Washington State's Dual Eligibles Model Saved Medicare $22M

By Michael D. Williamson

Jan. 25 — A CMS test program designed to improve service quality while reducing costs of care for beneficiaries dually eligible for Medicare and Medicaid in Washington state reduced Medicare costs by $22 million, or 6 percent, relative to a comparison group, a report found.

Results from the report are encouraging, a health-care consultant told Bloomberg BNA Jan. 25.

The report covers the results from the first performance period (July 2013-December 2014) of the Washington Health Homes demonstration. Health homes are responsible for organizing enhanced integration of primary, acute, behavioral and long-term care for Medicare-Medicaid dual-eligible beneficiaries, the report said.

The demonstration project tests new mechanisms to coordinate services across Medicare and Medicaid for people eligible for both programs in Washington and allows the state and the federal governments to share in savings resulting from quality improvements, Patrick Conway of the Centers for Medicare & Medicaid Services wrote in a Jan. 22 blog announcing the report. He serves as the agency's principal deputy administrator and chief medical officer and leads the CMS Center for Clinical Standards and Quality and the CMS Center for Medicare and Medicaid Innovation.

Through the demonstration, Washington is building upon its Medicaid health home model, targeting high-risk, high-cost dual eligibles with chronic health conditions. The demonstration model began serving enrollees in July 2013.

Nationally, Medicare and Medicaid spent an estimated $300 billion on dual-eligible beneficiaries in 2010, according to a Jan. 19 report from the Government Accountability Office (12 HCDR, 1/20/16). “These beneficiaries often have complex health needs, increasing the need for care coordination across the two programs,” the GAO said.

The CMS released the report on the Washington Health Homes test Jan. 22, Conway said. However, it is dated Jan. 4.

Effect on Medicaid Unknown

While the results reported in the preliminary evaluation of the Washington Health Homes demonstration are encouraging, it should be noted that the results don't include effects on Medicaid spending, James Teisl, an associate director at the Berkeley Research Group, a heath-care consulting group, told Bloomberg BNA in a Jan. 25 e-mail.

It is important to know how the Washington model affected Medicaid spending so other states can assess the value of similar programs for themselves, Teisl said.

In 2012, the Department of Health and Human Services announced Washington became the first state to partner with the CMS in the Financial Alignment Initiative to test a managed fee-for-service (FFS) model for providing Medicare-Medicaid enrollees with a more coordinated, person-centered care experience, according to a agency overview of the test program.

The Financial Alignment Initiative is an important demonstration to test whether aligning the Medicare and Medicaid payment systems can result in overall cost savings and better care for individuals eligible for both programs, Teisl said. “While there is widespread interest among state Medicaid programs in the demonstration, implementation has been slow and participation has generally been lower than expected due, at least in part, to provider resistance and other start-up challenges,” he told Bloomberg BNA.

Teisl also said unlike Washington, most states participating in the Financial Alignment Demonstration are doing so through capitated managed care. “This is consistent with an overall trend of increasing use of managed care in Medicaid to serve complex patient populations, including those needing long-term care,” he said, adding, “Evaluations of these capitated programs will be important to states as they decide whether to continue to participate in the alignment program.”

The HHS first announced the Financial Alignment Initiative in 2011 (132 HCDR, 7/11/11).

To contact the reporter on this story: Michael D. Williamson in Washington at mwilliamson@bna.com

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com