CMS innovation agency to launch risk-based model for dual eligibles

By | September 17, 2020

Dive Brief:

  • CMS’ innovation center is about to roll out a new model allowing insurance plans to take on financial risk for patients enrolled in both Medicare and Medicaid, Brad Smith, director of the Center for Medicare and Medicaid Innovation, said Tuesday at payer lobby AHIP’s virtual conference.
  • The trial will allow managed care organizations that assume risk for a patient enrolled in Medicaid to also assume risk for that same patient in fee-for-service Medicare.
  • Along with the dual-eligible demonstration, Smith said industry could expect some additional models to come out of the pipeline in the next few months, including one letting plans and providers take on risk for Medicare lives in certain geographies.

Dive Insight:

Allowing payers to assume risk for a dual-eligible population is an idea CMMI has toyed with before, Smith said at the AHIP National Conference on Medicare, Medicaid and Dual Eligibles. The upcoming trial will be based on CMMI’s direct contracting model, which offers capitated payments for Medicare FFS beneficiaries through partial or full downside risk.

Generally, Medicaid managed care organizations get upfront fixed payments from states, based on expected utilization of covered services, administrative costs and profit for their patient population. By comparison, Medicare plans are paid retroactively, based on the quantity of services their beneficiaries use.

Dual eligible beneficiaries are patients enrolled in Medicare and getting full Medicaid benefits or assistance with Medicare premiums or cost-sharing through Medicaid. Medicare usually pays for dual-eligible patients’ services first, because Medicaid is always the payer of last resort. However, Medicaid covers some services Medicare doesn’t, like nursing home care, behavioral healthcare and home-based services.

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Roughly 12.2 million people were dually enrolled in 2018, per CMS data. The population has high rates of chronic conditions and social risk factors, with many needing extensive long-term care. As such, they make up a disproportionate amount of spending in federal programs.

Dually eligible people make up just 20% of Medicare and 15% of Medicaid, but account for 34% and 33% of program costs respectively, according to CMS.

The new value-based CMMI model could see acute industry interest should it prove efficacious in lowering those costs. And it’s timely, as spending in Medicaid and Medicare snowballs amid the COVID-19 pandemic, and the Trump administration scrambles for avenues — many unpopular — to curb growing spending.

“We think that’s going to be really interesting and we’ll create a lot of flexibilities for plans who want to participate in that, Smith said.

Another model CMMI plans to roll out in the coming months is around geographic direct contracting, Smith said. The trial would allow insurers, providers and other healthcare organizations to assume financial risk for all Medicare lives, or a portion of Medicare lives, in a specific geographic region.

In exchange, they’d get much more flexibility in how to structure their program, including building preferred networks, potentially processing claims and other allowances, Smith said, while ensuring beneficiaries still have access to all providers available in Medicare.

That idea was first floated in April 2019, when the agency announced plans for the Primary Cares First model.

CMMI tests demonstration models in federal programs, allowing CMS to trial novel payment designs before implementing them on a nationwide scale.

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Of the 54 models the decade-old agency launched over the past nine years, five have saved significant amounts of money and two have expanded nationally. “I believe there will be more that’ll expand nationally in the near future,” Smith, who has been at CMMI for about eight months, said.

He also said the innovation center plans to be more active and aggressive in the back half of the year.

“Giving more risk to folks with bigger populations and creating more flexibility underneath them, we think is going to be a really effective strategy,” Smith said.

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