WARWICK - Seniors 85 and older (termed the “old old” by geriatricians) consume more health care services than those in their 60s and 70s – particularly when it comes to long term care services.

And, according to the U.S. Census Bureau, Rhode Island has more of these “old old” seniors, as a percentage of our population, than any other state.

Since long-term care is primarily covered by Medicaid, and therefore funded in part by state revenues, managing its cost is a critical component of the state’s future economic development.

Today the state is poised to implement a “demonstration project” which would involve a dramatic change in health care delivery systems for the elderly. Long-term care providers are apprehensive.

Integrated Care Initiative
Rhode Island is poised to embark on a demonstration project, part of the state’s “Integrated Care Initiative,” which will combine coverage under the Medicare and Medicaid programs into a single benefit for seniors who are covered by both.

Most Rhode Islanders over the age of 65 have health coverage through the federal Medicare program, which provides hospital, physician, and prescription drug coverage for eligible individuals.

Medicare does not cover long-term care, however. Seniors who need long-term care services (because of stroke, dementia, or other devastating illness) often rely on Medicaid coverage.

Medicaid picks up the cost of long-term care when an individual is no longer able to pay for it out of pocket.

Integration of the two programs for elders who are covered by both is expected to yield savings through administrative efficiencies.

Merging the two revenue streams should allow for expansion of home- and community-based services for elders, without depleting the resources necessary to care for those in nursing facilities. What’s more, case management and coordination of care should improve the consumer experience, as well as quality of care, making it a win-win.

Some trepidation
Long-term care providers are viewing the project with some trepidation, however. As health care providers they applaud the prospect of a savings initiative that won’t impair quality of care and, in fact, may improve it.

Moreover the cost shifting that arises from the bifurcated delivery system is a constant source of frustration for nursing facilities. (Medicare payments for post-acute care are constantly targeted for reduction, despite being necessary to prop up demonstrably inadequate Medicaid payments.)

So, why the apprehension? It has to do with methodology. The project will be implemented by turning the care of eligible seniors over to one or more health maintenance organizations, or HMOs. The HMOs will be paid on a capitation basis. That is, they will be paid a monthly fee for each enrolled senior, and must purchase and pay for all covered benefits out of that fee.

Long-term care providers have some experience with capitation. Under the “Medicare Advantage” program, the federal government has entered into contracts with private health plans to provide Medicare benefits to enrollees, often under a capitation payment arrangement.

Nearly a third of Rhode Island’s Medicare beneficiaries are enrolled in some form of Medicare Advantage plan – and these plans have been problematic for providers.

Medicare covers a limited “post-hospital” nursing and rehab benefit, typically provided in a skilled nursing facility.

Little advantage from Medicare Advantage
Medicare Advantage plans have increased patient co-pays under that benefit (uncollectible from Medicaid recipients); they have slashed provider rates; and they have engaged in the usual managed care bag of tricks – cumbersome pre-authorization requirements, delayed payments, and burdensome reporting requirements.

It’s worth noting that Medicare Advantage plans have also increased federal Medicare spending, despite all their cost cutting.

The HMO experience hasn’t been all bad, however. In the process of ramping up to the demonstration project, the R.I. Executive Office of Health and Human Services recently enrolled the majority of dual eligibles into an HMO for their Medicaid covered services.

The HMO, Neighborhood Health Plan of Rhode Island, is a highly regarded managed care organization, with strong levels of enrollee satisfaction, and patient care has continued without issue.

The duals demonstration will involve more generous Medicare revenues, however, and a new group of HMOs will likely want to enter the game. In light of their experience with Medicare Advantage plans, long-term care providers (led by the state’s skilled nursing facilities) are advocating on behalf of a bill before the R.I. General Assembly, which would impose an array of provider and patient safeguards – taking into account the particular vulnerability of the elderly dual eligible population as well as the financial fragility of the Medicaid-funded providers that care for them.

Writing safeguards into law
The proposed legislation seeks to assure that any savings expected from the demonstration project come from administrative efficiencies and improved outcomes, NOT from cutting provider rates or denying consumers’ access to care.

It would require that seniors have the unfettered option to decline to participate; create an “ombudsman program” to assist elderly enrollees; and require detailed reporting on costs and utilization so that the project can be fairly evaluated.

It also includes a requirement that a participating HMO could not pay a nursing facility less than the rates that would be paid under traditional Medicare and Medicaid for the same services.

Nursing facilities maintain that the demonstration project should not be used as a back door means of cutting rates to providers that are already under funded. The federal Centers for Medicare and Medicaid Services (CMS) itself has stated that savings under the demonstration projects should come from efficiencies, utilization shifts, and better care outcomes, without cuts to provider payments.

Rhode Island nursing facilities provide an extraordinarily high quality of care, as measured by national standards, and they do so in return for Medicaid payments that are at or below national averages.

Change to the long-term care delivery system is clearly necessary, in view of the eventual “silver tsunami” of aging Baby Boomers, but must be made with caution to avoid jeopardizing that care, and harming a particularly vulnerable demographic.

With carefully constructed and appropriate safeguards, the demonstration project may actually be able to strive for the holy grail of health care reform – controlling costs without impairing quality.

Virginia M. Burke is president and CEO of the Rhode Island Health Care Association