Obamacare and the Evolution of Medicare and Medicaid

A flurry of activity, envisioned by Obamacare (ACA) and driven by fiscal necessity, is beginning to transform how providers of long term services and supports (LTSS) address the needs of older adults.

Despite the growing interest in how the ACA will change healthcare delivery for working Americans, there is not much public coverage on the changes, which will affect the 49 million Medicare beneficiaries including the 10.2 million people who are dually eligible (duals) for Medicare and Medicaid services (and the subset of 7.4 million who are full-benefit duals). In light of the dearth of coverage in the popular press, I recommend these recently published research papers and policy briefs (here, here and here) for a comprehensive survey of new state and federal initiatives impacting the Medicare and Medicaid programs.

The CMS Medicare-Medicaid Coordination Office (MMCO) and the CMS Center for Medicare & Medicaid Innovation (the Innovation Center), both created by the ACA, are the chief change agents in this unfolding story. MMCO’s eight stated goals articulate a broad vision of increased integration between the two federal programs in order to improve care quality and continuity, eliminate waste and duplicative regulatory structures and simplifying duals access to services. Similarly, the Innovation Center’s congressional mandate is for the purpose of testing, ““innovative payment and service delivery models to reduce program expenditures …while preserving or enhancing the quality of care” for Medicare, Medicaid and CHIP beneficiaries.

Unlike a scripted play, with director, author and actors are working towards a foreseeable outcome, what is now unfolding seems more reminiscent of the Happening’s of the early 1960s: the responses of the audience (i.e. state governments and service providers) are as important as the props (i.e. federal regulations) and actors (i.e. MMCO and the Innovation Center) in this unfolding tale.

For better or worse, Illinois is at the vanguard of innovation as evidenced by its recent agreement (known as a Memorandum of Understanding – MOU) with CMS to test a capitated model to integrate care and aligned financing for Illinois full-benefit duals (approx 135,825 persons). Think of a capitated model as a three-part agreement: a health-plan (i.e. managed care organization -- MCO) enters into an agreement with the state, which in turn is contracted with CMS to receive a set risk-based payment from Medicare and Medicaid. If CMS is able to save money, then it will share the savings with the state. There are still many, many unknowns on how the model will be implemented. For example, duals are typically poorer and sicker then most Medicare beneficiaries and how well MCOs can meet the challenge of delivery person-centered health care and LTSS to this population has never been tested on this scale. Questions remain unanswered regarding the availability of ombudsmen to assist duals in navigating the complexities of the MCO system. Additionally, identification and implementation of quality standards and oversight have yet to be resolved. However, driven by the need to reduce Medicaid expenditures, the Illinois Department of Health and Family Services, is taking no prisoners in its drive to implement the MOU beginning on October 1, 2013.

A recently published policy brief identified the following national trends relating to the integration of Medicare and Medicaid services on the national level:

Two-thirds of all states are integrating or planning to integrate Medicaid and Medicare services for duals in state fiscal years 2013 and 2014.

Most integration programs are broad in scope – statewide initiatives targeting all full-benefit duals and spanning most LTSS.

Most states are turning to risk-based manage care models to deliver integrated services to duals.

In addition to the movement to managed care for duals, a multitude of Illinois LTSS providers are participating in Innovation Center programs designed to resolve the tension between access and affordability, while improving quality care. The programs include: the Bundled Payment for Care Improvement (BPCI) Program (ManorCare, the Illinois Bone & Joint Institute), the Community-based Care Transitions Program (CJE SeniorLife, Catholic Charities of the Archdiocese of Chicago) and the Independence at Home Program (Innovation Primary Senior Care LLC). Only time will tell whether these innovative programs are able to fulfill the stated objectives of the Innovation Center.

Beginning in federal fiscal year 2015, the ACA created Independent Payment Advisory Board (IPAD) will fulfill its mandate to control Medicare spending, by recommending Medicare cuts to Congress at the beginning of each fiscal year. Congress must authorize implementation of the recommendations or authorize other cuts, of the same size. Needless to say, providers are none to keen on the IPAB and the House has already voted to repeal the IPAD (here). The controversy over the IPAD bubbled up during the recent confirmation hearing of Marilyn Tavenner, the CMS interim administrator, where she emphasized that the IPAB  “[c]annot make recommendations that ration care, raise beneficiary premiums or cost-sharing, reduce benefits, or change eligibility for Medicare…” Her message was clear: appropriate Medicare reimbursement to providers is the goal, not health care rationing.

Even to the most casual reader, it is apparent that the ACA is radically altering the status quo in the delivery of health care and LTSS to American older adults. Whether or not, each initiative will succeed is less important then the need to successfully transition towards a person-centered health care and LTSS system that is affordable, achievable and aligned with consumer expectations. What do you think?

Learn more on Twitter @AgingInChicago.


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    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a company providing skilled nursing services in communities throughout Illinois and Missouri.

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