The State of SNPs in 2009 Rich Bringewatt Pot Holes and Engine Problems on the Way to Reform Rich Bringewatt Chair, The SNP Alliance, and President, National Health Policy Group October 29, 2009

The SNP Imperative 2/3 of Medicare spending is for the 8 million people who have 5 or more chronic conditions. 1/3 of Medicare spending is for those during the last 6 months of life. 70% of Medicaid spending is for the elderly and disabled. Usual care practices are fundamentally flawed. Meaningful reform will not be successful without a fundamental transformation of care for frail, disabled, chronically ill persons. SNPs provide an ideal total quality platform.

A Changing Environment SNPs are in their 5th year of development. Over these years, SNPs have experienced significant growth. The environmental landscape also has changed significantly since SNPs where established. To weather the storm and thrive over time, SNPs must reassess their condition and mission, in light of current reality.

Environmental Analysis Special Needs Plans Strengths Weaknesses Opportunities Threats

1. Business Case is Strong STRENGTHS Frail, disabled and seriously ill are high-cost & fast-growing segment. A broken fee-for-service system is well documented. Pooling of funds is consistently shown to be central in transforming fragmented care and tailoring services for individual needs.

2. SNPs Built on Experience STRENGTHS Legacy programs have history of demonstration experience. Program evaluations showed cost savings and better outcomes. Program evaluations consistently shown higher satisfaction scores. SNP provisions and reform efforts rooted in best practice literature.

3. Data Shows Promise STRENGTHS SNP Alliance Dual SNPs have higher than average risk scores but hospital rates are over 25% below FFS duals. Hospital rates for Institutional SNP are over 50% below FFS comparison. Chronic SNPs also have significantly lower hospitalization rates, although focus varies and difficult to compare.

1. Large Unfunded Mandate WEAKNESSES Comprehensive assessment, interdisciplinary teams & specialty care networks for ALL enrollees. Significant ‘model of care’ regs. SNP-specific quality measures on top of all MA plan requirements. Dual contract requirements without Medicare/Medicaid alignment.

2. Environmental Dissonance WEAKNESSES Major misalignment of State and CMS policy and oversight for duals FFS causes SNP providers to sub-optimize cost & care management HEDIS, HOS and CHAPS are inconsistent with complex care MA marketing regs impede ability to address frail & caregiver issues

2. Environ-Dissonance Cont. WEAKNESSES C-SNP criteria fuels fragmentation Movement to standardize ‘model of care’ impedes ability to tailor care to unique local & target group conditions Conflicts among MOC attestations, evaluation measures, auditing procedures, and provider certification Sunset impedes needed investment

3. Antiquated Insurance Principles WEAKNESSES Spreading of risk causes standard MA plans to avoid ‘adverse selection’ and impedes targeted risk management. It overvalues “getting it right in the middle” & undervalues payment for certain special needs individuals. Focus is on primary and secondary prevention & not tertiary prevention.

3. Antiquated Principles Cont. WEAKNESSES Incents MA plans to maximize provider participation; but SNPs need to limit network to providers with specialty care capabilities and relationships. Standard operating procedures (SOP) defined by majority interests; specialty care requires specialized SOPs. Optimum enrollment assumptions & reserve requirements not applicable.

1. SNPs Are Well Established OPPORTUNITIES 1. SNPs Are Well Established National long-term are demos are now part of mainstream Medicare program. SNPs are now in 46 of 50 states. SNPs are now the largest provider of specialized managed care in nation. Special care programs available for every major special needs group, including frail, adults with disabilities, & person with serious chronic illness.

2. New Momentum for Integration OPPORTUNITIES 2. New Momentum for Integration More Congressional leaders aware of Medicare/Medicaid misalignment. Pending legislation in House and Senate to create dual integration office. Broad support for integration among researchers and key opinion leaders. CMS and States giving more focus to the issue…beyond demonstration.

OPPORTUNITIES 3. Strong Pent-up Demand Frail, disabled and chronically ill are Medicare and Medicaid’s highest-cost and fastest-growing service group. Problems of component-based management bias & incentives in FFS system is well documented. Specialized managed care is only viable option to improve total cost and quality across time, place & profession.

1. Insurance Backlash THREATS Backlash against insurance companies (including MA) is being used to fuel support for healthcare reform. MA payment cuts are major source for financing overall reform agenda. Difficult to distinguish SNPs as a specialized reform effort for frail, disabled and chronically ill, given MA legislative base and intensity of view.

2. Competing Priorities THREATS Covering uninsured and insurance reform are primary focus of HCR. Prevention is primary focus of delivery reform due to assumed cost savings. Improved care for vulnerable mostly focused on kids and working adults, not old, frail and disabled. Difficult for multiple agendas to be addressed in same reform effort.

3. Entrenched Power Segments THREATS Payers actively shifting program costs. Each provider actively protecting own turf while ignoring cumulative effects. Entrenched FFS processes impede system integration for high-risk groups. Enrollees what total control over choice of providers, making it difficult to establish specialized care networks.

Conclusion Managed care models are the only viable option for controlling costs while expanding insurance coverage. SNPs are the only current managed care model for special needs individuals that can be brought to scale. SNP Alliance members have demonstrated that SNPs add value.

Conclusion Member survey shows SNPs add value. Legislative provisions show support for SNPs & SNP Alliance reform agenda. Risk adjustment and M/M office are potential game-changers. Backlash against private insurance & MA payment cuts will cause short-term pain. With proper positioning, SNPs will survive and thrive over the long-term.

Positioning for Success Identify high-leverage interventions that: Reduce SNP costs and improve efficiencies. Advance SNP specialty care capability. Align policy & oversight for specialty care. Step-up Medicare/Medicaid integration effort. Advance risk adjustment/payment reform agenda. Continue to refine SNP-specific measurement. Advance more efficient & appropriate oversight. Continue to demonstrate added value. Advance specialization/quality identity.