Is The Dual Eligible Opportunity over Hyped, or a Chance to Improve Healthcare Cost and Quality?

MAY 13

At a time when health reform is looking for better ways to control costs, one of the major initiatives within the Affordable Care Act (ACA) addresses the significant spending attributed to a relatively small population of individuals. The dual eligible population is about 9 million Medicare and Medicaid individuals and accounts for around $300 billion in healthcare costs annually.

Individuals in this population often suffer from multiple chronic conditions, and their hospital and long term care utilization drive a very high medical utilization rates.  This population’s medical utilization is acute, yet CMS hasn’t aligned Medicare and Medicaid programs (who frequently have conflicting goals and incentives) to address the dual eligible medical needs in a cost-effective and care-effective manner.

A big push within the ACA is to empower CMS to experiment with different care delivery and reimbursement models to more effectively manage care for the dual eligibles. CMS has launched multiple projects to move the dual eligibles into managed programs (either capitated, or fee-for-service) run by commercial insurers with the goal of driving cost savings while improving overall care.

Initially, the commercial carriers expressed a lot of excitement to capture a large portion of the $300 billion in annual spending. Groups like Aetna, United, Molina, HealthNet and WellPoint, among others, all shared with investors their vision for capturing tens or even hundreds of millions of new top-line growth. CMS demonstration projects had millions of duals moving into managed care programs starting in 2013 across several states.

Despite this activity and messaging, some excitement about the duals opportunity has faded.  Last week, the California duals projects CalDuals and CalMediConnect announced that its demonstration projects would be pushed from a 2013 start date to an early 2014 start date at the earliest. This is the third major delay for the MediConnect projects. Several of the other 21 states, that initially put their hat in the ring to manage dual eligible demonstration projects, have gone to the sidelines and now only four states have a chance of launching 2013 demonstration projects.

No doubt the California and other state delays are disappointing to both the managed care companies that have touted significant revenue opportunities from taking on the duals, as well as CMS, which is hoping to drive cost savings from the program. TripleTree, however, sees the delays as an opportunity for managed care companies to more deliberately evaluate their capabilities and gaps for managing the dual population. Only a small percentage of the duals population is in managed care programs today and the majority of plans have limited experience in managing the complex care needs of the duals population. These plans should be evaluating care coordination, cost management, community outreach and service, behavioral health, and other specialty vendors that can bring needed capabilities and experience in care management.

This quarter, TripleTree will be publishing a new research report which assesses the issues and approaches for managing care, cost, and quality of care within the dual eligible population. We believe that many of the managed care companies have gaps in their portfolios, and our assessment will identify a few innovative approaches being used by some companies to improve care coordination, cost management, and care transitions for the dual population.

TripleTree knows that no one company has all the requisite skills to serve the dual eligible population adequately and our report will attempt to lay out a framework for understanding what managed care companies will need if they chose to serve these 9 million individuals.

Let us know if you’re interested in receiving a copy of this report when it’s published, and if you have anything we should be considering about the dual eligible population as we conclude our research.

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Scott Donahue