Medicare Special Needs Plans: CMS Should Improve Information Available about Dual-Eligible Plans' Performance
Released: 2012-09-19T00:00:00

Letter

Background

Special Needs Plans

SNPs, including D-SNPs, have been reauthorized several times since their establishment was first authorized in 2003. For example, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) and the Patient Protection and Affordable Care Act (PPACA) both contained provisions reauthorizing and modifying SNPs. See table 1 for a summary of legislation establishing and modifying SNPs.

In 2012, 322 D-SNPs are operating in 38 states and the District of Columbia. CMS pays D-SNPs the same way that it pays other MA plans; that is, a monthly amount determined by the plan bid—the plan’s estimated cost of providing Medicare Part A and Part B benefits—in relation to a benchmark, which is the maximum amount the Medicare program will pay MA plans in a given locality. CMS then adjusts the monthly payments to MA plans on the basis of beneficiaries’ risk scores. If an MA plan’s bid exceeds the benchmark, the plan must charge each of its beneficiaries an additional premium to make up the difference. If a plan’s bid is less than the benchmark, a proportion of the difference is returned to the plan as additional Medicare payments called rebates, which must be used to reduce premiums, reduce cost sharing, or provide mandatory supplemental benefits, such as vision and dental care. Beginning in 2012, CMS has begun to phase in PPACA-mandated modifications in the rebate amount and introduced varied rebate amounts For 2012, rebates ranged based on CMS’s assessments of plan quality.from 66.67 percent of the difference between a plan’s bid and benchmark for plans with the lowest quality ratings to 73.33 percent of the difference for plans with the highest quality ratings.

D-SNPs must meet the same requirements as other MA plans, such as submitting an application to CMS. And like other MA plans, D-SNPs that meet minimum enrollment requirements are also required to submit data, such as the Health Effectiveness Data and Information Set (HEDIS) quality measures. In addition, they must conduct quality improvement activities, which include the reporting of certain structure and process measures, such as describing how they manage medication reconciliation associated with patient transitions between care settings.

CMS requires D-SNPs to develop a model of care that describes their approach to caring for their target population. The model of care must describe how the plan will address 11 clinical and nonclinical elements established in CMS guidance: (1) describing the specific target population, (2) tracking measurable goals, (3) describing the staff structure and care management goals, (4) providing an interdisciplinary care team, (5) establishing a provider network that has specialized expertise and describing the use of clinical practice guidance and protocols, (6) training plan employees and the provider network on the model of care, (7) performing health risk assessment, (8) creating individualized care plans, (9) establishing a communications network, (10) providing care management for the most vulnerable subpopulations, and (11) measuring plan performance and health outcomes. These models of care are reviewed and approved by NCQA—a private health care quality organization—on the basis of scoring criteria developed with CMS that emphasized the inclusion of in-depth descriptions or case studies. In their MA applications, D-SNPs must also “attest” that they meet a total of 251 subelements related to the 11 elements in their model of care.

New and expanding D-SNPs are required to contract with state Medicaid agencies in 2012, and beginning in 2013, all D-SNPs will be required to have contracts with state Medicaid agencies. According to CMS, the contracts are an opportunity to improve the integration of Medicare and Medicaid benefits, and the agency has implemented this requirement with the goal of “increased integration and coordination” for dual-eligible beneficiaries.

D-SNPs do not cover the same categories of dual-eligible beneficiaries, but their chosen category(ies) must correspond to those under the Medicaid program in the state in which the D-SNP is being offered. Dual- eligible beneficiaries fall into two main categories. One group, termed full- benefit dual-eligible beneficiaries, may receive the entire range of Medicaid benefits, including long-term care. The other group, partial- benefit dual-eligible beneficiaries, does not receive Medicaid-covered health care services, but Medicaid covers Medicare premiums or cost- sharing, or both, for these beneficiaries. Some D-SNPs limit enrollment to full-benefit dual-eligible beneficiaries, while others are open to all dual- eligible beneficiaries. Additionally, some D-SNPs are open only to disabled beneficiaries under age 65, whereas others are open only to those aged 65 and over.

