Integrating Medicare And Medicaid For Dual-Eligible Beneficiaries Through Managed Care: Proposed 2023 Medicare Advantage Regulations
Editor’s Note
This article inaugurates the Health Affairs Forefront major series, Medicare and Medicaid Integration. The series will feature analysis, proposals, and commentary that will inform policies on the state and federal levels to advance integrated care for those dually eligible for Medicare and Medicaid.
This article is written by Laura Keohane and Ann Hwang, who will author several series articles in response to the latest developments in policy and research affecting the dual eligible population. Other authors will contribute to the series as well.
The series is produced with the support of Arnold Ventures. Included articles are reviewed and edited by Health Affairs Forefront staff; the opinions expressed are those of the authors.
The series will run through August 30, 2022; submissions are accepted on a rolling basis.
On January 12, 2022, the Centers for Medicare and Medicaid Services (CMS) released the Contract Year 2023 Medicare Advantage and Part D proposed rule. These rules contain a number of provisions that will affect coverage for the approximately 4 million dual-eligible beneficiaries who receive their Medicare services through dual-eligible special needs plans (D-SNPs) or Medicare-Medicaid Plans (MMPs). This article focuses on provisions of importance to the dual-eligible population and efforts to foster better integration of Medicare and Medicaid benefits through managed care plans.
Addressing the lack of coordination between Medicare and Medicaid benefits is expected to improve quality of care for dual-eligible beneficiaries, who struggle to navigate between these two programs, and reduce overall spending on services. The limited evidence available about managed care integration efforts is not conclusive about whether these initiatives meet those aims. These proposed regulations signal CMS’ continued commitment to these strategies but raise questions about whether states will opt to engage in the substantial effort required to oversee integrated managed care plans.
Dual-Eligible Special Needs Plans (D-SNPs) As The Path Forward For Medicare-Medicaid Plans
Over the past decade, two large-scale strategies for aligning Medicare and Medicaid benefits through managed care plans for dual-eligible beneficiaries have emerged. The first approach, launched as part of the Financial Alignment Initiative (FAI) demonstration project authorized in the Affordable Care Act, created new Medicare-Medicaid Plans (MMPs) that are jointly funded by both programs to provide combined benefits. These plans have substantial oversight by the federal government and participating states.
The second strategy took an existing type of Medicare Advantage plan that exclusively enroll dual-eligible beneficiaries—dual-eligible special needs plans (D-SNPs)—and gradually expanded the degree of Medicaid coordination available in these Medicare plans. D-SNPs, which enroll approximately 3.3 million dual-eligible beneficiaries, can range from having minimal to extensive Medicaid benefit integration. Under the most integrated D-SNP options, state Medicaid programs contract with insurers that offer both Medicaid managed care benefits and Medicare D-SNPs, thereby giving dual-eligible beneficiaries the opportunity to enroll in two separate plans operated by the same insurer.
The FAI demonstration concludes in December 2022, raising questions about future coverage for the 400,000 MMP members. CMS indicates in these new proposed regulations that it views conversion to integrated D-SNPs as the future off-ramp for MMPs, and the proposed regulations take several steps to implement MMP features in D-SNP plans. MMPs have more oversight and integration requirements than D-SNPs but also have more flexibility in how some benefits are administered than D-SNPs, since MMPs operate as part of a demonstration project. The regulations bridge some of those differences between D-SNPs and MMPs and nudge D-SNPs closer to the more integrated model established in MMPs.
