Pennsylvania Seeks New Approach to Long-Term Medicaid Services

The Pennsylvania Department of Human Services (DHS) and Department of Aging (PDA) released a discussion document earlier this summer setting forth the state’s plan to transition its Medicaid long-term services and supports (LTSS) program to a managed care system. The state predicts this change will improve health care quality and access for low-income Pennsylvania seniors and persons with disabilities.

Under the current fee-for-service system, the state pays providers standardized payments for services delivered. Beneficiaries are entitled to a standardized benefit package and can receive services from any provider willing to accept the established payment.

Elsewhere, states contract with private insurance companies, called managed care organizations (MCOs), to deliver health services to enrollees. Beneficiaries in managed care systems are limited to the MCO’s provider network, and benefits packages may vary by insurance company. The state pays the MCO a capitated, per-member fee, and the MCO negotiates payments with providers. The standardized, per-member capitation rates make up-front costs more predictable, which is appealing to many states.

Pennsylvania officials expect that a managed long-term services and supports model will streamline and coordinate care in the state, ensuring that beneficiaries “get the right care at the right time, while avoiding unnecessary duplication of services and maintaining quality.” According to the recently issued discussion document, enrollment in the new managed care program may begin as early as January 2017. To plan for a transition to managed care, the state held a public comment and engagement period this summer, which included webinars and public meetings.

A managed care system for long-term services would, according to state officials, play an especially important role for dual-eligibles – that is, Medicare recipients who also qualify for Medicaid benefits. Dual-eligibles are among the poorest and sickest of all Medicare beneficiaries, so qualifying for both programs is important because it reduces financial barriers to receiving care. However, Medicare and Medicaid are administered separately, which creates confusion for patients and physicians trying to navigate two programs with different services, coverage and eligibility requirements, and funding streams. Long-term care patients often transition between care settings such as hospitals, where Medicare pays for services, and nursing facilities or home and community-based support, where Medicaid is the payer. Administering long-term care through a managed care model would, state officials say, allow for more collaboration and coordination between the two programs, reducing the risk of service disruptions as patients shift between the different types of coverage. Service coordination allows for a better understanding of “patient needs and preferences” and improves quality of care by enabling different providers treating the same patient to share information.

The state’s anticipated shift to a managed care system emphasizes the importance of allowing older Pennsylvanians to stay in their homes and communities, rather than moving them to institutions in their later years. Institutionalized care is more costly to the state and it often fails to take into account beneficiaries’ individual needs. According to guidance from the Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicare and Medicaid, managed long-term care programs should adopt a “person-centered” approach that ensures “beneficiaries’ medical and non-medical needs are met” and that they “have the quality of life and level of independence they desire.” The state expects that managed care will allow beneficiaries to “live as independently as possible with the least restrictive setting to meet the individual’s needs.”

In addition to improved services and better health outcomes, care coordination under a managed-care model may reduce state and federal costs. The most expensive Medicare recipients are those receiving acute short-term care, particularly in hospitals, and the most expensive Medicaid recipients are those who receive institutional care. According to state officials, managed care is expected to target both of these high-cost groups, although the long-term cost-savings of managed care remain to be seen. In theory, managed care would allow beneficiaries to receive treatment earlier, thus reducing the need for short-term acute services and unnecessary hospitalizations. Managed care is also expected to increase beneficiary access to home and community-based services, thus reducing reliance on more costly institutional care.

Although states have traditionally administered Medicaid under a fee-for-service model, most states now use some form of managed care to deliver Medicaid services. Like many states, Pennsylvania uses managed care for most of its Medicaid program, but currently delivers long-term support and services through a fee-for-service model. However, state interest in managed care for long-term services is growing. Of the 19 states currently operating capitated managed care programs for long-term services, more than half applied for and received federal approval in the last 3 years.

Even though almost 75% of Medicaid beneficiaries are already enrolled in some form of managed care, most of those beneficiaries are far younger and healthier than the dual-eligible group. Most beneficiaries requiring long-term care are elderly or people who have disabilities and individuals in both groups have more complex, diverse health needs than the rest of the Medicaid and Medicare populations. Medicaid MCOs and Medicare plans may therefore lack the expertise needed to coordinate care for this population, so states may need to invest in comprehensive oversight and monitoring to ensure that beneficiaries are receiving adequate care.

CMS issued guidance in 2013 for states seeking to implement managed-care programs for long-term services. The guidance set forth what CMS views as the most important aspects of these programs, including adequate planning and transition strategies, active stakeholder engagement, support and education for beneficiaries in navigating the managed-care system, integrated services and benefit packages, person-centered processes, and an emphasis on home and community-based services. Pennsylvania officials state that that they will incorporate all the principles in the CMS guidance when they make the transition to managed care.