Other Initiatives for Care Coordination for Dual- Eligible Beneficiaries

Recently, the federal government, states, researchers, and advocates have focused increased attention on care coordination for dual-eligible beneficiaries. PPACA required HHS to establish the Federal Coordinated Health Care Office (generally known as the Medicare-Medicaid Coordination Office) within CMS to more-effectively integrate Medicare and Medicaid benefits and to improve federal-state coordination for dual- eligible beneficiaries to ensure that they receive full access to the items Experts believe that, in addition and services to which they are entitled.to benefiting dual-eligible beneficiaries, more-effective benefit integration and care coordination can generate significant savings by, for example, lowering emergency room use.

The Medicare-Medicaid Coordination Office, working with the Center for Medicare & Medicaid Innovation (called the Innovation Center), is beginning a financial alignment initiative that is expected to enroll up to 2 million beneficiaries in 26 states and is intended to align Medicare and Medicaid services and funding so as to reduce costs while improving beneficiaries’ care. governments expect to realize savings from aligning the payments and integrating care. Under existing coordination efforts, integrating benefits requires an investment of resources from states to work with D-SNPs, or other stakeholders, but according to experts most of the financial savings accrue to Medicare, because most savings result from services that are largely paid for by Medicare, such as reductions in the number or length of hospital stays. Under the financial alignment initiative, savings will be shared by Medicare and Medicaid without reference to whether the savings are achieved in Medicare or Medicaid services, although the allocation of these savings between Medicare and Medicaid has not yet been finalized. Two models will be tested: a managed FFS model, under which payments are adjusted retrospectively, and a capitated model under which one payment is made to an MA plan under a three-way contract among Medicare, the state Medicaid agency, and the plan.

In 2011, the Medicare-Medicaid Coordination Office, in partnership with the Innovation Center, entered into contracts with 15 states for up to $1 million each to design state demonstrations. Furthermore, in July 2011 CMS issued a letter calling for additional state Medicaid agencies to submit letters of intent to participate in the demonstrations to better align Medicare and Medicaid funding.

The initiative is being conducted under the demonstration authority of the Innovation Center, under which the Secretary of HHS may conduct evaluations that analyze both quality of care and changes in spending. For purposes of testing models under this authority, budget neutrality— which would require that no more be spent under the demonstration than is currently being spent on care for dual-eligible beneficiaries—does not apply. The Secretary can expand the demonstrations nationwide if the demonstrations are determined to reduce spending without reducing the quality of care or improve the quality of care without increasing spending.

The state demonstrations under the financial alignment initiative do not necessarily include D-SNPs, and in some cases may replace D-SNPs. As of June 2012, all 26 states had submitted their proposals for the demonstrations. Decisions about implementation of these designs had not been announced as of July 2012 yet implementation of these models is expected to begin by January 2013 and continue into 2014.

Dual-Eligible Beneficiaries in D-SNPs Had Similar Health Status to Other Dual-Eligible Beneficiaries

The demographic and mental health characteristics of dual-eligible beneficiaries enrolled in D-SNPs in 2011 differed from those of dual- eligible beneficiaries in other MA plans and, to a lesser extent, from those of dual-eligible beneficiaries in FFS. Despite these differences, dual- eligible beneficiaries in D-SNPs and dual-eligible beneficiaries in FFS and other MA plans had very similar health status in 2010, the year for which the most recent data were available, as measured by Medicare risk scores.

Dual-Eligible Beneficiaries in D-SNPs Had Characteristics That Were Generally Similar to Their FFS Counterparts but Differed in Key Respects from Such Beneficiaries in Other MA Plans

Dual-eligible beneficiaries in D-SNPs (9 percent of all dual-eligible beneficiaries in 2011, as shown in fig. 1) were most similar to dual-eligible beneficiaries in FFS, but differed substantially from dual-eligible beneficiaries in other MA plans on certain demographic and mental health measures.

A larger proportion of dual-eligible beneficiaries in D-SNPs, as well as dual-eligible beneficiaries in FFS, were under age 65 and disabled in 2011 compared with those in other MA plans (see fig. 2). Additionally, similar proportions of dual-eligible beneficiaries in D-SNPs and dual- eligible beneficiaries in FFS (15 and 16 percent, respectively) were diagnosed with a chronic or disabling mental health condition such as major depressive disorder or schizophrenia, compared with just 10 percent of dual-eligible beneficiaries in other MA plans. Among the characteristics in our analysis, the largest difference between D-SNPs and other MA plans was the proportion of full-benefit beneficiaries in each plan type: 80 percent of dual-eligible beneficiaries in D-SNPs and 75 percent of dual-eligible beneficiaries in FFS were eligible for full Medicaid benefits, compared with just 34 percent of dual-eligible beneficiaries in other MA plans.

