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High anxiety: California’s poorest and sickest await the budget vote

Dual eligibility sounds great if it means a chance at winning two $500 million jackpots.

But in government shorthand, “dual eligibles” are those persons who qualify for Medicare, the federal health insurance for seniors and the disabled, and Medi-Cal, the state’s health care program for the poor.

The Legislature is scheduled to vote today (Wednesday, June 27) on a budget bill that will sharply change how most of the state’s dual eligibles receive health care.

California’s 1.1 million dual eligibles – and the 8 million in other states — are among the sickest and poorest persons covered by either program.

Half of dual eligibles — 61 percent of them over age 65, the remainder disabled — are in fair or poor health, more than twice the rate of other persons on Medicare, according to an August 2011 report by the Kaiser Commission on Medicaid and the Uninsured.

Many have multiple chronic conditions and are more likely than other Medicare recipients “to have mental health needs, live in nursing homes, be hospitalized, use emergency rooms and require long term care,” the report says.

More than half have income of $10,000 or less each year.

All of which means dual eligibles are also the most expensive recipients to care for.

For most dual eligibles, Medicare pays the bulk of medical costs – hospital stays, doctor visits, testing, and prescription drugs. Medi-Cal covers long-term or in-home care and Medicare’s deductible.

Nationally, dual eligibles represented 20 percent of those on Medicare in 2008 but accounted for 31 percent of Medicare spending, an April 2012 Kaiser Family Foundation briefing notes.

Although 15 percent of the Medicaid population, dual eligibles were responsible for 39 percent of Medicaid spending.

In his January budget proposal, Gov. Jerry Brown says 7 percent of Medi-Cal recipients generate 75 percent of the costs of the program, which is the second largest chunk of spending in the state’s cash-starved general fund.

Brown has proposed placing some 685,000 dual eligibles in eight counties, including Los Angeles and San Mateo, into managed care plans that would coordinate both their Medicare and Medi-Cal treatment.

The ambitious proposal — called the “Coordinated Care Initiative”– is estimated by Brown to save the state $611 million in its first year with implementation starting in March 2013. Part of that savings stems from deferring payments to managed care providers as dual eligibles are phased in.

Within four years, as all dual eligibles are moved to managed care, the state predicts savings will balloon to $880 million – without any payment deferrals.

“The dollar savings are important but the most important thing is coordination of care and access for a population that currently gets care in a fragmented, uncoordinated fashion,” said Jane Ogle, deputy director of Health Care Service Delivery at the Department of Health Care Services.

“We think managed care is the best mechanism to do that. It’s been used successfully in Medi-Cal and we’re proposing to expand it to Medicare. It puts in-home care, nursing home services and mental health under one roof and provides one-stop shopping for the beneficiary. It’s not designed to diminish care, it’s designed to make it rational.”

Critics, which include the National Senior Citizens Law Center and the California Medical Association, worry that Brown’s “pilot project” moves too many fragile people too quickly to a system of care that potentially could view them more as cost drivers than patients. 

“The idea is really interesting but we’re not sure it’s going to work. We’re worried about people losing access to current providers and services they receive,” the Oakland-based law center’s deputy director Kevin Prindiville told Capitol Weekly.

“Dual eligibles would automatically be moved into one of these demonstration plans and the worry is their long-term Medicare doctor doesn’t participate in the plan.  There’s nothing more important than that persons with health conditions maintain a relationship with a trusted provider,” Prindiville said.

Both the law center and the medical association also say placing almost two-thirds of the state’s dual eligibles into managed care is far more than a pilot project.

“This is untried anywhere. These networks aren’t ready for this,” said Dr. Ted Mazer, a San Diego ear, nose and throat specialist. “And this certainly isn’t a pilot. A pilot is a small population where time is taken to coordinate, implement and improve the idea before rolling it out the general population.”

Says Prindiville: “They’re not testing it, they’re doing it.”

 The Legislative Analyst recommended to lawmakers in March that they reject Brown’s eight-county proposal and approve a four county demonstration project, as the state originally proposed to the federal government.

 “We would like to see demonstrations that are much smaller and rolled out more slowly,” said Prindiville. “We’d like Los Angeles not to be one of the counties because it’s so big and complicated. Under the current proposal, if it doesn’t work the way (the administration) says it will, we’ll be really far down a road with no way to turn around.” 

The June 25 version of the budget trailer bill containing Brown’s plan — AB 1468 — is set for Senate and Assembly floor votes June 27. It allows the program to be conducted in eight counties.

Finding more efficient, cost-effective ways of treating dual eligibles is part of a nationwide effort, spearheaded by the Centers for Medicare and Medicaid within the US Department of Health and Human Services.

In all, 26 states have offered the federal government a variety of proposals integrating decision-making on care for dual eligible. Not all use managed care.

None of the proposed programs are as yet operational.

Also in its March 7 assessment, the Legislative Analyst notes Brown’s implementation timeline “doesn’t allow time to evaluate results from pilots in other states,” which would help better shape California’s plan.

No other state has a dual eligibles population remotely close to California.

New York is second with 657,000 persons although the Empire State’s May 3, 2012 draft plan would affect less than 130,000 of its dual eligibles.         

Among the other states, North California has a dual eligible population of 284,000. Massachusetts has 233,000. Of the smaller states, Colorado has 71,000 and Vermont, 31,000.

In the wake of budget pressures and ever-rising health care costs, both federal and state policymakers have embraced managed care as a more efficient model than the traditional fee-for-service.

“The whole movement in health care is away from a fee-for-service model, which encourages delivery of more services, to one anchored in value, outcomes and care coordination,” said Kim Belshe, a senior public policy advisor at the Public Policy Institute of California and former state cabinet secretary for Health and Human Services under two governors.

“From an overall policy direction (expanding managed care to cover dual eligibles is) the right thing to do.” 

Under a fee-for-service system, patients can choose their doctors and the coverage pays for office visits
, surgeries, tests and other procedures.

In contrast, managed care plans usually require patients to visit a specific network of doctors or health care providers. Sometimes permission is required prior to receiving certain services. A fixed or capitated payment is made monthly to the managed care provider for each patient.

Since the administration of Gov. Pete Wilson, California has moved an increasing number of Medi-Cal recipients into managed care programs.

Some 54 percent of Medi-Cal recipients are now in managed care. About 70 percent of Medi-Cal’s costs are generated by fee-for-service, the legislative analyst says.

It works much the same as in the private sector. The state buys coverage from health plans that then have responsibility for a beneficiary’s care. The plan contracts with doctors, laboratories, hospitals and others to create a network from which that person receives their care.

In November 2010, California won a waiver from the federal government to mandatorily shift 380,000 Medi-Cal recipients in 16 counties who are seniors or disabled into managed care over 12 months.

The state delayed the beginning of the transition period from February 2011 to June 2011.

“This has been the most confusing, onerous and challenging implementation of a public program change in our Health Consumer Center’s 14 years,” Katie Murphy, managing attorney for Neighborhood Legal Services of Los Angeles, told lawmakers on March 7.

“These are human lives at stake. Our clients are paying the price for rushed implementation, underground goals and policies that exceed the reach of the legislation and disjointed administration that leaves stakeholders with no meaningful opportunity to affect change,” Murphy said, noting Brown’s dual eligibles proposal would eventually impact three times as many people.

Ed’s Note: Restores dropped word “million” in 14th graf.


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