Covering Dual Eligible Population July 2014

Covering the Dual-Eligible PopulationA new frontier for managed care organizations

DST Health Solutions | July 2014

C OV E R I N G T H E D UA L- E L I G I B L E P O P U L AT I O N

High-cost, high-risk population

A N E W F R O N T I E R F O R M A N AG E D C A R E O R G A N I Z AT I O N S

Executive summary

Millions of Americans who are eligible for health care

coverage through both the Medicare and Medicaid

programs are migrating to managed care plans as

state and federal agencies implement strategies to

better manage program costs and improve the quality

of care for dual-eligible beneficiaries.

For managed care plans, the dual-eligible market

represents a new frontier, offering great opportunities

and equally great challenges. Many dual-eligible

beneficiaries have multiple, chronic conditions and

live in poverty. Some are homeless. The cost of

caring for a dual-eligible member averages $33,000

annually, more than four times the cost of caring for

a standard Medicare beneficiary.1 Few managed care

organizations have worked with a population whose

needs are as great.

Adding to the challenge are the administrative

complexities involved in managing two distinct

funding streams — Medicare and Medicaid — along

with distinct sets of benefits and regulations.

Nonetheless, the opportunities are compelling.

“Migrating the dual eligible population into managed

care plans is a logical next step in the evolution

of government programs,” according to Thomas

Scully, senior counsel at Alston & Bird LLP, and

former administrator of the Centers for Medicare

and Medicaid Services (CMS). “By some accounts,

this change will yield more than $200 billion in new

annualized premiums for health plans over the course

of the next several years.”2

Succeeding in this demanding market will require

that health plans enlist the support of a partner

that offers service and technology solutions that

address beneficiaries’ needs and that streamline the

administrative complexities that arise in dealing with

the Medicare and Medicaid programs.

M E D I C A R EMedicare generally pays for

acute care (hospital and other

short-term care), post-acute

care (services provided in skilled

nursing facilities or elsewhere

to promote recovery from

acute illness or surgery) and

prescription drugs.

M E D I C A I DMedicaid pays for long-term

services and supports (LTSS)

that help people stay at home,

as well as other costs that

Medicare doesn’t cover.

These include dental and

vision services and those

services with Medicare

coverage limits; for

example, durable medical

equipment and skilled

nursing facilities.

The market

Approximately 9 million of the sickest, poorest and

most vulnerable people in the health care system

are eligible for coverage through both the Medicare

and Medicaid programs. Dual-eligible beneficiaries

have incomes at or near the federal poverty level

and are disabled or at least 65 years old. Roughly 7

million “full duals” qualify for full benefits from both

programs; the remaining 2 million are “partial duals,”

qualifying to have Medicaid pay at least a portion of

the costs incurred under Medicare.3

In 2013, dual-eligible beneficiaries accounted for $300

billion in Medicare and Medicaid spending.4 That equates

to $33,000 per member per year, compared with $8,000 for a

standard Medicare beneficiary. In addition:

• Dual-eligible beneficiaries account for 31 percent of Medicare costs but represent only 20 percent of Medicare beneficiaries5

• These beneficiaries account for 36 percent of Medicaid costs but represent only 14 percent of Medicaid beneficiaries.6

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Costs are disproportionately high because dual-

eligible beneficiaries are more likely than others

to be disabled and to report serious limitations in

performing daily activities such as preparing meals

and bathing. Many have cognitive impairments,

mental disorders, and chronic conditions such as

diabetes. This has led to higher rates of hospitalization

and emergency-room visits, as well as greater need

for long-term services and supports (LTSS). More than

33 percent of the dual-eligible population requires

a nursing home level of care, with about half of

these beneficiaries receiving this care in a nursing

home and half receiving Medicaid-covered personal-

assistance services at home.7

Federal and state officials have expressed concerns

about the steep costs of caring for dual-eligible

beneficiaries and about the appropriateness of the

care delivered. Additional concerns arise in view of the

frustrations beneficiaries experience in dealing with

multiple sets of rules, benefits, ID cards and providers.