While dual-eligible beneficiaries in D-SNPs were generally similar to those in FFS, there were several demographic measures on which dual- eligible beneficiaries in D-SNPs differed from both those in FFS and other MA plans. A smaller proportion of dual-eligible beneficiaries in D-SNPs lived in institutions (e.g., nursing facilities, intermediate care facilities, or inpatient psychiatric hospitals) in July 2011 compared with dual-eligible beneficiaries in FFS, and, to a lesser extent, other MA plans. D-SNPs also enrolled a smaller proportion of dual-eligible beneficiaries who were 85 or older compared with the other plan types, as well as a larger proportion of beneficiaries who were racial or ethnic minorities.

Health Status of Dual- Eligible Beneficiaries in D-SNPs Was Similar to That of Dual-Eligible Beneficiaries in FFS and Other MA Plans

Dual-eligible beneficiaries in D-SNPs had very similar health status as measured by their 2010 risk scores, the year for which the most recent data were available, when compared with dual-eligible beneficiaries in FFS and other MA plans. As shown in figure 3, the average risk score— which predicts Medicare costs—of dual-eligible beneficiaries in D-SNPs (1.29) was similar to the average scores for dual-eligible beneficiaries in FFS (1.35) and other MA plans (1.34).eligible beneficiaries in D-SNPs and dual-eligible beneficiaries in FFS and other MA plans were expected to cost Medicare at least twice as much as the average Medicare FFS beneficiary, and less than 10 percent in each plan type were expected to cost at least three times the average.

D-SNPs Typically Offer Fewer Supplemental Benefits Than Other MA Plans, and Information on Planned Services Is Not Comparable

Dual-eligible beneficiaries in D-SNPs do not necessarily get more benefits than those in other MA plans, although D-SNP representatives told us their care coordination services are more comprehensive than other MA plans. D-SNPs and other MA plans varied in how frequently they offered supplemental benefits—benefits not covered by FFS—and MA plans offered more of these supplemental benefits than D-SNPs. While the models of care we reviewed described in varying detail how the D-SNPs plan to provide other services, such as health risk assessments, to beneficiaries, most D-SNPs did not provide—and are not required to provide—estimates of the number of dual-eligible beneficiaries that would receive the services.

D-SNPs Offered Fewer of Their 10 Most-Common Supplemental Benefits Than Other MA Plans

D-SNPs provide fewer supplemental benefits, on average, than other MA plans. Of the 10 supplemental benefits offered by more than half of D-SNPs, 7 were offered more frequently by other MA plans and 3 were offered more frequently by D-SNPs.benefits were offered much more frequently by D-SNPs compared to other MA plans: they offered dental benefits one-and-a-half times more (See fig. 4.) These 3 supplemental often, over-the-counter drugs nearly twice as often, and transportation benefits almost three times more often. However, a smaller proportion of D-SNPs compared to other MA plans offered hearing benefits, as well as benefits for certain inpatient settings and outpatient services. For some of the services D-SNPs offered less frequently, dual-eligible beneficiaries may receive some coverage through Medicaid. In addition, according to CMS, some of the benefits offered more frequently by other MA plans (e.g. international outpatient emergency) are not necessarily as useful a benefit for D-SNPs.

For the three most-common D-SNP supplemental benefits—vision, prevention, and dental—we analyzed the individual services covered under these benefits and found that D-SNPs’ vision and dental benefits were generally more comprehensive than those offered by other MA plans. For example, in their vision benefit, a larger proportion of D-SNPs compared to other MA plans covered contact lenses and eyeglasses. In addition, a larger proportion of D-SNPs compared to other MA plans included in their dental benefit coverage of oral surgery, extractions, and restorative services. However, D-SNPs were less likely than other MA plans to include membership in health clubs as part of their preventive health care benefits.

