Stitching Medicare and Medicaid Together

By: - December 13, 2010 12:00 am

When Michael Hall became Pennsylvania’s secretary of aging in 2008, the state ranked 49th in the nation in offering long-term care alternatives for elders who wanted to avoid nursing facilities. 

“Every survey ever done showed that nine out of 10 people in Pennsylvania said they didn’t want to go to a nursing home,” Hall recalls. “But we were spending nine out of 10 dollars on nursing homes, and nine out of 10 people who needed long term care were living in them. We were doing exactly the opposite of what taxpayers and voters said they wanted.” 

In just a few years, Hall has made a lot of progress. The portion of long-term care dollars that Pennsylvania spends on institutional care has dropped from 92 percent to 76 percent. That was the result of many small steps the state has made to better coordinate care for frail elders and to help them find home- and community-based care options rather than automatically steering them toward nursing homes. 

Pennsylvania still has a lot of room for improvement, however. On average, states spend just 43 percent of their long-term care dollars on nursing homes. That continuing gap spurred Hall to address one of the toughest and costliest health care challenges, not just in Pennsylvania, but in all states: the problem of how to care for the so-called “dual eligibles.” Those are the people who are both impoverished enough to qualify for the state Medicaid program, as well as old enough or disabled enough to qualify for the federal Medicare program. 

Dual-eligibles are so costly to care for because many live alone, have multiple chronic illnesses and are likely to need help with daily activities of living. Among this population, there is a higher-than-normal rate of depression, mental illness, cognitive impairment and drug and alcohol abuse. 

For most of these people, getting the health care services they need is a struggle. Their care is fragmented among multiple providers, because they don’t have a single doctor who takes responsibility for their overall health. They have a Medicaid card, a Medicare card and they’re often living on Social Security checks and other public income supports. This is the population that has been most difficult to keep out of nursing homes when other alternatives might be viable. 

In part, that’s because where Medicaid and Medicare overlap, it can be difficult to untangle conflicting federal and state rules, as well as financial incentives that tend to push patients toward nursing homes. Hall, who has held similar positions in Vermont and Maine before his current job, believes states have to find a way around the red tape to get patients into the type of care they say they want-care that also happens to cost states less. 

“Our responsibility at the end of the day is changing their quality of life and the trajectory of their lives,” Hall says. “We’re looking at anything we can do to achieve that.” 

A national focus 

The idea of coordinating the two big publicly-funded health care programs to provide better care for the nation’s most vulnerable people has been getting a lot of attention lately. 

Dual-eligibles represent only 18 percent of the nation’s Medicaid population of about 60 million, but they are responsible for about half of all Medicaid spending and 27 percent of Medicare spending. When they need long-term care, Medicaid covers at least 86 percent of the costs. 

Over the past decade, programs that integrate Medicaid and Medicare have resulted in improved consumer satisfaction, better health outcomes and lower Medicaid costs in Arizona, Massachusetts, Minnesota, New Mexico, New York, Wisconsin and Washington. In each case, states have had to change their Medicaid rules by attaining a waiver from the federal government. 

For the most part, they have approached the dual-eligible problem through managed care. Massachusetts, for example, offers an integrated Medicaid and Medicare plan for dually eligible beneficiaries 65 and older, called Massachusetts Senior Care Options. Available only in eastern and central regions of the state through four separate managed care organizations, the plan includes primary and acute care, behavioral health services, prescription drugs, and long-term care services and supports. Since its inception in 2004, the program has enrolled more than 13,000 members. 

Studies have shown that people covered by integrated long-term care programs experience fewer hospital re-admissions, less depression and lower rates of chronic diseases such as hypertension, diabetes, kidney failure, asthma and emphysema. They are also more likely to keep their diseases in check and not suffer complications such as amputations resulting from diabetes. All of this spells better quality of life for patients and lower Medicaid costs. Though little research exists quantifying the savings, experts agree the potential cost reductions are huge. 

But only 2 percent of the dual-eligible population — just 120,000 people — are covered by these experimental programs. In most cases, states lack the resources to create these complex new programs and, once available, it can be difficult to get consumers to enroll in them. 

The new federal health care reform law provides financial incentives for states to pursue cost-saving innovations. The federal government has created a new Federal Coordinated Health Care Office, headed by a former state Medicaid director, to work out regulatory conflicts and eliminate perverse cost shifting between the two programs. Grant programs are in place to help states develop new types of integrated Medicare-Medicaid plans. 