Heightening the confusion and costs: More than 86

percent of dual-eligible beneficiaries are enrolled in

fee-for-service Medicare and Medicaid and as such

lack the support of a health plan that could coordinate

coverage and care between the two programs. As

a point of comparison, 70 percent of all Medicare

beneficiaries are enrolled in fee-for-service coverage.8

9 mi l l ion

1 .6 mi l l ion

219

4,400

For dual-eligible enrollees who receive fee-for-service coverage, Medicare is the primary

source of coverage, with Medicaid covering copays and other services/items that Medicare

doesn’t cover.9

CMS and many states are working together to implement programs that promise to

transform dual-eligible coverage. These programs have created promising opportunities for

commercial payers, which stand to gain substantial enrollments and revenue — if they can

meet the challenges of serving this unique population.

Total dual-eligible population

Number in MA and SNP Plans

Number of D-SNP CMS plan contracts

Average enrollment per plan contract, January 2013

C OV E R I N G T H E D UA L- E L I G I B L E P O P U L AT I O N A N E W F R O N T I E R F O R M A N AG E D C A R E O R G A N I Z AT I O N S


DUAL ELIGIBLE SPECIAL NEEDS PLANS

In 2006, CMS began encouraging the creation of Dual

Eligible Special Needs Plans (D-SNPs), a special type

of Medicare Advantage plan that serves only dual-

eligible beneficiaries. To date, D-SNPs have had mixed

results, with only 1.5 million beneficiaries enrolled.

Historically, D-SNPs focused on Medicare benefits

rather than coordinating benefits and care across both

programs and plan providers. In 2013, CMS began

requiring that these plans substantially increase

coordination of Medicare and Medicaid benefits.

Coordination and integration of Medicare and

Medicaid benefits will be key to the future success

of these plans. In a report to Congress, the Medicare

Payment Advisory Commission noted that highly

integrated D-SNPs perform better on quality measures

than do D-SNPs that are not as fully integrated.10

MEDICARE-MEDICAID PLANS: FINANCIAL

ALIGNMENT DEMONSTRATION PROJECT

The Patient Protection and Affordable Care Act

(PPACA) of 2010 authorized the Financial Alignment

Demonstration Project, enabling the establishment

of Medicare-Medicaid Plans (MMPs). The objective

of MMPs is to align service delivery and financing

for “full duals” while preserving or improving the

quality of care. CMS will limit enrollments to 2 million

beneficiaries. If the project is successful, many more

could migrate to managed care in the future. Most

states participating in the project will evaluate a

capitated model. A managed fee-for-service model

also will be evaluated during the project.

MMPs differ from D-SNPs in three key features:

• Three-way contracts: Capitated MMPs sign

a three-way contract with CMS and the state

Medicaid office, with the parties agreeing on the

coordination of care management and funding.

• Passive enrollments: Dual-eligible beneficiaries

are passively enrolled in MMPs but can opt out or

change plans if they wish.

• Cohesive standards: The demonstration project

seeks to standardize Medicare and Medicaid

policies and streamline processes such as appeals

and grievances.

The prospect of substantial Medicare-Medicaid

payments and large volumes of passive enrollments

has led nursing home and long-term-care providers

to create MMPs. Joining them have been Medicare

Advantage plans expanding into Medicaid, as well as

Medicaid managed care organizations expanding into

Medicare. Many of these organizations will need to

make substantial investments in technology solutions

and business processes with which to manage

members and administer Medicare-Medicaid benefits;

however, there is no guarantee that the demonstration

project will be continued longer term. Key to success

will be the use of outsourced technology-driven

services, which reduce up-front costs as well as

implementation risk.

