades, but solutions have resulted in a patchwork of policies that fall short of meaningful integration.

Which is why a bipartisan Hearing on this issue is particularly exciting – it suggests a readiness to move beyond the incremental collage of solutions available in select states to something that works for all dual eligible beneficiaries. But while the Hearing highlighted some important points about barriers (yes, we need more data), a lot of important points weren’t made.

As long as we have misaligned financing, there won’t be an integrated experience. This needs to be said louder: MONEY MATTERS. One expert witness (Dr. Jose Figueroa) mentioned the phrase “single pot of money” – suggesting that without this, beneficiaries and providers will continue to face barriers. He was spot on, but no one asked follow-up questions or explored what this means in practice. In my opinion, misaligned financing is the single biggest contributing factor to fragmented experiences.

Why? Currently, Medicaid dollars pay for Medicaid services and Medicare dollars pay for Medicare services, even if the same organization is administering both sets of benefits. The consequence is cost-shifting between programs and utilization controls to maximize the dollar under each program. For example, let’s assume for simplicity the actual total cost of serving a dual eligible beneficiary is $1,000 per person per month (PPPM). A health plan might receive $400 PPPM from Medicare and $600 PPPM from Medicaid, making the plan “whole.” But now let’s assume that the cost of Medicare services is really $250 PPPM and the cost of Medicaid services is $750. The plan must hit spending targets (the “medical loss ratio”) in both programs, so is incentivized to get as close to the $400 Medicare payment as possible, and manage the Medicaid spend to get costs down to $600. In the best-case scenario, the health plan uses Medicare supplemental benefits to fill gaps in Medicaid coverage, and the beneficiary’s needs are met through government program cost shifting. In the worst-case scenario, the plan maximizes spending on the Medicare dollar while cutting services or taking a serious financial loss on the Medicaid dollar.

In reality, it’s never this basic. The sum of the Medicare and Medicaid payments may be grossly out of alignment with overall costs, or the payments might be going to two different, uncoordinated plans (or sets of providers). But in nearly all instances, bifurcated funding creates perverse incentives that result in hospitalizations, long-stays in a nursing facility, and emergency department utilization that could be avoided. It means providers must navigate two approval processes, carry twice the administrative burden, and forego cost-sharing payments. It results in multiple sets of member materials to describe different benefits and coverage policy. It creates the need for additional administrative processes and systems to encounter expenses separately to CMS and a state.

If policymakers are serious about Medicare-Medicaid integration, they need to address misaligned financing. But first, they have to understand the implications and workarounds that have emerged to deal with it.

State flexibility matters, unless it’s more about politics than the person. There was a lot of talk during the Hearing about the importance of state flexibility in designing integrated programs. Fundamentally, I agree – if a state’s paying the bill, it should be able to design the program. And some states have designed amazing programs given the confines of our current policy environment. But what no one acknowledged during the Hearing was that this flexibility has contributed to many states not pursuing integrated programs at all. As of January 2022, 48% of dual eligible beneficiaries live in counties or states without an integrated option.

I get it – states have enough on their plate to navigate Medicaid; we shouldn’t expect their limited budgets to accommodate Medicare expertise too. Which is why Senator Scott introduced legislation to provide grant funding to states to assist with Medicare integration (my opinion: grants are great and I hope some version of this legislation passes, but a longer-term enhanced federal medical assistance percentage (FMAP) tied to integration would give states more budget stability, and might move the needle more…). This also isn’t the first time states had access to planning grants to build Medicare-Medicaid integrated programs, yet we still have only 24% of counties with an integrated option. Integrated and targeted programs should be available to all dual eligible beneficiaries, period.

State flexibility also creates significant eligibility variation across states – due to differences in eligibility criteria, a dual eligible beneficiary in one state may be a Medicare-only beneficiary in a neighboring state, despite being low-income and having complex medical and functional needs regardless of where they live. Are we okay with these inequities between states when more than half the costs flow through federal spending? Perhaps Senator Casey’s proposed expansion of PACE starts to chip away at this, but we have a long way to go.

