As part of the Affordable Care Act, the Centers for Medicare and Medicaid Services (CMS) was authorized to initiate demonstration projects to improve healthcare utilization of dual-eligible beneficiaries. How will changes in the payment and delivery of services for dual-eligible patients impact home health providers? That’s what we discuss in this Metrics Matter.
Who Qualifies as a Dual-Eligible Beneficiary?
Dual-eligible beneficiaries are defined as individuals who qualify for both Medicare and Medicaid benefits simultaneously. To fall into this category, individuals must be elderly (65 years or older) or permanently disabled and have an annual income level at or below the poverty line, which is determined by where they live. Each state has its own qualifications for Medicaid within certain Federal guidelines.
Based on their state’s rules and their income level, dual-eligible beneficiaries may have full or partial Medicaid benefits. Partial benefits can range from the state paying as little as an enrollee’s Part B premium to paying full benefits, which include medical costs not covered by Medicare, such as dental, glasses, hearing aids, and medical supplies. Partial benefits may also include paying for personal-care services or nursing-home costs, depending on the individual’s need assessment.
Research shows that dual-eligible beneficiaries tend to be the poorest and sickest of the Medicare population and are disproportionately high consumers of healthcare on a per capita basis. Their high utilization is often a result of, or complicated by, a poor system of social supports.
Interest Is High Among States to Participate in Dual-Eligible Demonstration Projects
Under the terms of the demonstration projects testing effort, states are given a lump sum of money that includes the Medicare and Federal portions of Medicaid. The states can put their Medicaid medical dollars into the pool and add their long-term-care monies, as well. Thus far, 20 states have had their applications approved — or approvals are pending — for the demonstration projects. With such a high participation rate, this is a concept that has merit, and it is only a matter of time before it spreads nationally.
In the demonstration projects, there is variation among the states as to whether they choose to include their long-term-care dollars. Additionally, there is also a variation in the geographic scope of the demonstration states. Illinois and California are limiting their efforts to a few major metropolitan areas, for example, while Ohio is going statewide. The states involved in the demonstration projects are then contracting with companies similar to managed care organizations (MCOs) to manage this patient population. These “insurance companies” will use existing provider networks or form new ones.
For home health agencies, managed care payors have been significantly less profitable than traditional Medicare fee-for-service (FFS). This is because many MCOs utilize per-visit payment methodologies at low rates and tightly control visit levels. For home health agencies offered episodic payments from their contracted plans, the rates reflect the expenses and profit requirements of the MCOs.
A State-by-State Look at the Percentage of Home Health Medicare Reimbursement Represented by Dual-Eligible Patients
We have identified all dual-eligible patients who were served by home health agencies in 2012 under Medicare FFS and calculated the percentage of total Medicare reimbursement represented by these dual-eligible beneficiaries on a state-by-state basis. This represents the amount of monies that will eventually move to a much lower-margin payor and, thus, negatively impact the profitability and financial stability of many agencies.
Based on our analysis, we can conclude the following:
- Thirty-four percent of all Medicare FFS reimbursement in 2012 was for dual-eligible patients. The variation among states is significant, however, with some states having as little as 10% of their revenues at risk versus other states with almost 50% at risk.
- Moreover, we found that several states in the highest quartile, such as Texas, Louisiana, Mississippi, and Florida, also have high recert rates. These states could see recert episodes of care diminish.
- We know that this dual-eligible population is a hotbed of chronic disease and may need ongoing monitoring to prevent hospital readmissions and acerbation of their condition. In these cases, we are likely to see MCOs develop other less labor-intensive healthcare approaches, such as using telemonitoring to manage patients.
How Can You Assess the Impact of the Dual-Eligible Beneficiaries on Your Home Health Agency?
The dual-eligible transition to “managed care” represents a serious threat to numerous home health providers. Since many agencies have recorded these patients simply as “Medicare” in their computer systems, a lot of them do not even know how many dual-eligible patients they serve. In order to help providers assess their vulnerability to this change and that of their competitors, Healthcare Market Resources has developed a new report — Dual-Eligible/Revenue Impactors — as part of its market profile report set. Any planning efforts that don’t contain an assessment of this home health revenue threat are sorely lacking in comprehensiveness.
Click here or call 215-657-7373 if you have questions about this metric and want to learn more about the many ways Healthcare Market Resources’ data can help you determine the impact of industry trends on your agency.