MEDICAID MANAGED LONG-TERM SERVICES

AND SUPPORTS PLANS

Because dual-eligible and Medicaid beneficiaries with

disabilities account for a disproportionate share of

Medicaid costs, many states have implemented or

are implementing Medicaid Managed Long-Term

Services and Supports (MLTSS) plans. The number of

states offering MLTSS plans totaled 18 in 2013 and will

expand to 26 in 2014.11

These plans shift Medicaid benefits from fee-for-

service to capitation and provide a narrow benefit

package covering services that Medicare doesn’t

cover or fully cover. Benefits include nursing home

care as well as in-home and community-based

support services such as adult day care. The benefit

package also funds Medicare copays and limits,

including long-term stays in hospitals and skilled

nursing facilities.

For MLTSS, a key to success will be the implementation

of patient-centered medical homes, which coordinate

both care and support services and help keep enrollees

out of nursing homes and institutions.

The opportunity: New options to cover dual-eligible beneficiaries

These innovative new programs include Dual Eligible Special Needs Plans, Medicare-Medicaid Plans, and Medicaid

Managed Long-Term Services and Supports Plans.



Potential size of the market

How large the dual-eligible market becomes will

depend on three factors:

• State motivation to move dual-eligible beneficiaries

into commercial plans. Market growth will depend

greatly on whether the states choose to move

large numbers of dual-eligible beneficiaries into

managed care. The states also manage auto-

assignments and transfers.

• Health plan economics. Government agencies

want payments to plans to be cost-neutral or

lower than fee for service. This directly affects the

number and longevity of market entrants.

• Success of new plan entrants. New plans will

achieve varying degrees of success in obtaining

CMS and state approvals, attracting enrollees and

managing costs. The extent of their success will

affect competition within the market as well as the

eventual size of the market.

Effective administration of dual-eligible membership is costly

Plan payments by CMS and the states are significant,

but the costs of serving the dual-eligible market are

significant as well. Contributing to high costs are such

factors as:

Comprehensive services. Many beneficiaries have

never been enrolled in plans that manage care,

require no cost sharing and offer benefits such as

transportation. To ensure appropriate utilization, plans

must provide exceptional care management and

encourage members to play a greater role in managing

their own health.

Community care. Keeping beneficiaries out of nursing

homes and institutions is a key goal of CMS and states;

achieving this goal will require intensive case and

disease management and collaboration with PCPs and

other community support resources.

Perpetual open enrollment. Dual-eligible members

always have the option to disenroll and return to fee-

for-service coverage or chose another plan. To reduce

churn, plans must be competitive while complying with

CMS and state requirements regarding plan design.

Higher government scrutiny. Plans must comply with

CMS and state regulations and are subject to more

rigorous oversight than typical Medicare Advantage

plans face.

System modifications. Many states require that plans

implement care-coordination strategies involving

providers and other stakeholders outside the plan.

Plans will need access to systems with case- and

information-sharing capabilities that protect client

privacy and security. Plans in the dual-eligible market face critical technology needs in every functional area;

for example, claims administration, finance, and care and disease management. Claims

administration systems must process claims with both Medicare and Medicaid components.

In finance, systems must track member risk levels, calculated in reference to hierarchical

condition categories (HCCs) assigned to members annually. Member encounters also must be

tracked, and plans must reconcile billing and plan payments from states and CMS. Health plans

will need technologies that enhance case, disease and utilization management. Meeting these

demands will require system modifications, new technologies, outsourcing of specialized

services that lie outside the plans’ core competencies, and support from a reliable partner.



New technology requirements

Care management. Intensive care management, undertaken in partnership with each enrollee’s primary care provider and local resources, is key to improving outcomes and quality of life for dual-eligible beneficiaries, reducing unnecessary care and managing costs.

Provider engagement. Plans and providers must partner and integrate efforts to engage and serve members. Collaboration between the primary care provider (PCP) and health plan enables effective design and frequent updates of a care plan, which both entities can consult as they seek to monitor and manage care more effectively. Effective provider engagement and communication also are key to delivering patient-centered care.