Despite offering these supplemental benefits somewhat less often than other MA plans, D-SNPs allocated a larger percentage of their rebates to supplemental benefits than other MA plans. (See table 2.) They were able to do so largely because they allocated a smaller percentage of rebates to reducing cost-sharing. Most dual-eligible beneficiaries will have their cost-sharing covered by Medicaid, so D-SNPs have less need than other MA plans to cover cost-sharing. We also found that D-SNPs tended to receive smaller rebates than other MA plans ($70 per member per month on average compared to $108).

Although the 15 models of care we reviewed described the types of services D-SNPs intended to provide, D-SNPs generally did not state in their models of care how many of their enrolled beneficiaries were expected to receive these services. The criteria D-SNPs are evaluated on in the approval process emphasize the inclusion of in-depth descriptions and case studies rather than details about how many beneficiaries would likely receive these services, for example, the number of beneficiaries that will use additional services targeted to the most vulnerable. CMS does not require D-SNPs to report that information in the models of care, although such information could be useful for future evaluations of whether D-SNPs met their intended goals, as well as for comparisons among D-SNPs.specificity in the model-of-care scoring criteria confused some D-SNPs; having more specific scoring criteria may also eliminate some uncertainty in the approval process.

Three D-SNPs we interviewed told us that a lack of Knowing the extent of the special services D-SNPs expect to provide would assist future evaluations of whether they met their goals, but most models of care did not include this information. For example, all 15 D-SNPs stated in their models of care that they planned to conduct health risk assessments for beneficiaries within 90 days of enrollment and an annual reassessment, as they are required to do by CMS. However, only 4 provided information on how many members had actually completed a health risk assessment or reassessment in prior years, with cited completion rates for 2010 ranging from 52 to 98 percent. In addition, none of the D-SNPs we reviewed indicated in their models of care how many beneficiaries were expected to receive add-on services such as social support services that were intended for the most-vulnerable beneficiaries. The models of care we reviewed did include, as required in the model-of- care scoring criteria, information about how the D-SNP identifies the most vulnerable beneficiaries in the plan and the add-on services and benefits that would be delivered to these beneficiaries. D-SNPs’ models of care described a variety of methods used to identify these beneficiaries: health risk assessments (10 D-SNPs); provider referrals (9); and hospital admissions or discharges (7). However, the models of care generally did not indicate how many or what proportion of beneficiaries were expected to be among the most vulnerable, although one D-SNP’s model of care stated that complex-care patients constituted over one-third of its membership. Furthermore, it was sometimes unclear whether the services described as targeted to these beneficiaries were in addition to those available to all dual-eligible beneficiaries in the D-SNP. D-SNPs also described the services that they plan to offer to the most-vulnerable beneficiaries, the most frequent being complex/intensive case management (6 D-SNPs). Other services D-SNPs planned to offer the most-vulnerable beneficiaries included 24-hour hotlines, social support services, and supplemental benefits beyond what was planned to be offered to all dual-eligible beneficiaries in the D-SNP.

CMS guidance also requires D-SNPs to describe how they intend to evaluate their performance and measure outcomes in achieving goals identified in their models of care, but CMS does not stipulate the use of standard outcome or performance measures in the model of care, such as measures of patient health status and cognitive functioning. As a result, it would be difficult for CMS to use any data it might collect on these measures to compare D-SNPs’ effectiveness or evaluate how well they have done in meeting their goals. Furthermore, without standard measures, it would not be possible for CMS to fully evaluate the relative performance of D-SNP models of care. While it is not required, an evaluation of D-SNPs could both help to improve the D-SNP program and inform other initiatives to better coordinate care for dual-eligible beneficiaries. The models of care we reviewed had little uniformity in the measures plans selected. Four D-SNPs discussed their approach to performance and health outcome measurement largely in general terms, such as describing which datasets they would use or the categories of outcomes that would be measured. The other 11 D-SNPs provided specific measurements, which included measuring items such as readmissions, emergency room utilization, and receipt of follow-up calls after inpatient stays. Were CMS to move to a standard set of performance and outcome measures, it could be less burdensome and no more costly than what some D-SNPs currently collect. Using standard measures could also streamline the models-of-care review process.

