Dual eligible beneficiaries: Roles for surgeons under health care reform

Patients who qualify for both Medicare and Medicaid, known as “dual eligibles” or “duals,” are the most socioeconomically vulnerable and costly patient population in the health care system. In 2007, duals comprised 21 percent of the Medicare population but accounted for 31 percent of total Medicare costs; they represented 15 percent of the Medicaid population, but 39 percent of total Medicaid costs.^1-5 Poor care coordination and lack of financial alignment between Medicaid and Medicare results in poor access, increased costs, and decreased quality of care for duals.^1-7

Inadequate care coordination contributes to hospital readmissions and increased use of acute care services for preventable conditions for duals.^8,9 An estimated $20 billion could be saved annually by improving coordination of primary, acute, and long-term services and by eliminating duplicate services.^10-12

The Affordable Care Act (ACA) contains several provisions that are designed to address these problems. For example, it encourages states to integrate care and coordinate benefits for duals through state demonstration programs.^13-16 In addition, the ACA established two new offices within the Centers for Medicare & Medicaid Services (CMS): the Medicare-Medicaid Coordination Office, also known as the Federal Coordinated Health Care Office (FCHCO), and the Center for Medicare and Medicaid Innovation (Innovation Center). The FCHCO aims to align care coordination and financing mechanisms for all Medicare and Medicaid beneficiaries, whereas the Innovation Center will test novel payment and service delivery models, including global payments and capitation.^17,18

Although these reforms are needed, there is a paucity of information regarding how surgical services will be integrated into state demonstration programs or how transitions from a fee-for-service (FFS) model to capitated programs will affect surgeons’ compensation. Unfortunately, sparse data are available on surgical patient demographics, readmission rates, and use of surgical services by the dual eligible population. Limited data document a lack of access to surgical care and decreased overall survival after surgical resection compared with Medicare-only patients.^6,19 As a result, the surgical community has an opportunity to contribute to the understanding of this population in terms of assessing demographics, readmission rates, quality and access barriers, and current use of surgical services.

The American College of Surgeons’ National Surgical Quality Improvement Program (ACS NSQIP^®) and the Inspiring Quality campaign stimulated a dialogue on innovative quality improvement programs across the nation.^20,21 Because of this initiative, members of the ACS have the opportunity to advocate for the integration of surgical quality improvement strategies within state demonstration programs to improve care, costs, and overall outcomes for duals.

Characteristics of dual eligibles: Dual eligible benefit structure

Medicare is a federally funded program that provides health insurance to individuals who are 65 years of age and older or who have Social Security disability insurance.¹ People who have amyotrophic lateral sclerosis, end-stage renal disease (ESRD), or who require a kidney transplant also qualify for Medicare coverage, regardless of age.

Medicaid, on the other hand, provides health care coverage to low-income individuals and is funded by both the federal and state governments. The individual states define who among their residents qualifies for Medicaid coverage and which services are covered under the program, but most cover provider services, nursing home care, and home health services.^3-5,13,14

Medicare pays for acute care services, whereas Medicaid pays for long-term and social support services (see Figure 1).²² All Medicare beneficiaries are subject to cost sharing, meaning they pay an annual deductible and coinsurance on medical services. For duals, Medicaid covers these shared costs.¹³

Approximately 9 million Americans qualify for dual eligibility, and 7 million are “full duals,” meaning they receive full benefits from both Medicare and Medicaid. The remaining 2 million beneficiaries are “partial duals,” meaning they do not qualify for full Medicaid benefits.¹ Full duals receive Medicaid benefit packages, whereas partial duals are ineligible for certain Medicaid services, such as hearing, vision, and dental programs that some states offer.²² However, partial duals can become full duals if they spend down their assets during prolonged hospitalizations or nursing home stays.¹

Policymakers are aware of the high costs associated with caring for this population. In a tight economy, state budgets are strained, and the resources required to provide health care to duals may compromise other state spending priorities. At the federal level, policymakers are continually looking for ways to find savings in the system, and are increasingly aware of the need to address the comprehensive care needs of duals. These efforts are hindered by separate funding streams, varying health care coverage rules among health plans, and multiple health care providers, all of which increase the complexity of coordinating care, providing quality care, and controlling costs between federal Medicare programs and state Medicaid programs.^1-4

Demographics

Many dual eligibles live in poverty, nearly two-thirds lack a high school diploma, more than half are female, and a high proportion are minorities (see Figure 2).⁴ Many duals have cognitive and functional limitations, live in long-term care facilities, have increased rates of chronic conditions, and experience higher annual mortality rates in comparison with Medicare-only patients (see Figure 3).^1,3,4,23,24 These socioeconomic and medical conditions increase the challenges of care coordination, leading to greater hospitalization rates when compared with Medicare-only beneficiaries (26 percent versus 18 percent in 2008).³

Duals who are 65 years of age or older likely have three or more chronic conditions, require assistance with daily living, and reside in nursing facilities.^2,4,9,23 These elderly patients are potentially high-risk surgery candidates who are predisposed to developing postoperative complications and may require more intensive and prolonged follow-up care. State demonstration programs that integrate postoperative care coordination into their initiatives may be able to improve overall outcomes and decrease costs.

