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 GAO Report Finds Managed Care Plans Struggling to Deliver Quality Care at Low Prices

Government-backed managed care plans have struggled to offer high-quality, low-cost care for the nation’s poorest and most vulnerable seniors, a new federal report has found.
Nearly 40 states have begun placing Medicare beneficiaries in managed care plans, hailed by federal regulators as a way to save public dollars while not skimping on the quality of health care for the nation’s seniors. But a new report by the Government Accountability Office (GAO) says that those expectations “may be optimistic.”
“While operating specialized plans and integrating benefits could lead to improved care,” Monday’s report says, “GAO’s results suggest that these conditions may not reduce dual-eligible beneficiaries’ Medicare spending…”
“Dual eligibles” are those people—most of them seniors—who qualify for both Medicare and Medicaid help. To auditors’ eyes, care for such seniors is an expensive proposition, and Congress and regulators at the Centers for Medicare & Medicaid Services have begun putting together programs that they hope will lead to “financial alignment.”
Looking at specialized programs designed to integrate the care of dual eligibles with disabilities (who, in 2009, accounted for $103 billion in public health care expenses), GAO found multiple layers of conundrum.
“Dual-eligible special needs plans (D-SNP)—Medicare Advantage private plans designed to target the needs of dual-eligible beneficiaries—that fully integrate Medicare and Medicaid benefits often met criteria for high quality but had limited experience serving disabled dual-eligible beneficiaries or demonstrating Medicare savings,” the report says.
The specially designed plans known as Fully Integrated Dual-Eligible SNPs (FIDE-SNPs) offered better quality of care than most D-SNPs, but “relatively few” of those fully integrated plans “served disabled, dual-eligible beneficiaries or reported lower costs for Medicare services than expected Medicare fee-for-service (FFS) spending in the same areas,” GAO found.
Monday’s report suggests that the new federal fetish for managed care has moved cost problems somewhere else on the ledger without solving them. It also raises questions of whether budget cutters are pushing on a string.
Medicaid spending, notoriously volatile in the states, ranged all over the map—per capita Medicaid spending for dual eligibles with disabilities in Michigan, for instance, was $27,000, while it was $188,000 in New York, GAO says. Where Medicaid rates were relatively high, Medicare rates tended to be low (and vice versa), the report says.
More than half of the Medicaid dollars used by the highest-cost patients went to community-based long term care supports and services, GAO found, while nearly two-fifths of Medicare dollars used by the highest-cost patients went to “institutions” such as hospitals, GAO reported.
But those dual eligibles who racked up high-tab Medicare bills tended to be a lot sicker, GAO added: About 35 percent of high-expense Medicare patients had “six or more chronic conditions, compared with 14 percent of beneficiaries with high Medicaid expenditures,” Monday’s report says. Perhaps worse, one-quarter of the high-tab Medicare patients “had three or more mental health conditions, compared with 13 percent of beneficiaries with high Medicaid expenditures.”
“The presence of multiple health conditions may drive the use of costly Medicare services among beneficiaries with high Medicare expenditures,” GAO says. “As the number of chronic and mental health conditions increased among these beneficiaries, the average number of emergency room visits, inpatient stays, and readmissions also increased. The increase in the average number of emergency room visits was particularly dramatic as the number of mental health conditions increased.”
Specialized managed care plans were supposed to stand in that very gap. But Monday’s report says that it’s difficult to find plans that can deliver high quality at low prices.
“Only eight of the 35 FIDE-SNPs—and three of the 14 with high quality—bid below Medicare FFS spending in 2013,” the report says. “Also, only three FIDE-SNPs that served disabled dual-eligible beneficiaries bid below Medicare FFS spending, and none of these met criteria for high quality. Among the 11 high-quality FIDE-SNPs that bid at or above Medicare FFS spending, only two bid within 3 percentage points of FFS spending. On average (weighted by July 2013 enrollment), the 35 FIDE-SNPs bid 6 percent above FFS spending, and the 14 high quality FIDE-SNPs bid 3 percent above FFS spending.”
Monday's report can be found here.
Bill Myers is Provider’s senior editor. Email him at Follow him on Twitter, @ProviderMyers.
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