Dual Eligibles: An Opportunity for Insurance Companies in Michigan

One costly problem for Medicaid and Medicare is the inordinate amount of money spent on individuals who are dually eligible for both Medicare and Medicaid.  In 2010, Michigan Medicaid spent $3.7 billion and Medicare spent in excess of $4 billion on such individuals.  Expenditures are trending upward.  At the same time, the current service delivery system has proven to be ineffective with regard to access to services, and many believe a lack of coordination between the two programs has led to an increase in costs.

On March 5, 2012, Michigan introduced its solution to this problem in the form of its proposal to "Integrate Care for People Who Are Medicare - Medicaid Eligible ("MMEs")."  The Michigan plan covers all Medicare and Medicaid services and benefits, including outpatient and inpatient acute care; skilled and custodial nursing; behavior health services; hospice; home health care; durable medical equipment and prescription drugs; and other community based long term care services.  When fully implemented, the Michigan program will integrate services and funding for more than 200,000 enrollees with a budget of approximately $8 billion.

The current delivery system in Michigan consists of 11 Medicaid health plans ("MHPs") that cover about two-thirds of all Medicaid beneficiaries as well as 18 prepaid inpatient health plans ("PIHPs") which provide the behavioral health population with services.  PIHPs are public entities that receive capitation payments for Medicaid beneficiaries who have mental illnesses or substance abuse disorders.  Nursing home care is provided on a fee-for-service basis while community based services are provided through the State's MI Choice home and community based services waiver.  Moreover, there are 29 health maintenance organizations in Michigan that offer Medicare Advantage Plans and one that offers an Institutional Special Needs Plan (I-SNP).

As part of the Michigan plan, there will be a demonstration project in July of 2013; the State will propose separate contracts (i) for integrated care organizations ("ICOs"), which will provide coverage for all physical health (acute and primary care), pharmacy and long term supports and services, and (ii) for the PIHPs, which will provide behavioral health and developmental disabilities services.  PIHPs and the ICOs will be required to share a secure electronic platform that contains, at a minimum: (i) a current integrated problem list, required for medical records; (ii) a single integrated person centered plan of care; (iii) a current medication list; and (iv) care management notes that contain current information on treatment including recent emergency services.  Long term care services (which include home and community based services provided through the MI Choice Waiver), nursing facility care and the Medicare Part D pharmacy benefit will also be managed by the ICO.  The services provided by the ICOs and PIHPs will be phased in by region and by population.  Then, in any region, beneficiaries have the option of choosing between two or more ICOs.  However, only one PIHP will be available in that region.  The geographic regions are unlikely to conform to current Medicaid HMO or PIHP regions.

Because there are two contracts with two separate entities, ICOs and PIHPs, there is the potential for confusion on how the care is delivered to the enrollee.  The State has proposed the following process to resolve this potential inefficiency:

1. Enrollees will receive a preliminary health assessment/screening that identifies the person's preferences, needs and priorities.  The initial screen will assist in determining whether it is the ICO or the PIHP that will have primary responsibility for working with the participant;
2. Once the lead contractor is determined, the ICO or PIHP will conduct a more extensive person-centered assessment which will include a core set of information gathered for each person;
3. ICOs will provide a primary care medical home for all participants to manage acute and primary care services.  Each enrollee will have a care coordinator from the ICO to coordinate physical health services. If a person has mental illness or substance abuse disorders, the PIHP will provide a supports coordinator for the enrollee;
4. The coordinator with lead responsibility will coordinate with a multi-disciplinary team.

The lead coordinator, from the above-described process, will make sure that the coordinators from both the ICO and the PIHP will form a "care bridge" to ensure that there is integration and coordination of services even though there are two separate contracts with two separate entities.  Additionally, each enrollee will have a person-centered medical home (“PCMH”) responsible for providing access to and coordination of acute and primary care services.  The PCMH is to be facilitated by the ICO and will be accountable for meeting the majority of the enrollee's care needs, including prevention and wellness, acute care and chronic care.

Michigan hopes that CMS approves its program by sometime late summer or early fall of 2012, and then intends to solicit bidders for its demonstration project in late 2012 so that it will have its proposed system up and running by mid-2013.

Entities interested in participating in Michigan's proposed integrated dual eligible program will be required to demonstrate the adequacy of their network in providing services so that the region will be covered.  The bidding entities, through their providers, must demonstrate certain core competencies.  These core competencies include:

1. experience with person-centered planning and self-determination;
2. use of evidence based practices and specific levels of quality outcomes;
3. experience in working with people who have disabilities; and
4. cultural competence.

Successful ICO bidders will be paid a capitation rate.  This rate will use a base rate to cover all medical services for their entire enrolled population.  Medical services will include Medicare and Medicaid acute and primary care services, along with management of the PCMH.  The ICO capitation rates will include an amount for long term care supports and services, including both community-based and nursing facility care.  Successful PIHPs bidders will also receive capitation payments based on three separate rate structures.  One structure will cover enrollees who are not categorized as having an intellectual/ developmental disability, serious mental illness or substance use disorder.  The second PIHP rate structure will cover enrollees who have an intellectual/developmental disability.  The third PIHP rate structure will cover enrollees who have a serious mental illness.

Both ICOs and PIHPs involved in the Michigan program will have the ability to negotiate reimbursement arrangements with their network of providers to provide incentives for best practices and quality care.  ICOs will be required to pay no less than a calculated state rate to nursing facilities.  The rates paid to ICOs and PIHPs will be actuarially sound with adjustments for age, gender and regional use factors.  There will also be proposed financial incentives paid to management entities to achieve specific desired outcomes.

The Michigan model proposes a passive enrollment with each enrollee being automatically enrolled in the program but having an option to voluntarily opt out of the integrated care plan proposed by the State.

Michigan believes that there is duplication, confusion and ultimately higher costs by having an uncoordinated dual health care system.  It is the hope that, under the Michigan Plan, dual eligibles may experience better health care with a single person centered care plan and coordination of delivery.  The Michigan plan is complicated and it will present challenges to existing HMOs and insurance companies who try to become the managers of ICOs and PIHPs.  However, dual eligibles are a large market with up to 200,000 potential enrollees and the Michigan plan represents a unique opportunity to deliver better health care to a large vulnerable population in Michigan.