Costs

In 2009, Medicaid costs for dual eligibles were $129 billion, and Medicare spending for duals was $132 billion; so, total health care costs for these patients exceeded $250 billion dollars.^1-4 Dual eligible Medicare beneficiaries incurred costs of $14,169 per person, which was nearly twice that of Medicare only beneficiaries ($7,933).³ The most costly 10 percent of duals account for more than 60 percent of Medicare spending for duals, and costs for this top-tier group accounted for 15 percent of total Medicaid expenditures in 2008.^1-3

Beneficiary characteristics differ between duals with Medicare spending that is less than $2,500, defined as low-cost duals, and duals with Medicare spending greater than $40,000, defined as high-cost duals.25 The latter group of patients are more likely to live in long-term care facilities, have ESRD (11 percent versus <1 percent low-cost duals), diabetes (50 percent versus 21 percent low-cost duals), or heart conditions (60 percent versus 29 percent low-cost duals).^3,4,25

Additionally, 39 percent of duals (3.6 million) are younger than 65 years of age and disabled, and Medicare spending for disabled, young duals is lower than spending for duals age 65 and older ($13,661 per capita versus $16,445 per capita on average).^3,4 This disparity likely is attributable to decreased patterns of service use due to the fact that younger duals are less likely to live in a facility and generally have fewer than three chronic conditions.^2,24 Overall, there appears to be a younger, healthier low-cost dual population with lower utilization rates and costs to the health care system than elderly, high-cost duals (see Figure 4).³ It is unknown whether such a dichotomy exists within the surgical patient population. Further research is needed to determine which factors predict high costs and what quality initiatives surgeons can implement to efficiently deliver care to this population.

Barriers to surgical access

A paucity of data is available on duals’ access to and use of surgical services. However, few studies on select populations suggest a lack of access to surgical care and decreased postoperative survival.^6,19,26,27 A study in Michigan used statewide Medicaid and Medicare data to evaluate all treatments of non-small cell lung carcinoma (NSCLC) in duals versus Medicare-only patients. In a study of 2,626 patients, duals were half as likely as Medicare-only patients to undergo lung resections even when controlling for multiple factors. Surgical resection narrowed but did not close the survival gap between duals and Medicare-only beneficiaries.¹⁹

Another study in Michigan used a similar methodology to compare the likelihood of surgical consultation and resection between duals who had NSCLC or colon cancer with their Medicare-only counterparts. In a study of more than 3,000 patients, duals were half as likely to be evaluated by a surgeon, although the likelihood of resection was not significantly different between duals and Medicare-only patients.⁶ These studies begin to define the problem but are limited given that they were performed in one state and were confined to lung and colon cancer patients only. Whether these findings can be generalized to all surgical patients is questionable due to differences in disease processes, regional variations, age, and types of surgical treatment.

Causes of surgical disparities between duals and other patients are likely multifactorial; for example, educational disparities lead to poor health literacy, non-adherence to treatment plans, and gaps in communication between health care provider and patient.^6,19,27,28 Additionally, geographic isolation could present transportation barriers likely leading to delayed surgical care. Lastly, access to physicians may be limited due to poor Medicaid reimbursement rates and, consequently, some physicians may not accept dual patients.^6,19,26

Fragmented care coordination

Duals often have more than one co-morbidity, which multiple health care providers manage, thereby increasing the complexity of care coordination needed between Medicaid and Medicare.²⁸ Care is provided through a system of disjointed programs funded by different state and federal governmental agencies.¹ For duals, fragmentation occurs due to differences in state eligibility criteria and services provided by Medicaid.

Poor-quality care leads to hospital readmissions, thereby increasing the use of acute care services for preventable conditions for duals.⁸ In 2008, duals represented one-third of all Medicare hospital stays that had preventable primary diagnosis of pressure ulcers (36 percent), asthma (32 percent), and diabetes (32 percent). Patients with pressure ulcers had the highest cost per stay ($15,000). One-fourth of hospitalizations for duals were for urinary tract infections (UTI), chronic obstructive pulmonary disease (COPD) exacerbation, and bacterial pneumonia.⁸ Women accounted for most dual-eligible hospital stays, accounting for more than three out of four stays for injurious falls, asthma, and UTIs.⁸

Experts estimate that $20 billion could be saved annually by eliminating duplicate services, decreasing acute care visits, and better integrating Medicaid and Medicare.^10-12 For example, quality improvement initiatives focused on development of standardized protocols that visiting nurses could use to avert postoperative wound infections and pressure ulcers likely would decrease the number of preventable hospital admissions. Through state demonstration programs, surgeons potentially have the opportunity to design and advocate for postoperative care coordination services.