Long-term services and supports (LTSS). The PCP and health plan must coordinate and communicate with LTSS providers such as adult day care, in-home service providers and nursing services. LTSS providers see the member frequently and can provide updates on the individual’s condition. That is a critical step in keeping members out of the hospital and in the home.



Five keys to successfully covering the dual-eligible population

Data. The many interactions with dual-eligible beneficiaries lead to generation of extensive data, which plans must aggregate, analyze, and share with other stakeholders. Having the right data and making it available at the right time to the right stakeholders is key to ensuring that members receive appropriate care when they need it. Accurate data also is essential to meeting Medicare-Medicaid compliance and reporting requirements.

Intensive plan-to-member interaction. Health plans will need to stay in close touch with dual-eligible members, checking on their health status and needs and monitoring their medication use and adherence to the care plan. Ensuring that community supports such as transportation and nutrition are available — and being used — will require frequent interactions with members. This not only helps reduce emergency room visits, hospitalizations and costs, but it also improves quality of life.

DST Health Solutions meets demands in key functional areas for dual-eligible health plans.

DST Health Solutions: Efficient coverage of the dual-eligible market

DST Health Solutions has broad experience in providing comprehensive enrollment, administrative and care

management services to payer organizations that serve commercial and governmental markets, including Medicare

and Medicaid. We can enroll, administer benefits and manage dual-eligible beneficiaries in compliance with CMS

and state requirements, helping health plans improve efficiency, reduce costs and remain focused on their highest

priority — serving the member.

Marketing & Sales

Communications

DST Customer Communications ProductDesigner AMISYS/EXETER

CareAnalyzerDST Infrastructure

DST Service

CareAnalyzer

CareAnalyzer

CareConnect

CareConnect

CareConnect

AWD Customer Service

AWD Customer Service

AWD Appeals & Grievance

DST Service

DST Service

DST Service

MarketProminence AMISYS/EXETER

Benefit Plan Design &

MaintenanceCMS & StateEnrollmentProcessing

MonthlyMembership

Reporting(MMR), 834 &

Reply Reporting(TRR) with

CMS and state Medicaid agencies

CMS & State Payment

Reconciliation

HCC Revenue Management

EDPSSubmission

RAPS Data Submission

Communications • Annual Notice

of Change (ANOC) • Welcome Packets

• ID Cards

Call Center

Nurse Line

Appeals &GrievanceAdvertising

Sales & Broker Administration, Appointment &

Licensing

Commissions& Fees

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Fraud, Waste& Abuse

Provider Administration

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NetworkContract

Administration

Credentialing

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Enrollment & Eligibility Care

Management& Analysis

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Individual Assessment & Person Centered

Care Plan

Disease Management

Case Management & Discharge Planning

QualityManagement

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STARSProgram

Product Management

Claims Administration

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• 834, 837, 835, EFT

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Front EndProcessing

Types• Professional• Institutional

• Ancillary• Dental• Vision

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FinancialProviderNetwork

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ExternalCompliance

- BPO and/or Technology - Technology Only - DST Solution


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DST Health Solutions has the answer

Summary

Coverage of the dual-eligible population represents a new frontier for managed care plans. Meeting beneficiaries’

needs and managing the complexities of both the Medicare and Medicaid programs will require that these plans

undertake system modifications, gain access to new technologies, outsource highly specialized services, and obtain

support from a reliable partner. DST offers solutions in all key functions of D-SNP and MMP operations. We can help

your plan succeed on the new frontier.

End Notes

1 Congressional Budget Office. “Dual-Eligible Beneficiaries of Medicare and Medicaid Spending: Characteristics,

Health Care Spending, and Evolving Policies.” June 2013. Available at http://www.cbo.gov/publication/44308.

2Scully, Thomas. Personal interview conducted by DST Health Solutions staff. June 27, 2014.

3Congressional Budget Office. Op cit.

4 Triple Tree Merchant Bank, LLC. “Changing Care Management Models in Dual Populations.” Q4 2013. Available

at http://www.triple-tree.com/files/7313/8255/9209/TripleTree_- _Changing_Care_Management_Models_in_Dual_

Eligible_Populations.pdf.

