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Dealing with the Dual Eligibles

Former Indiana Medicaid director Melanie Bella is leading the effort to build bridges between Medicare and Medicaid programs.

Medicare has 48 million beneficiaries. Medicaid has roughly 60 million enrollees. About nine million people are eligible for both programs. These "dual eligibles" -- low-income seniors and younger people with disabilities -- account for about 40 percent of the costs of the two programs. Yet until recently, there's been very little coordination between state Medicaid programs and the federal Medicare program. It's Melanie Bella's job to change that.

Bella heads the newly created Federal Coordinated Health Care Office at the Centers for Medicare & Medicaid Services (CMS). As the former head of Indiana Medicaid program, she has a strong grasp on state concerns. "My goal in this job is to have very collaborative relationships with states in the areas where our interests are aligned," says Bella. "We have every reason to be collaborative and be very good partners and try to figure out how to make it easier for states to do the right thing." I spoke to Bella about her plans for a new, more collaborative relationship -- "an incredible opportunity for improvement," in her words -- in this condensed and edited transcript.

You ran Indiana's Medicaid program from 2001 to 2005. How have your experiences there informed what you are trying to do now with the dual eligibles?

My focus when I was in Indiana, for the most part, was on chronic disease and chronic disease management. Dual eligibles were a part of that. Indiana was just getting into managing the high-need, high-cost population at large, without necessarily focusing on "the duals." One of the things I learned in Indiana was the financial misalignment. When you're a state Medicaid director and you see the financial misalignment in this population, it makes it hard for you to do the right thing. I want to change that.

Could you elaborate more on what you mean by the financial misalignment? Give me an example.

The best example is a Medicaid agency that is doing a care management program. Let's say I'm a high-needs beneficiary. Medicaid is paying someone to better manage my care -- a care manager or a doctor who's getting a primary care case management fee. By and large, dual eligibles aren't included in these state care management programs. Why? Because the savings that you typically see, especially in the short term, is in decreased hospitalizations, better management of drugs [and] reduction of readmissions. For all those services, Medicare is the primary payer.

Medicaid is paying for care management, but Medicare is accruing the savings. That's the financial misalignment. We need to figure out how to align those incentives better.

What kind of coordination has there been to date between Medicare and state Medicaid programs? How would you characterize the state of coordination?

We have a couple programs that demonstrate coordination. One is PACE, the Program of All-Inclusive Care for the Elderly. It's a wonderful model. It's very patient centered. It has an interdisciplinary care team that really is reflective of medical needs and behavioral health needs, and social needs. But it's geared toward a very, very frail population [55 years or older that requires nursing facility level of care], so we have only around 20,000 people in PACE across the country. By definition, it's not broadly applicable to the whole population.

Then, we have Medicare Advantage Special Needs Plans that are allowed to subset or target portions of the Medicare population. Prior to the passage of these plans a Medicare plan would have to serve everyone. Now there are dual eligible special needs plans. Some of them are what we would call truly integrated and coordinated, which means they have a contract with the state Medicaid agency for all the Medicaid services too. So you have one entity that is coordinating the care and is getting the two streams of funding.

That is not happening in very many places. Most of the special needs plans do not have contracts with Medicaid agencies for the full range of benefits. Now there is a requirement that special needs plans have contracts with state Medicaid agencies in place by 2013. But few of them have been focused on the long-term care side, which is where states really need the help.

Where is the lack of coordination most evident, and how exactly is your office going to try to foster coordination?

Well, why don't I start with what is the purpose of this office? In the simplest terms, we have two jobs. One is to improve care for the beneficiaries. The second one is to strengthen the state/federal relationship. Again, we can only be successful working in partnership with states so a huge part of the office and the way we are staffed is to really be good partners to states.

There are areas where we have opportunities for better alignment, so we actually did something called the Alignment Initiative. I have a team in the Baltimore office who literally are responsible for identifying all the places where Medicare and Medicaid bump up against each other. We put this together, we grouped them into six categories, and we put that out for public comment in the Federal Register.

