Managing Care for High-Cost Elderly Duals: A Challenge for Medicaid Michael Birnbaum Director of Policy, Medicaid Institute United Hospital Fund June 2, 2009 Funded by the New York State Department of Health

The Medicaid Institute at the United Hospital Fund provides information and analysis explaining New York’s Medicaid program, with the goal of helping to redesign, restructure, and rebuild the program. “The Institute’s mission is to shape sound health policy and practice so that Medicaid can meet its most important challenges: covering more low-income New Yorkers, better managing patient care, reforming payment systems, providing effective long-term care, and improving program administration.” James R. Tallon, Jr. President United Hospital Fund

3 Medicaid is a cornerstone of New York’s health care system.  Cover 4.2 million low-income New Yorkers  1.6 million children  1.5 million (non-elderly, non-disabled) adults  1.1 million elderly or disabled beneficiaries  Deliver key services  Half of all births  Three-fourths of all nursing home days  Finance one-third of state’s health care economy  Spending on services = $44.3 billion in FFY 2007 Source: United Hospital Fund analysis of NYS DOH enrollment reports; CMS 64 and NHE data. Note: Medicaid enrollment is from February 2008.

4 $6.5 billion $8.3 billion $2.4 billion $8.2 billion $12.3 billion Medicaid Spending by Service Area Source: United Hospital Fund analysis of CMS Form 64 data. Note:Other acute care (FFS) includes hospital outpatient and clinic services, office-based physician services, outpatient prescription drugs, and other services. Spending on administration is not included. Shares do not sum to total due to rounding. $44.3 billion in 2007

5 1.A significant share of Medicaid spending on high-cost patients is avoidable. 2.Medicaid can control how patients receive services and how providers are paid. 3.A successful management intervention can reduce Medicaid spending by keeping high-cost patients out of the hospital. Managing High-Cost Patients: Key Assumptions

6 1.Because high-cost elderly duals rely heavily on long term care, it is unclear whether a significant share of their Medicaid spending is avoidable. 2.As secondary insurer to Medicare, Medicaid cannot play the lead role in managing service use for duals. 3.A Medicaid intervention that reduces hospital admissions among duals realizes savings for Medicare. Do these assumptions hold for high-cost elderly duals?

7 Elderly Duals in NYC: Enrollment and Spending (52,000)

0% 20% 50% 80% 100% Percentiles of beneficiaries by spending Distribution of Medicaid Spending per Elderly Dual (New York City, 2005) 8

9 Prevalence of Select Conditions: Elderly Duals in NYC +50%+24%+66% +19%

10 Prevalence of Select Conditions: Elderly Duals in NYC +146%+181%+186% +500%

11 Medicaid Service Use among Elderly Duals (New York City, 2005)

12 Medicaid Spending on Elderly Duals (New York City, 2005)

13 Profile of a High-Cost Elderly Dual (Ms. B)

14 Profile of a High-Cost Elderly Dual (Mr. G)

Strategies must address three distinct challenges: 1.Managing high-cost duals has more to do with maintaining health status over time than avoiding illness and costly episodes of care. 2.Medicaid is not responsible for providing most acute care services to high-cost duals and has no authority whether they choose to receive these services through managed care or fee-for-service. 3.It is unclear how many nursing home residents can feasibly be transferred into community settings, or how much savings Medicaid would realize. 15 Care Management and Cost Containment for Elderly Duals

 Efficient and effective long-term care requires practical guidelines and achievable goals.  Capitation for long-term care services must be assessed to determine its advantages and disadvantages.  The outcomes of engaging providers directly in care management, rather than using a plan as intermediary, must be evaluated.  States’ ability to link Medicaid service delivery to Medicare policy and financing will require leadership and guidance from the federal government. 16 Moving Forward: Takeaways