5 Jacobson, Gretchen; Neuman, Tricia; and Damico, Anthony. “Medicare’s Role for Dual Eligible Beneficiaries.” Kaiser

Family Foundation. April 2012. Available at http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8138-02.pdf.

6 Young, Katherine; Garfield, Rachel; Musumeci, MaryBeth; Clemans-Cope, Lisa; and Lawton, Emily.

“Medicaid’s Role for Dual Eligible Beneficiaries.” Kaiser Family Foundation. August 2013. Available at http://

kaiserfamilyfoundation.files.wordpress.com/2013/08/7846-04-medicaids-role-for-dual-eligible-beneficiaries.pdf.

7 Brown, Randall; and Mann, David R.; Mathematica Policy Research. “Best Bets for Reducing Medicare Costs for

Dual Eligible Beneficiaries.” Kaiser Family Foundation. October 2012. Available at http://kaiserfamilyfoundation.

files.wordpress.com/2013/01/8353.pdf.

8 Kaiser Family Foundation. “Medicare Advantage Fact Sheet.” May 2014. Available at http://kaiserfamilyfoundation.

files.wordpress.com/2014/05/2052-18-medicare-advantage.pdf.

9Congressional Budget Office. Op. cit.

10 Center for Medicare Advocacy. “Dual Eligible Special Needs Plans: Considerations for Reauthorization.”

2013. Available at https://www.medicareadvocacy.org/dual-eligible-special-needs-plans-considerations-for-

reauthorization/.

11 Truven Health Analytics. “Growth of Managed Long Term Care Services and Supports Programs: A 2012

Update.” Prepared for the Centers for Medicare and Medicaid Services. July 2012. Available at http://www.

medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Delivery-Systems/Downloads/MLTSSP_White_

paper_combined.pdf.

© 2014 DST Systems, Inc. DST Systems, Inc. (DST) has provided the information in this Product Sheet for general informational purposes only, has a right to alter it at any time, and does not guarantee its timeliness, accuracy or completeness. All obligations of DST with respect to its systems and services are described solely in written agreements between DST and its customers. This document does not constitute any express or implied representation or warranty by DST, or any amendment, interpretation or other modification of any agreement between DST and any party. In no event shall DST or its suppliers be liable for any damages whatsoever including direct, indirect, incidental, consequential, loss of business profits or special damages, even if DST or its suppliers have been advised of the possibility of such damages.


1 3 | D ST H E A LT H S O L U T I O N S 1 4 | D ST H E A LT H S O L U T I O N S

DST Health Solutions offers software and services that enable plans to serve the dual-

eligible market efficiently and cost-effectively. For more information on DST Health Solutions,

call us at 800.272.4799, email us at [email protected], or visit us at

www.dsthealthsolutions.com.

DST Health Solutions

2500 Corporate Drive

Birmingham, AL 35242

800.272.4799

[email protected]

www.dsthealthsolutions.com

A B O U T D ST

H E A LT H S O L U T I O N S, L L C

DST Health Solutions, LLC, delivers

contemporary healthcare technology

and service solutions that enable

clients to thrive in a complex,

rapidly evolving market. Providing

business solutions developed from a

unique blend of industry experience,

technological expertise, and service

excellence, we assist our clients in

improving efficiencies while also

effectively managing the processes,

information, and products that

directly impact quality outcomes.

Our portfolio of services and

solutions, which includes enterprise

payer platforms, population

health management analytics, care

management, and business process

outsourcing solutions, is designed to

assist clients in successfully managing

their most important business

functions while facilitating strategic

and financial growth. We specifically

support commercial, individual, and

government-sponsored health plans,

health insurance marketplaces, and

healthcare providers in achieving the

goal of affording the best possible care to

their members each and every day. DST

Health Solutions, LLC, is a wholly-owned

subsidiary of DST Systems, Inc.

Documents

Covering Dual Eligible Population July 2014