D-SNPs Reported More- Comprehensive Care Coordination Services and Greater Beneficiary Interaction Than Other MA Plans

Of the 15 D-SNPs we interviewed, 9 were in organizations that offered both D-SNPs and other MA plans, and representatives from 7 of those D-SNPs told us that their care coordination services are different from those in their organization’s other MA plan offerings. For example, a representative from one D-SNP told us that while care coordination and case management were available in both types of plans offered by that organization, dual-eligible beneficiaries in the D-SNP are continuously enrolled in case management, whereas dual-eligible beneficiaries in other MA plans who need these services receive them for only a limited time. A representative from another D-SNP said that the plan provides care coordination services similar to those of other MA plans offered by its organization but that dual-eligible beneficiaries in the D-SNP who need these services are identified faster than are dual-eligible beneficiaries in the other MA plans. A representative of a third D-SNP said it has a community resource unit that is not available in other MA plans offered by its organization, which works with local agencies such as long-term care providers and adult protective services.

Multiple representatives of the 15 D-SNPs we interviewed described their care coordination services as being “high touch”—meaning that the plans, particularly the case managers, have frequent interaction with dual- eligible beneficiaries in the D-SNP. For example, representatives from one D-SNP told us that its plan includes in-person meetings with case managers. Representatives from another D-SNP described several specific examples of care coordination successes, such as when a case manager followed up on a beneficiary’s Medicaid reenrollment application to ensure that the beneficiary did not lose eligibility, and another situation in which a case manager worked with the complex social and housing needs of a beneficiary who had both physical and mental health issues. Representatives from a third D-SNP noted that they have providers who conduct home visits to help prevent hospitalization.

Although Some D-SNP Contracts with State Medicaid Agencies Expressly Provide for Benefit Integration or Care Coordination, Most Do Not

CMS stated that contracts between D-SNPs and state Medicaid agencies are an opportunity to increase benefit integration and care coordination.However, only about one-third of the 2012 contracts we reviewed contained any provisions expressly providing for D-SNPs to deliver Medicaid benefits, thereby achieving benefit integration. Only about one- fifth of the contracts expressly provided for active care coordination between D-SNPs and Medicaid agencies, which indicates that most care coordination was done exclusively by D-SNPs, without any involvement of state Medicaid agencies. Further, D-SNP representatives and state Medicaid officials expressed concerns about resources needed to contract with D-SNPs, and uncertainty about the future of D-SNPs.

Some Contracts Include Provisions to Address the Integration of Benefits or Meaningful Coordination of Services between D-SNPs and Medicaid Agencies, but Most Do Not

Benefit Integration

The 2012 D-SNP contracts with state Medicaid agencies we reviewed varied considerably in their provisions for integration of benefits and state payments to D-SNPs for covering specific services. According to CMS, “his variability is to be expected, as States and MA organizations can develop agreements for to assume responsibility for providing or arranging for a wide range of Medicaid services based on each State’s ability and interest in integrating its Medicaid program with Medicare via a SNP.” Thirty-three percent of the 124 D-SNP contracts with state Medicaid agencies for 2012 that we reviewed expressly provided for the delivery of at least some portion of Medicaid benefits, thereby integrating Medicare and Medicaid benefits. The contracts varied in the extent of the Medicaid benefits for which a plan was responsible. About 10 percent provided a limited number of Medicaid services, such as dental or vision benefits. In contracts where there was some integration of Medicare and Medicaid benefits, states contracted for the different services, making comparisons among the contracts difficult. Of the 23 percent that integrated most or all Medicaid benefits, 64 percent of D-SNPs provided all Medicaid benefits, including long-term care support services in community settings and institutional care; 25 percent provided most Medicaid benefits, including long-term support services in community settings but not institutional care; and 11 percent provided most Medicaid benefits but did not provide any long-term support services or institutional care. (See fig. 5.)

Sixty-seven percent of contracts between D-SNPs and state Medicaid agencies did not expressly provide for D-SNPs to cover Medicaid benefits. To carry out MIPPA’s requirement that each D-SNP contract provide or arrange for Medicaid benefits to be provided, CMS guidance has required that contracts list the Medicaid benefits that dual-eligible beneficiaries could receive directly from the state Medicaid agency or the state’s Medicaid managed care contractor(s).

