As lawmakers search for ways to rein in chronic budget deficits, health coverage for people who are both old enough to qualify for Medicare and poor enough to receive Medicaid might end up as a target for cuts. These patients, who are known as dual eligibles, are costly to cover and their care is often poorly coordinated. Because of that, many budget cutters are convinced there are ways to make their coverage more efficient, which would save the government money.
A panel of voices sympathetic to the idea of squeezing money out of care for dual-eligibles visited the Senate Finance Committee this week to talk about their ideas. But many Democrats on the panel were wary. The 2010 health reform law set up an office to oversee duals, and that office has launched a large pilot program, to transition duals in several states to Medicaid managed care plans. Officials from three testified that they have seen some progress and some savings. But several members of the committee expressed concern that it’s too soon to know whether the approach will work nationwide.
The new office "was created to test new and innovative models of care coordination for dual eligibles," said Sen. Jay Rockefeller, D-W.Va., who helped write the legislation that established it. "It was not created to recycle old ideas already proven ineffective for this population, thereby risking the health of millions of Medicare-eligible seniors by forcing them to comply."
Care for Americans who are eligible for both Medicare, through either old age or a disability, and Medicaid, through low income, is a perennial target in cost cutting proposals. The 9.4 million Americans who fall into the group require expensive, extensive care, the costs of which account for 31 percent of Medicare spending and 39 percent of Medicaid spending every year, though beneficiaries make up a much smaller fraction of those programs’ populations. Because Medicare and Medicaid cover different services, observers have long believed there are inefficiencies that could be dealt with in ways that both improve duals’ care, and save money. Together, states and the federal government spent $300 billion on dual eligibles last year. Somewhere in those lofty totals, the logic goes, must be savings. The Simpson-Bowles plan, for example, included an estimated $12 billion in savings from changing care plans for dual eligibles over a ten year period.
States are working to identify areas of overlap and potential savings, but proven strategies have not yet materialized. The new Obama administration program, which has attracted interest from 26 states would the group from both plans into Medicaid managed care plans. In managed care plans, the states and federal government contract with a private provider to provide care, allowing the three groups to negotiate savings up front. In order to be approved, states must promise savings from both the Medicare and Medicaid budgets. Massachusetts, the first state approved, promised as much as 4% savings by the third year. During the hearing, Sen. Thomas Carper, D-Del., called the program a "poster child" for efforts to improve care and simultaneously cut costs.
Leaders in three states that have submitted proposals to the demonstration programs testified today on their progress in implementation. Thomas Betlach, the director of Arizona's Health Care Cost Containment System, emphasized in testimony his confidence that efforts to move his state's dual eligible population to a managed care plan will be met with success.
"This is not about achieving a budget target," he said. "States like Arizona want to move the system forward, improve care for our citizens and be responsible with the taxpayers' dollars."
But there is a growing chorus in opposition to the shift. Doctors, hospitals, and patient groups have all criticized the plan, which many say could keep patients from receiving the care they need. The Medicare Payment Advisory Commission addressed a letter to the Center for Medicare and Medicaid Services in July, documenting their concerns with the scope of the program and the speed with which it was implemented. Sen. Jay Rockefeller, D-W.V., has been a vocal critic of the plan, which he says emphasizes cost-cutting over care. He called for a full halt to the program Thursday, repeating a request he made in a July letter to Sebelius.
Like Rockefeller, Finance Chairman Max Baucus, D-Mont. was adamant in the hearing that the focus of the demonstrations must be on improving care, not just saving dollars. But he was nevertheless open to the idea of finding savings somewhere in the bureaucratic overlap occupied by dual eligibles.
"Streamlining Medicare and Medicaid so they work together will pay dividends," he said Thursday. "It will improve the health of vulnerable Americans. And increasing efficiency will also save the federal government money."
Margot Sanger-Katz contributed to this report.