Medicaid, managed care and beyond

Why do we automatically talk about Medicaid when the subject of long-term care is raised? The answer is that Medicaid pays for a significant majority of all long-term care, especially in New York state.

Medicare specifically does not cover chronic or long-term care, and, due to the high cost of such care, the majority of individuals do not have sufficient funds to pay for an extended period. There is also long-term care insurance, but the relatively high premiums and requirement that people are medically qualified tend to reduce its utilization.

A government-sponsored long-term care program called the “CLASS Act” was included in the Affordable Care Act, but analysis showed that that it could not be implemented in a budget-neutral manner. Thus, Medicaid, the “payer of last resort,” has become the de facto long-term care financer, a situation not expected to change in the foreseeable future.

Not surprisingly, one of Gov. Andrew Cuomo”™s first acts after taking office was to put together a Medicaid redesign team and charge it with changing the way that New York Medicaid does business.

New York spends more than any other state on Medicaid, and per person charges for long-term care are almost three times higher than in California. In fact, a March 2013 Congressional report of the Committee on Oversight and Government Reform is titled “Billions of Federal Tax Dollars Misspent on New York”™s Medicaid Program.” Although the report was not solely devoted to long-term care, it is critical of the personal care program, of the fact that spousal refusal is permitted in the state and of attorneys who perform estate planning to divest assets and create Medicaid eligibility (a phenomenon certainly not unique to New York). The report does commend Cuomo for undertaking the Medicaid redesign, and in particular, the Section 1115 waiver, which mandates Medicaid Managed Long Term Care (MLTC).

The MLTC waiver was one of the central proposals of the Medicaid redesign team. The program makes virtually all home care services available only through a mandatory managed care organization (MCO) and is the major initiative to reduce and contain the spiraling costs of long-term care. It is also being implemented at an almost staggering pace, considering that it is a government initiative, with ambitious deadlines and very little lead time to ease the patients into the proliferation of new networks and procedures.

Managed Home Care

New York”™s MLTC program started in late 2012 in New York City, with Nassau, Suffolk and Westchester counties following soon after. Persons applying for Medicaid home care, adult day care or private duty nursing were required to enroll with an MCO, which then performs the necessary evaluations and sets the level and types of care to be provided. This program is being expanded statewide, with Rockland and Orange counties already transitioning to MLTC, and Putnam and Dutchess soon to follow. In fact, the current plan is to have the entire state covered by mandatory MLTC by the end of 2014.

While there are a number of fears over whether care will be compromised in the name of cost savings, and whether important constitutional rights will be inhibited by the administrative roadblocks to a hearing, generally, the program has generally not cut hours or services to patients at the outset. At this point, the most significant complaint is the lengthy and bureaucratic approval and enrollment process. We have also seen one organization be suspended for enrolling people who did not need the care. There have been anecdotal reports of MCOs rejecting patients who are too needy and therefore too expensive. This is not surprising, given the objective of the program, which is to achieve capitated savings by volume, so that costs are spread over a larger number of participants in the plan.

Nursing Home Managed Care

In January, the Office of Health Insurance Programs (OHIP) released a report detailing New York”™s plan to include nursing home coverage in the Section 1115 Waiver. The transition to mandatory managed care for nursing homes begins in April. Under this plan, Medicaid recipients currently in nursing homes are exempt from mandatory enrollment, although they can “voluntarily” enroll. New applicants for Medicaid will have to enroll with a MCO that is affiliated with the nursing home in which they are seeking placement. Those currently on Medicaid and receiving home care services through an MCO will be limited to placement in a nursing home which is part of that organization”™s network. A number of advocacy groups are concerned over the OHIP plan and have asked for a delay in its implementation. Perhaps one of the pieces that will be most difficult to implement is the transition of people who were in nursing homes, but are more appropriate for home care, back into the community.

FIDA

New York received a grant under the Affordable Care Act to create a demonstration program called fully integrated dual advantage (FIDA) for recipients who receive both Medicare and Medicaid, known as the dual eligibles, to receive services. This program would provide a number of fully capitated plans for dual eligibles, meaning that all medical services being provided to them under the Medicare and Medicaid programs, including physicians, hospitals and medicine, as well as long-term care would be provided by a single managed care organization. Although this program is not mandatory, all dual eligibles will be auto-enrolled into various FIDA organizations and will have to opt out to return to fee-for-service Medicare; however, it is possible that patients will lose out on continuity of services if they suddenly are not able to utilize the medical providers they have been using because they are now “out-of-network.” New York has recently pushed back the start date for this program from July 2014 to January 2015.

The Future

In theory, managed care reduces costs by allowing the managed care organizations to negotiate lower-cost contracts with providers, by increasing efficiency through care coordination and by standardizing levels of care. On the other hand, when applied to recipients of Medicare and Medicaid, known as the dual eligibles, the patients to be serviced by these programs are by definition the most medically needy and frail segment of our population. Consequently, the costs associated with providing care to such individuals will necessarily be higher than the general population, regardless of efficiency measures. Even though there is significant pressure to reduce the cost of a large and expensive health care network, if this population does not receive adequate care, the results would be disastrous. Only the passage of time will determine if managed long-term care is able to strike the requisite balance between saving taxpayer dollars and covering the vital needs of our elderly and medically needy citizens.

Deepankar Mukerji is counsel to Keane & Beane P.C. in White Plains, focusing on elder law. Prior to joining the firm in 2007, he had a 20-year career with Westchester County, most recently as director of resources for the Department of Social Services. He can be reached at dmukerji@kblaw.com.