What’s Not In The Regulations: Incentives For States To Expand Or Launch Integrated Benefits
Before discussing the details of what the regulations cover, let’s start with an important spoiler alert about what the regulations do not include: meaningful incentives for more states to offer integrated benefits. When the FAI demonstration launched, many states expressed interest, but only 13 participated. Even though more states have adopted integrated D-SNPs than MMPs, most states still have no large-scale participation in integrated benefits among dual-eligible beneficiaries. Like the rest of the Medicare population, Medicare managed care participation is common among dual-eligible beneficiaries: Forty percent of dual-eligible beneficiaries with full Medicaid are enrolled in Medicare Advantage. However, only 55 percent of these beneficiaries are in a D-SNP, and MedPAC estimated that only 18 percent of D-SNP members have significant integration with Medicaid benefits. According to the latest Medicaid scorecard from CMS, only 18 states have more than 10 percent of dual-eligible beneficiaries in an integrated care program. Most states would have to take significant action to pursue a D-SNP integration strategy since this approach relies on alignment with Medicaid managed care, and only half of states offer long term services and supports through Medicaid managed care plans.
State Medicaid programs have limited bandwidth to oversee Medicare plans for dual-eligible beneficiaries, and it is difficult to argue states should prioritize this role when there is not a clear funding source for this work—either to launch new programs or to support ongoing work. The proposed regulations do not establish a mechanism for states to financially benefit from Medicare-side savings in D-SNPs, a fundamental issue with that model that would most likely require legislation to address. The FAI demonstration did establish a shared savings mechanism between states and Medicare for MMPs, which meant states could still financially benefit even if the savings was achieved by reducing the use of Medicare-covered services like hospitalizations. The FAI also included demonstrations that did not require managed care, and there has not yet been a successor program for these approaches after the FAI ends.
What’s In The Regulations: Measures To Improve Experiences For Dual-Eligible Beneficiaries In Medicare Advantage
The most straightforward proposed changes require two basic improvements for all D-SNPs regardless of their level of integration with Medicaid. Based on successful consumer advisory panels implemented in MMPs, all D-SNPs will now be required to convene an advisory group of dual-eligible plan members to weigh in on issues like benefit design, members’ experiences, and plan communications. As part of health risk assessments that D-SNPs are already required to administer, all plans will also have to start screening for housing and food instability with a consistent set of questions. The screening requirement complements related efforts by CMS to consider incorporating social risk factors into performance measurement, described in the recently released Advance Notice of Methodological Changes for Calendar Year 2023 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies.
Another noteworthy provision in the proposed regulations seeks to address potentially confusing or misleading activities of third-party marketing organizations across the entire Medicare Advantage program, a measure that may be particularly valuable to dual-eligible beneficiaries who currently face an overwhelming amount of choice and marketing. CMS points out that dual-eligible individuals in Los Angeles have over eighty-five choices for Medicare managed care coverage for 2022, including seventy Medicare Advantage plans, nine D-SNPs, two Fully Integrated D-SNPs (FIDEs), and five MMPs. Improving the quality of information available about plan selection may help dual-eligible beneficiaries decide between traditional Medicare and different types of Medicare Advantage coverage to find an option that fits their needs.
Raising The Bar For Integration In Integrated D-SNPs
D-SNPs can range from offering a minimal level of integration with Medicaid benefits to offering coverage that is closely aligned with Medicaid coverage. CMS designates D-SNPs that meet certain requirements for integration as Fully Integrated or Highly Integrated D-SNPs (FIDEs and HIDEs). These plans are operated by insurers that also provide Medicaid managed care benefits. Such plans are already required to take certain integration steps that are not available in all D-SNPs, like offering beneficiaries with aligned coverage a unified appeals process for Medicare and Medicaid benefits.
The proposed regulations require a higher degree of integration with Medicaid benefits from these plans to retain their designation as FIDEs and HIDEs. To address concerns that a dual-eligible beneficiary may be enrolled in a FIDE and still have Medicaid coverage from a separate insurer, the proposed regulations would require FIDEs to only enroll dual-eligible beneficiaries with the same insurer for Medicaid managed care and to provide Medicare and Medicaid plan offerings in the same geographic service areas. The proposed regulations also require FIDEs to provide Medicaid capitated coverage of cost-sharing instead of arrangements where state Medicaid programs process cost-sharing claims separately. CMS clarifies and introduces new limits on what type of LTSS, behavioral health, and other Medicaid benefits can be carved out of Medicaid managed care coverage for insurers operating FIDEs and HIDEs. CMS notes that many FIDEs and HIDEs already meet most of the proposed standards.