For D-SNPs contracting with state Medicaid agencies to provide all or some Medicaid benefits, the capitated payment reflected variation in coverage and conditions. One state that contracts for all Medicaid benefits except a limited number of services including long-term care services paid the D-SNP at a rate of $423 per member per month. Another state, which contracted for a limited number of benefits, including Medicare-excluded drugs, expanded dental coverage, and case- management services, paid the D-SNP $132 per member per month. This state’s Medicaid agency retained responsibility for inpatient hospital services and long-term care coverage. Some contracts, rather than stating a single capitation rate, gave payment rates for different categories, including risk or acuity level, beneficiary age, and service location, as well as whether the beneficiary was designated as nursing home eligible and whether services for these beneficiaries were provided in the community or facility setting. Within one state, payment rates ranged from just under $170 per month for dual-eligible beneficiaries who were neither nursing home eligible nor had a chronic mental health condition and were living in the community to over $8,600 per month for dual-eligible beneficiaries residing in a nursing facility and requiring the highest level of care.

Some of the 2012 contracts providing for payments from state Medicaid agencies to D-SNPs did not address the direct provision of benefits, often providing for payments to the D-SNP for assuming the state’s responsibility for paying dual-eligible beneficiaries’ Medicare copayments, coinsurance, and deductibles. These payments ranged from $10 to $60 per member per month.

While all contracts between D-SNPs and state Medicaid agencies for 2012 provided for some level of care coordination to beneficiaries, approximately 19 percent expressly provided for active coordination of beneficiary services between the D-SNP and the state Medicaid agency. Most active coordination occurs when dual-eligible beneficiaries transition between care settings or between Medicare and Medicaid. Thirteen percent of all contracts contained provisions requiring D-SNPs and the state Medicaid agency to coordinate the transition of beneficiaries between care settings (such as hospital to nursing home) within a given time frame. For example, one state’s D-SNP contracts directed the plans to notify the Medicaid service coordinators or agency caseworker, as applicable, no later than 5 business days after a dual-eligible beneficiary had been admitted to a nursing facility. The other 6 percent of contracts included provisions for providing different coordination activities such as requiring the plan to work with Medicaid staff to coordinate delivery of wrap-around Medicaid benefits.

The remaining 81 percent of all contracts did not specifically address D-SNPs’ coordination with state Medicaid staff, such as case managers. Rather, these contracts indicated that the D-SNP would coordinate Medicaid and Medicare services but did not specify the role of the state Medicaid agency in coordinating those services. Because D-SNPs are required by Medicare to provide care coordination services to dual-eligible beneficiaries, these services are often provided without reimbursement or payment from the state Medicaid agency.

D-SNP and State Officials Expressed Some Concerns about Contracting

Concerns about Resource Investment

D-SNP representatives and state Medicaid officials we spoke with reported that contract development and submission to CMS are resource- intensive. State officials reported that because they had limited resources, they needed to balance the benefits of the contract with the time and resources needed to develop and oversee it. As one state Medicaid official said, the state “bandwidth”—resources—was a challenge, and she was concerned about contracting with the large number of D-SNPs in her state. This official added that the state did not want to be in the position of making contractual commitments that could not be honored because of limited funds or other resources. In contrast, the plan representatives we interviewed expressed interest in continuing to operate D-SNPs and were therefore eager to contract with states despite any challenges that might exist. Beginning in 2013, D-SNPs will not be permitted to operate without state contracts.

Representatives from 12 of the 15 plans and officials from 3 of the 5 state Medicaid agencies we spoke with pointed out that establishing a contract between Medicaid and a Medicare plan highlights conflicts between federal and state requirements. A representative from one D-SNP told us that it was challenging for plans and state Medicaid agencies to agree about the characterization of dual-eligible beneficiaries because Medicare and some states have different definitions. Officials from one state Medicaid agency and D-SNP representatives reported difficulty reconciling the difference between the Medicare contracting cycle, which is based on the calendar year, and the fiscal year contracting cycle for their states. They reported that, if a contract would not cover the entire calendar year, CMS would not approve it. In one case, a state Medicaid official reported that CMS’s deadline of July 1, 2012, for 2013 contracts would occur before the state signed contracts for 2013. Sometimes non- Medicaid structures conflict with CMS’s contracting requirements for D-SNPs. A representative of one D-SNP told us that Medicaid benefits for individuals with developmental disabilities were managed through a contract with the state’s family services agency, not the state Medicaid agency. Therefore, to provide services to this population, the D-SNP had to become a subcontractor to the family services agency. The official said that the D-SNP and the state need to work with CMS to develop a subcontracting relationship that is acceptable. State Medicaid officials and D-SNP representatives reported that they did not always have the resources or the administrative ability to resolve these types of issues before entering into a contract.