Medicaid regulations don’t address Medicare. There was considerable discussion about access to Medicaid home-and community-based services (HCBS) at the Hearing. Kudos, because we need to talk about this – too many individuals lack access to these important services. But where was Medicare in the conversation? States pursue (and CMS approves) HCBS waivers and related managed care programs without any required discussion of the integration of HCBS with Medicare, despite more than half of Medicaid HCBS users being dually eligible for Medicare.

You first need to have HCBS to integrate with HCBS, so there’s a lot of value in discussions to expand HCBS access. But not directly tying HCBS to Medicare integration was a missed opportunity in the Hearing. Congress and CMS should take a closer look at Medicaid HCBS authorities and include Medicare integration as part of the approval process. This is also another role to consider for the Medicare-Medicaid Coordination Office at CMS (MMCO) – the Bipartisan Budget Act of 2018 (BBA 2018) gave MMCO broad authority to promote Medicare-Medicaid integration, but this authority focuses on Dual-Eligible Special Needs Plans (D-SNPs). Why not include MMCO in Medicaid HCBS program design, too?

Plan choice is out of control, and no one wants to tackle the elephant in the room: passive enrollment. Senators Casey and Scott raised a number of questions around increasing enrollment in integrated programs and improving enrollment processes. And an expert witness (Ms. Jane Doyle) provided a powerful example of having to call multiple agencies in her state to work through Medicaid eligibility, with her state aging agency not understanding dual eligible beneficiaries’ needs. But no one explored the challenges created by the number of program/plan choices a person must navigate. In 2021, a dual eligible beneficiary had to choose from an average of 26 different Medicare Advantage plans in their county, ranging as high as 110 in Los Angeles, California. And unsurprisingly, most of these “choices” aren’t integrated at all. Medicare choice is a third rail in policy circles, but is this much choice really choice at all?

Enrollment choices and challenges are a focus of Senator Scott’s proposed legislation, allowing grant funds to support dual eligible beneficiaries during enrollment processes. Again, kudos to this, because it’s surprisingly difficult to enroll in an integrated program, financial incentives in the system make it harder, and enrollment channels (including enrollment counselors and Medicare Plan Finder) need to be more targeted toward Medicare-Medicaid integration. For example, State Health Insurance Assistance Program (SHIP) volunteers tend to be well-versed in Medicare but may not be trained on the nuances of enrolling in a product that aligns with Medicaid, or the unique needs of dual eligible beneficiaries.

However, “passive enrollment” wasn’t discussed during the Hearing, and this deserves real policy attention. Passive and auto-enrollment happen across our healthcare system – including for low-income subsidy Medicare Part D plans, employer-sponsored health plans, and Medicaid plans. A state can passively enroll a dual eligible beneficiary into a Medicaid program or specific health plan, but on the Medicare side, this authority is extremely limited and surprisingly controversial. Coupled with appropriate beneficiary education, passive enrollment can be a strong tool to increase dual eligible beneficiary participation in integrated programs with enhanced beneficiary protections. Importantly, it can simplify their choices. But first, Congress needs to talk about it.

I’m still excited that the Senate held a Hearing on dual eligible beneficiaries, even if I am a little disappointed that there were a lot of missed opportunities to probe deeper on the very real barriers preventing integrated care. I hope this is the first in a series of listening sessions that set us up for impactful policy reform, and policy efforts go further than the Scott and Casey proposals rolled out last week. While these are a great signal, there’s a lot more to do.

Allison Rizer is a Principal with ATI Advisory, where she leads the firm’s practice area focused on Medicare-Medicaid Integration and LTSS Innovations. Allison has spent nearly 15 years researching policies that contribute to system fragmentation facing dual eligible beneficiaries.

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