Options For States To Exercise Additional Oversight Of D-SNPs
CMS also proposes to give states new, optional oversight requirements for D-SNPs. These options provide a way for states with existing MMPs to transition those plans to FIDE or HIDE D-SNPs while retaining some of the oversight authority that is unique to the MMP program. One challenge with monitoring D-SNPs is that a D-SNP is often operated as part of a larger Medicare Advantage contract that includes multiple plans, including non-specialized plans that are open to all Medicare beneficiaries, not just dual-eligible beneficiaries. CMS would allow states to require that D-SNPs be operated as part of Medicare Advantage contracts that only contain D-SNPs and exclude other types of plans. Since many Medicare Advantage performance measures are reported at the contract level, this step would provide greater transparency about how D-SNPs perform on indicators like medical loss ratios and Medicare Advantage star ratings. This power would also facilitate the creation of integrated Medicare and Medicaid member materials for information like what providers are in network, another measure that was successfully piloted in the MMPs.
Reducing Medicaid Spending By Recalculating How Maximum Out-Of-Pocket Limits Are Applied
The measure with the most significant financial consequences for D-SNPs and states is a proposal that affects all Medicare Advantage plans, D-SNP or otherwise. Since 2011, Medicare Advantage plan coverage must include an out-of-pocket (OOP) limit that applies to services covered under Part A and B benefits. Many dual-eligible beneficiaries qualify for Medicaid coverage of Medicare cost-sharing. Under current regulations, a plan can choose to only count cost-sharing paid directly by the beneficiary toward the OOP limit, not cost-sharing paid by Medicaid. Even if a state Medicaid program has paid enough cost-sharing to reach the OOP limit for a dual-eligible member, a Medicare Advantage plan can continue to charge cost-sharing. In contrast, if a member without Medicaid paid enough cost-sharing to reach the OOP limit, a Medicare Advantage plan would cover all subsequent services in full without any cost-sharing. Because of this difference in how cost-sharing is counted towards the OOP limit, a Medicare Advantage plan may offer more comprehensive coverage to beneficiaries without Medicaid who reach the OOP limit than dual-eligible beneficiaries with the same spending levels.
The proposed regulation requires plans to calculate whether a beneficiary has reached the OOP limit in the same way for Medicare-only and dual-eligible beneficiaries: based on the cost-sharing requirements of the plan, not on whether those amounts are paid directly by beneficiaries or not. This measure will be cost-saving for state Medicaid programs, especially for states that opt to pay full Medicare cost-sharing amounts to providers. Providers could also see modest increases in payments for high-cost dual-eligible Medicare Advantage members since the plan will be responsible for payment in full for members who exceed the OOP limit; state Medicaid programs can opt to not pay providers the full Medicare cost-sharing amount for dual-eligible beneficiaries under “lesser-of” policies that cap cost-sharing payments at Medicaid payment rates, which are often lower than Medicare. Since D-SNPs exclusively enroll dual-eligible beneficiaries, this change will have the largest financial impact on D-SNPs and could reduce the amount of funds that D-SNPs have available to spend on supplemental benefits like dental coverage or transportation support.
A Better Integrated Care Model But Limited Reach
For dual-eligible beneficiaries who already have integrated benefits through D-SNPs or MMPs, these proposed regulations include several provisions designed to improve members’ experiences in D-SNPs and to strengthen integration requirements for D-SNPs that have extensive alignment with Medicaid managed care plans. These changes capture elements from the MMP that CMS has found to be beneficial and lay the groundwork for the conversion of MMPs to integrated D-SNPs. However, the regulations raise important questions about whether states will have sufficient incentive to advance integrated products, given limited bandwidth and the lack of financial benefits for states. By raising the bar for integrated products, stricter regulations create a risk that both states and plans may be less inclined to enter this market.
Public comments on the proposed regulations can be submitted until March 7.