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QUESTION: Pursuant to a congressional request, GAO reviewed states' initiatives to
enroll dual eligibles (beneficiaries who qualify for both Medicare and
Medicaid benefits) into one managed care plan, focusing on: (1) the
status and key features of state initiatives focusing on: (1) the status
and key features of state initiatives to integrate care for
dual-eligible beneficiaries; and (2) factors that have contributed to
the length of the waiver negotiation process and implementation time
frames.
GAO noted that: (1) two states are enrolling a small number of dual
eligibles in limited geographic areas into integrated care programs, and
two additional states plan to implement programs by 2001; (2) officials
in these four states view their initial efforts as stepping stones and
plan to make their programs more widely available; (3) since the 1995
approval of an integrated care program in Minnesota, the states of
Wisconsin and New York also have received federal approval to integrate
Medicaid and Medicare services for dual eligibles; (4) states are
emphasizing service delivery in beneficiaries' homes and targeting
different segments of the dual-eligible population compared with the
Program for All-Inclusive Care for the Elderly , which enrolls only
frail individuals; (5) all plans in states with approved programs are
nonprofit, including the three participating health maintenance
organizations in Minnesota; (6) important factors associated with
states' decisions about pursuing integrated care programs for dual
eligibles are the complexity of planning and implementing a
demonstration and the extended time frames needed to do so; (7) states
have criticized the length of the process required to gain federal
approval for their initiatives; (8) in states with approved programs,
the federal waiver review process ranged from over 1 year to over 3
years; (9) though some delays were associated with the Health Care
Financing Administration's (HCFA) 1997 reorganization and the heavy new
demands on the agency as a result of 1997 legislation, HCFA has taken
action to try to speed up the review process; (10) difficulty in
reaching agreement on an appropriate Medicare payment methodology for
integrated care programs was an important factor that delayed the
approval of state waiver applications; (11) the challenge has been to
agree on payment rates that adequately compensate health plans for
differences in frailty among dual eligibles while meeting the Office of
Management and Budget's requirement that Medicare demonstrations not
increase federal Medicare expenditures; (11) Medicare's move toward a
new diagnosis-based risk-adjustment methodology raises concerns for
state demonstrations because research has shown that the methodology
tends to underestimate the costs of frail beneficiaries; and (13) this
situation underscores the importance of learning from these four state
demonstrations so that their experience may inform similar initiatives
that other states may be considering.
ANSWER: HCFA agreed with the report's overall findings and conclusions but commented
on our description of its efforts to identify an appropriate payment
methodology for frail dual eligibles. HCFA stated that it has engaged in a
large body of research in an attempt to find an appropriate payment
methodology. Because recent research has uncovered numerous problems with
the use of "frailty" measures for payment purposes, HCFA believes that
defining a payment methodology for integrated care demonstrations may
require moving beyond the common notion of using survey-based functional
status, or "frailty," as a risk adjuster. Therefore, it is seeking to refine
the frailty approach or find an alternative risk-adjustment methodology for
plans that enroll special populations. We agree that a narrow
conceptualization of frailty is unlikely to be sufficient and that clinical
assessments are preferable to survey-based information. In fact, many states
determine frailty by conducting a face-to-face assessment of an individual's
need for assistance with daily living, not by relying on surveys or
questionnaires. Risk adjusters for such special populations need to account
for the potentially greater severity of individual conditions and the
multiplicity of conditions frail individuals may have. We have revised the
report to more fully portray HCFA's research efforts and have clarified the
refinements of risk-adjustment methods needed for these populations.
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