We put it out there in an effort to be transparent and say, "Here are areas where we think the programs aren't working well together. Give us your input and tell us what we're missing." You name it, it's there. It's in enrollment, it's in marketing, it's in grievances and appeals, it's in benefits standards. In the past, if states had an issue with the duals, they would go work with the Medicaid side of the house. But they had no point of contact to interpret the issue for the Medicare side of the house and to appreciate the intersection. Our job is to be that for them and for our colleagues. All they have to do is let us know what their issue is, and, while we alone may not be able to resolve the issues, we'll get the right people in the room to tee up the discussion and get the decision the state needs.

In many ways our office is one of translation, interpretation and triage. We don't have operational responsibility over the regulation of the program. Our job is to make life easier for these beneficiaries, the people who serve them, and states who work with them and pay for their care. It starts with a phone call or a concept paper and identification of what the needs are. Then it's our job to work behind the scenes to get the right decision-makers in the room to begin to process what the states are requesting.

States are demanding greater flexibility about a whole range of issues. It certainly seems that the U.S. Department of Health & Human Services (HHS) is trying to be very responsive to that. At the same time when you talk about this alignment initiative, greater flexibility for states -- and increased ability for states to customize their programs to their needs -- doesn't necessarily go with that. As you know, Medicare is a unitary program. Isn't some greater convergence of state Medicaid programs necessary to have truly effective coordination?

I think it depends on the state. There are different motivations driving the requests for state flexibility. States that want flexibility to do better alignment and coordination, that's one situation. States where, in my mind, flexibility translates into budget cutting, that's a completely different story, obviously. While I'm deeply committed to working with states, I'm also deeply committed to protecting beneficiary interests. We have to really be designing programs that are better than what people are getting today and then have the appropriate safeguards in place. So with any flexibility is going to have to come a commitment to some safeguards, particularly for these populations that are the most complex and are the most at risk for harm if we do it wrong.

In talking about the challenges of caring for the dual eligibles, HHS Secretary Kathleen Sebelius recently suggested that if states could reduce costs by 10 percent they could realize savings of $12 billion a year. Is that a goal for your office? How do you get there? What are some of the strategies for trying to do that?

I'm a big believer -- and this started back in my Indiana days -- that the best long-term sustainable cost containing strategy is improving quality and improving utilization. We have under utilization, over utilization and inappropriate utilization. All three of them cost us needlessly. Those are the things we have to work on and that will produce savings over time.

When you look at this population, the majority of them are not in any sort of coordinated system. We estimate that of that nine million, about 100,000 are in what I'd describe as truly integrated care. Our goal is to dramatically increase that number.

This is the land of opportunity, if you will. For example, CMS has analyzed data on avoidable hospitalizations and on readmissions for dual eligibles. You just see that here are actionable, pretty discrete opportunities. Same thing on the medication management. Same thing on nursing homes. We see this incredible churn from nursing home into hospital for things like urinary tract infection, pressure sores, dehydration. That stuff doesn't need to be happening. This is an incredible opportunity for improvement.

What are some of the other ways in which states should seek to interact with your office?

We recently put out an informational bulletin on state access to Medicare data. We're pretty excited about that. We think it's a really valuable resource. We're also offering to help start conversations about things like a multipayer initiative.

There are lots of little, state-specific things we can help with too. If you're running into a problem because of a bad debt policy in Medicare or a home health standard in Medicare, call our office. If you want to understand how to think about getting approval to do a demonstration of a new care model, contact our office. Anything and everything duals-related where states don't know where to go, they can contact our office, especially if it's around data, demonstrations, technical assistance, best practices about what other states are doing or contracts with special needs plans.

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Tina Trenkner is the Deputy Editor for She edits the Technology and Health newsletters.
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