Misaligned payments

Nursing home care also is an area of high incurred costs due to misaligned reimbursement incentives.²⁹ Medicare and Medicaid both pay for nursing home care; these services are differentiated by referring to Medicare coverage as skilled nursing facility (SNF) and Medicaid coverage as nursing facility care. Medicare coverage requires prior hospitalization, whereas Medicaid covers long-term nursing home care.²⁹ When a nursing home beneficiary is admitted to the hospital, Medicare pays the hospital costs, and when patients return to nursing homes the institution receives higher Medicare SNF payments rather than Medicaid rates.

Nursing homes that hospitalize residents for preventable conditions likely fail to provide adequate medical care.²⁹ Recent studies support this claim and demonstrate that compared with Medicare-only beneficiaries, duals are likely to be discharged to mediocre SNFs with lower nurse-to-patient ratios.⁷ Lack of adequate nursing care could lead to poor-quality care, contributing to readmission rates for preventable conditions. Due to these concerns, CMS moved toward encouraging the development of value-based payment demonstration projects in 2009, rewarding SNFs that reduced preventable hospital admissions.³⁰ It is important for surgeons to be involved in the development of policies related to quality improvement programs in nursing homes. Their involvement could lead to decreased hospital readmissions for preventable postoperative complications and, in turn, improve quality of care while decreasing costs.

ACA policy solutions and implications

The ACA contains several provisions aimed at improving care coordination and financing for duals. The ACA-created FCHCO is tasked with integrating and coordinating Medicare and Medicaid benefits and finances; additionally, the Innovation Center is charged with testing novel payment and service delivery models.^17,18 Other policies in the ACA call for establishing medical homes for Medicaid patients, waiving Medicare Part D cost sharing for full duals, and increasing federal expenditures to support state expansion of home- and community-based services for long-term care.¹⁵ The key ACA policy likely to improve outcomes for duals is establishment of state demonstration programs.

State demonstration programs

In July 2011, CMS announced national efforts to integrate care and coordinate benefits for duals through state demonstration programs.^13,14 Design contracts and financial alignment proposals between states and CMS are required and, once approved, memorandums of understanding (MOU) between CMS, the state, and health plans are created. Currently, nine states have finalized MOUs; three (Massachusetts, California, and Washington) started enrolling beneficiaries in 2013, and the rest will implement programs in 2014. The federal government pays all health care costs in a demonstration program’s budget, but states pay for long-term costs of care.⁵ CMS plans to limit enrollment to 2 million dual eligibles in demonstration projects nationally.^12,16

California, Illinois, Massachusetts, New York, Ohio, South Carolina, and Virginia will test a capitated financial alignment model, and Washington will test a managed fee-for-service model. Minnesota will test only integration of administrative functions without a CMS financial alignment model. Following are summaries of the demonstration projects in various states.

Massachusetts’ One Care model

Massachusetts Medicaid (MassHealth) and Medicare will join with three health plans to offer One Care to dual-eligible patients. For a period of time, duals may voluntarily enroll in One Care. After this time period has passed, they will be enrolled in a managed care plan and may opt out of One Care.¹⁶

Three health plans participating in One Care are Commonwealth Care Alliance, Fallon Total Care, and Network Health. Massachusetts created managed care entities called Integrated Care Organizations (ICOs), which provide patient-centered medical homes and coordinate behavioral health services, clinical care services, and prescription drugs, and provide community-based services as an alternative to other high-cost services, based on enrollees’ needs. Long-term care support coordinators will be hired independently of the health plans and will come from community-based organizations.^16,31,32

CMS will combine Medicare and Medicaid funds to provide a blended capitated payment to ICOs. CMS will contribute Medicare Parts A, B, and D services to the ICO blended rate. The state contributes to the ICO rate through Medicaid. The capitation rate will be risk-adjusted based on Medicare Advantage and Medicaid risk-adjustment rating categories and high-cost risk pools.

Duals may lose their current providers after enrolling in the new ICOs. When a beneficiary enrolls in an ICO, patients have a 90-day transition period during which they may continue to receive care from their current provider. After this time period ends, duals may only continue to receive care from providers that are part of the ICO network. CMS and the state will both be responsible for oversight of ICOs; additionally, CMS will monitor and evaluate programs by funding independent evaluators.