Beginning in 2013, D-SNPs must secure a contract with the state Medicaid agency in each state in their service area. To do this, D-SNPs may need to establish new relationships with state officials who, according to the D-SNP representatives we interviewed, sometimes have very limited knowledge of Medicare and its requirements. However, some states have experience with Medicaid managed care and in some cases, D-SNP representatives had previously worked with the state on Medicaid contracts, thereby somewhat easing the transition to working with D-SNPs.

Plan representatives and state Medicaid officials told us that uncertainty about the future made them cautious in contracting. Authority for SNPs to restrict enrollment to special needs populations (such as dual-eligible beneficiaries) currently expires at the end of 2013; SNPs may not continue as a unique type of MA plan if Congress does not extend this authority. Were this to occur, states would lose any advantages they might have gained from investing their resources to work with D-SNPs to integrate benefits and coordinate care. Furthermore, uncertainty regarding the future of D-SNPs creates uncertainty for the states about how to continue to serve dual-eligible beneficiaries currently enrolled in D-SNPs.

Uncertainty about the implementation of state demonstrations under the CMS initiative to align Medicare and Medicaid services—financial alignment initiative—has made some states hesitant to enter into contracts with D-SNPs. As of June 2012, all proposals had been made available for public comment but CMS had not finalized agreements with the states. Medicaid officials from two states told us that if their proposed financial alignment demonstrations were implemented, D-SNPs in their states would cease to exist. Some states were moving forward with D-SNP contracts while concurrently preparing to shift D-SNPs to a different type of managed care plan if their demonstration proposal is implemented. However, officials from one state told us that they did not have sufficient clarity about the direction of the state Medicaid program in relation to its proposed demonstration to enter into contracts. Even in those states where demonstrations would not eliminate D-SNPs, contracting challenges as well as potential financial incentives associated with the demonstrations from the financial alignment initiatives create disincentives for states to work with D-SNPs outside of the financial alignment initiatives and, therefore, leaves the future of D-SNPs in question in these states as well.

Conclusions

D-SNPs have the potential to help beneficiaries who are eligible for both Medicare and Medicaid navigate these two different systems and receive the health services that meet their individual needs. However, CMS has not required D-SNPs to report information that is critical to better holding plans accountable and determining whether they have realized their potential. Although the models of care D-SNPs must submit to CMS generally state what these plans intend to do, they do not all report the number of services they intend to provide. For example, plans are not required to report the number of enrollees they expect to designate as most vulnerable, or how many and which additional services they will provide to these enrollees. Although D-SNPs are required to collect performance and outcome measures, they are not required to use standard measures such as existing measures of hospital readmission or patient health status and cognitive functioning. Further they are not required to report these measures to CMS, and, lacking standard measures, it would in any case be difficult to compare D-SNPs’ effectiveness. Standardizing these measures should have a minimal effect on D-SNPs’ administrative efforts, because additional measures could replace some or all of the measures currently used as well as much of the narrative in models of care. Standardizing measures could also reduce CMS’s administrative efforts by streamlining review of D-SNPs. Additional standardized information would allow CMS to meet its goals for accountability for effective and efficient use of resources.

Further, CMS has neither evaluated the sufficiency and appropriateness of the care that D-SNPs provide nor assessed their effectiveness in integrating benefits and coordinating care for dual-eligible beneficiaries. Nonetheless, CMS is embarking on a new demonstration in up to 26 states with as many as 2 million beneficiaries to financially realign Medicare and Medicaid services so as to serve dual-eligible beneficiaries more effectively. If CMS systematically evaluates D-SNP performance, it can use information from the evaluation to inform the implementation and reporting requirements of this major new initiative.

Recommendations for Executive Action

To increase D-SNPs’ accountability and ensure that CMS has the information it needs to determine whether D-SNPs are providing the services needed by dual-eligible beneficiaries, especially those who are most vulnerable, the Administrator of CMS should take the following four actions: require D-SNPs to state explicitly in their models of care the extent of services they expect to provide, to increase accountability and to facilitate evaluation; require D-SNPs to collect and report to CMS standard performance and outcome measures to be outlined in their models of care that are relevant to the population they serve, including measures of beneficiary health risk, beneficiary vulnerability, and plan performance; systematically analyze these data and make the results routinely available to the public; and conduct an evaluation of the extent to which D-SNPs have provided sufficient and appropriate care to the population they serve, and report the results in a timely manner.