Bumps in the road

Pennsylvania’s experience, however, shows how difficult that can be. Second only to Florida in the percentage of people aged 65 or older, Pennsylvania has an estimated dual-eligible population of 370,000. The state also has the nation’s highest percentage of elderly and disabled people already enrolled in Medicare managed care plans, indicating consumer willingness to participate in an option that would coordinate Medicaid care, as well. 

Hall found elders and their advocates to be skittish about the idea, however. “The community thought he came with a prescription that was already a done deal,” says Crystal Lowe, executive director of Pennsylvania’s Association of Area Agencies on Aging. The advocates did not strictly oppose the concept of integrating Medicare and Medicaid; they wanted to be more involved in developing the details. They also objected to Hall’s proposal to automatically enroll all eligible consumers and let them opt out if they didn’t like the plan. 

Although it had lukewarm public support, Hall drafted a federal waiver application and planned to move forward with his plan. It was set to go live last July, but creating an IT system that combined the separate and often conflicting eligibility rules for Medicare and Medicaid proved more difficult than expected. The program is now on hold. 

It will be up to the new governor, Republican Tom Corbett, to decide whether to move forward. Corbett said in his campaign that he was committed to reducing skyrocketing Medicaid costs and industry experts already have presented the case for fully integrating Medicare and Medicaid to Corbett’s transition team. 

Successful care coordination 

In the meantime, Pennsylvania is seeing improvement on nursing home utilization simply by offering traditional fee-for-service Medicaid services along with a managed Medicare plan. One of the largest such experiments in the nation is run by Gateway Health Plan, which serves more than 26,000 patients — about 7 percent of Pennsylvania’s dual-eligible population. 

While realizing the cost savings that would come from fully integrating Medicaid and Medicare under one managed care contract is not yet possible, Gateway CEO Michael Blackwood says his organization has seen average annual cost increases of only 3.6 percent, compared to 7 percent increases in Medicaid generally. 

Blackwood says coordinating care for this vulnerable population is not easy. It takes a skilled staff and good IT systems. “Our outreach staff tracks all of the services our members use to see what they actually received by checking claims and pharmacy records,” he explains. “We call to make sure they’re taking their meds and we visit them in their homes. We hold weekly team meetings to discuss our most difficult cases.” 

When Gateway set up shop in Pennsylvania in 2006, the company advertised on radio and television and met with people in the community to explain how people who qualified for both Medicare and Medicaid could get improved service from an organization that accepts both insurance plans. 

Helen Schmidt remembers how she first heard about Gateway. “A lady was at the Food Stamp office when I went to renew,” Schmidt, age 85, recalls. “She explained all about the program and it sounded good to me.” 

Schmidt has lived in the town of McKeesport her entire life. She suffers from emphysema, high blood pressure, encroaching blindness due to macular degeneration, hearing loss, failing kidneys and a variety of other medical problems that keep cropping up. “I’m falling apart at the seams,” she says in a spunky, good-natured way. 

Before she signed up for the Gateway plan she had to travel on a bus to a county hospital, her oxygen tank in tow, for hours in both directions. She often got confused about which doctor she was supposed to see at what time. Transitions into and out of the hospital were rough. “You can take an ambulance to the hospital, but how are you supposed to get back home?” she asks. 

Schmidt lives alone with her seven cats in the same house she grew up in. For income, she relies on Social Security checks, Food Stamps and other safety net programs. She calls her care coordinator at Gateway an “angel” and lists her as next of kin when she fills out hospital admission papers. 

Last winter, Schmidt mentioned that her furnace had quit working and the staff at Gateway arranged for a local weatherization group to come in and replace it. “I don’t know what I’d do without them. They’re my dictionary. I go to them for everything,” Schmidt says. 

So far, Gateway’s staff has managed to give Schmidt the care she needs without moving her into a nursing home. That’s the way Schmidt wants it to remain. “They’d have to dope me up to the eyeballs to get me out of here,” she says. “If I want to get up at 4:00 in the morning and sing and dance, that’s what I’m going to do. That’s just the way I live.” 

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Christine Vestal

Christine Vestal covers mental health and drug addiction for Stateline. Previously, she covered health care for McGraw-Hill and the Financial Times.