One Care’s structure is based on a pilot program, the Massachusetts General Hospital (MGH) Physicians Organization Care Management Program, which succeeded in controlling costs and improving quality of care.^5,21,31,32 The MGH Physicians Organization Care Management Pilot Program was successful largely due to time and resource investment. Case managers with substantial experience engaged in intensive training and nurses with strong clinical and leadership skills were hired. Communication was a key component, with weekly e-mail reports serving as an important feedback mechanism. MGH information technology was adapted and changed as needed to suit the program. All these components are built into the One Care model and are strategies that could potentially be used to design surgical care coordination programs into state demonstration programs.

California’s Cal MediConnect

California Medicaid (Medi-Cal) and Medicare are scheduled to launch Cal MediConnect in April in eight counties. Cal MediConnect is a care coordination program similar to Massachusetts One Care, targeting dual eligible beneficiaries. An estimated 465,000 beneficiaries will be enrolled in Cal MediConnect.

Participating health plans provide all Medicare and Medicaid services, including primary and acute care services, prescription drugs, behavioral health, and long-term support services (LTSS). Dental, vision, and nonemergency transportation services, which were not covered under Medi-Cal, will now be compensated. Health plans allow enrollees to continue care with current Medicare providers for six months and their Medicaid providers for 12 months. Plans also include interdisciplinary care teams comprising experts in cultural competency and social services. Health plans are financed through capitated models similar to One Care.^16,17,33-35

Washington and Minnesota demonstration programs

Washington State’s demonstration program differs in that it will use Medicaid-driven medical home networks to coordinate Medicare and Medicaid services using a FFS model. Providers will continue to receive FFS reimbursements from both Medicare and Medicaid covered services. Any savings in this demonstration program will be determined retrospectively. The state will be able to share in savings with CMS if targets and quality standards are met.¹⁶

Minnesota will align administrative services between Medicaid and Medicare but will not test any CMS financial alignment models. Instead it will maintain its current Minnesota Senior Health Options program, a service for duals that is currently financed through a capitated integrated payment and delivery system that includes Medicaid managed care organizations. Plans will be able to integrate and coordinate primary, acute, LTSS, and behavioral health services.

Overall, state demonstration programs could reveal ways to improve care coordination while decreasing costs and improving overall health outcomes for duals. The surgical community will need to monitor these programs as they roll out in each state to determine which models are effective for improving outcomes for dual eligible beneficiaries.

Implications and future directions

The goal of the ACA is to improve health care quality and slow spending growth in the health care system. This approach aligns with the goals of ACS NSQIP and the ACS Inspiring Quality campaign. Nationally, hospital readmission rates for preventable surgical conditions are being used as quality indicators through the Hospital Readmissions Reduction Program administered by CMS. ACA provisions authorize CMS to progressively reduce Medicare payments to hospitals with high readmission rates.³³ Dual eligibles experience higher readmission rates than non-duals, likely because of their poor access to care, low socioeconomic status, and poor baseline health status.^36-38

As a result, those hospitals and surgeons that disproportionately care for a higher number of duals may be penalized financially. Physician practices and hospitals may be unable to absorb these financial reductions, further widening the gap in resources and equity in care for duals. Furthermore, recent studies demonstrate that, compared with Medicare-only beneficiaries, duals are discharged to poorer-quality SNF facilities due to failures in discharge planning.⁷ Improving care coordination and discharge planning as well as designing pre- and postoperative surgical care quality improvement programs through state demonstration programs may be beneficial in reducing admissions for preventable conditions, improving access to quality care, and lowering costs. These are potentially key areas where state demonstration programs, the College, and ACS state chapters can align.

At the state level, the Inspiring Quality campaign brings together local and national health care leaders to participate in policy discussions to improve surgical quality and identify gaps in care. Currently, no plans exist to integrate surgical quality improvement programs into state demonstration programs. The Physician Group Practice Demonstration program, an accountable care organization demonstration project, lowered surgical readmissions for duals through quality- and cost-targeted initiatives.³⁹ Similar success for duals can potentially be achieved in state demonstration programs.

Further research by surgeons characterizing surgical demographics and use of surgical services by duals before and during implementation of the ACA and demonstration programs is essential and will support innovative quality improvement programs. Prospectively monitoring and evaluating state demonstration programs to determine changes in reimbursement rates as payments transition from a FFS model to capitation programs will be important to determine the effects on access to surgical care. When possible, the surgical community should be in discussions with CMS and the states to advocate for inclusion of surgical services in demonstration programs. The ACS is positioned to take a leadership role in advocating for access to quality surgical care for all dual-eligible patients.

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References

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