Agency and Other External Comments and Our Evaluation

We obtained comments on a draft of this report from HHS and the SNP Alliance, which represents 32 companies that offer more than 200 SNPs. CMS provided written comments, which are reprinted in appendix I, and technical comments that we incorporated where appropriate. Representatives from the SNP Alliance provided us with oral comments.

HHS Comments

HHS concurred with our recommendation that CMS should require plans to explicitly state in their models of care the extent of services they expect to provide, and agrees that information about the extent to which D-SNPs provide certain services would increase accountability and facilitate evaluation. HHS also stated that CMS recently began to collect information on the completion of health risk assessments, but has not made it public because the information is relatively new. HHS did question the usefulness of quantifying the number of members expected to receive services described in the documents, stating that the model of care is a framework for indicating how the SNP proposes to coordinate the care of SNP enrollees. However, as we noted in the draft report, we believe such information could be useful in later evaluating whether D-SNPs met their intended goals.

HHS also concurred with our recommendation that CMS should require D-SNPs to collect and report standard measures relevant to the populations they serve, and stated that CMS is working to create new measures that will be relevant to dual-eligible beneficiaries in D-SNPs. HHS also stated that CMS currently collects a broad range of standard quality measures, including HEDIS, as well as structure and process measures. HHS included in its response a recent Health Plan System Management memorandum that CMS sent to MA organizations, including D-SNPs, which outlined updated reporting requirements for 2013. HHS also noted that in addition to the data it currently collects, CMS requires D-SNPs to conduct both a Quality Improvement Project and a Chronic Care Improvement Project, and asked GAO to note this in the final report. We did not include these because, as we noted in the draft report, quality and quality measures were not in the scope of our work.

HHS also concurred with our other two recommendations.

SNP Alliance Comments

First, SNP Alliance representatives stated that the benefits D-SNPs provide most frequently are more meaningful to dual-eligible beneficiaries than some of the supplemental benefits provided more frequently by other MA plans. We note in the report that some of the supplemental benefits offered at lower rates by D-SNPs may be covered by Medicaid, thereby reducing the need for them to be covered by D-SNPs. Second, SNP Alliance representatives were concerned with our definition of FIDESNPs. They explained that CMS’s definition, which we used, limits FIDESNPs to those that integrate all Medicare and Medicaid benefits without any limits, such as the number of nursing home days covered. They contended that some D-SNPs may be considered fully integrated even though they do not include all benefits, such as nursing home care, and may have some limits. However, in reporting on CMS activities we have no basis for using different definitions than those formally applied by the agency. Third, SNP Alliance representatives stated that the ability of their D-SNP members to fully integrate benefits through contracting is limited by the capacity and interest of state Medicaid agencies. We note in the report that state Medicaid agencies we interviewed acknowledged limitations in their capacity for contracting. Fourth, SNP Alliance representatives had some concern with our emphasis on estimating how many beneficiaries are expected to receive the services described in the model of care, stating that all dual-eligible beneficiaries would have access to the services described based on need. However, as we stated in the draft report, information is not generally available on the number of beneficiaries that use these benefits. Finally, SNP Alliance representatives were supportive of the state demonstrations under the financial alignment initiative. They noted that D-SNPs are being used as a platform for half of the state demonstrations, with the remainder being based on a Medicaid model. They considered the adoption of the D-SNP model by many of the state demonstrations as evidence of D-SNPs’ success.

SNP Alliance representatives generally agreed with our recommendations. They said that they support better aligning reporting requirements with the models of care, and stated that D-SNPs need a set of core measures that are most relevant to the dual-eligible population they serve.

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If you or your staff have any questions about this report, please contact me at (202) 512-7114 or CosgroveJ@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix II.

Appendix I: Comments from the Department of Health & Human Services

Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Phyllis Thorburn, Assistant Director; Ramsey Asaly; George Bogart; Melanie Anne Egorin; Linda Galib; Giselle Hicks; Corissa Kiyan; Elizabeth T. Morrison; and Kristal Vardaman made key contributions to this report.