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Study: Large savings elusive in state dual eligibles demonstrations

As the federal government evaluates state demonstrations for providing Medicare-Medicaid eligible Americans with better, more cost-effective care, a new study suggests that large savings will be elusive without specialized models and some improvisation.

In a report commissioned by the Kaiser Family Foundation, Randall Brown and David Mann from Mathematica Policy Research culled prior evidence on dual eligible pilot programs and care management programs for high-risk Medicare patients.

They found some patterns of success for improved care, reduced hospitalizations and cost savings, but overall, the evidence on dual eligible programs that’s available today is sketchy, they noted in their report, with “typically modest” savings among even the more successful models.

However, they noted, some evidence does suggest modest savings are achievable.

Personalized care based on health conditions, age, mobility and other factors, is one key to successful programs studied, the authors found, because there’s considerable variability even among patients with similar chronic conditions.

Frequent in-person and over-the-phone contact with case managers, nurse practitioners or community organizations, along with motivational interviewing, education programs and pharmaceutical management assistance has been shown to help reduce hospitalization and possibly yield savings, the study found.

With costs around $300 billion a year, care for dual eligible patients is one area where the federal government hopes to find cost savings under the Affordable Care Act.

The Centers for Medicare & Medicaid Services is currently reviewing state applications for dual eligible demonstration programs. Eighteen states want to test the capitated model, five want to test managed fee-for-service and three want to test both. So far CMS has approved Massachusetts’ capitated model, with community organizations acting as patient-centered medical homes, and Washington state’s fee-for-service coordinated care plan.

[See also: Massachusetts launches dual eligibles demonstration plan.]

Among the capitated managed care models that were studied for the report, the Program of All-Inclusive Care for the Elderly (PACE), EverCare Hospice and Palliative Care, Minnesota Senior Health Options and the Wisconsin Partnership Program brought reduced hospitalizations, although they didn’t necessarily lead to cost reductions because the demonstration’s payments were set higher than normal.

Created in 1997, PACE has been considered an effective intervention program, but Brown and Mann found that while it has been shown to decrease hospitalizations by blending acute and long-term care, it hasn’t led to lower Medicare expenditures for seniors with significant long-term care needs.

A 2004 study found that Minnesota’s dual eligible managed care program, begun in 1997, and Wisconsin’s program, a PACE adaptation, started in 1999, reduced preventable hospitalizations by as much as 23 percent, but overall didn’t reduce hospital admissions or ER visits.

Some signs of both improved care and cost savings have been found with the non-profit Commonwealth Care Alliance, a capitated full risk-bearing managed care program, that has operated in greater Boston since the early 1990s, with a disability care program and a dual eligible special needs plan (D-SNP) that has around 3,700 seniors, most of them eligible for nursing homes.

In a 2011 study published in Health Affairs, disability care per enrollee in Commonwealth Care was about $1,600 less than similar Medicaid fee-for-service spending of around $5,210. Hospitalization rates for Commonwealth Care’s senior beneficiaries were about 45 percent lower than for control groups. The Mathematica Policy Research authors note, though, that this study was based on internal data that hasn’t been made publicly available, and efforts to corroborate the findings have been inconclusive.

Another coordinated capitated care model, Evercare, operated by UnitedHealth Group’s Ovation’s division, showed it reduced hospitalizations for nursing home-bound Medicare beneficiaries. A study of five capitated Evercare programs found hospitalization rates for enrollees were half those of similar Medicare beneficiaries in fee-for-service nursing homes, saving, on average, $2,000 per enrollee, although with somewhat higher acute care use rates. While the capitation payments in the Evercare program were higher than traditional fee-for-service, the authors found the model does show some promise in its ability to reduce hospitalizations and control costs.

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