Michigan, the federal government and some of the country's largest insurers are getting ready to test key ideas about how to improve healthcare for some of the most vulnerable Americans.
Michigan and the Centers for Medicare & Medicaid Services have signed a memorandum of understanding for a new demonstration program to reform the delivery and payment of healthcare for about 100,000 Michiganders dually-eligible for Medicare and Medicaid. The next step, before enrollment can start later this year, is signing three way contracts with insurers, who've already been selected by the state.
Testing the viability of an integrated care model with capitated payments, Michigan's demonstration will rely on eight integrated care organizations or ICOs contracted to manage physical health, long term care and support services for both community- and institutional-based patient populations, with prepaid inpatient plans covering behavioral and mental health.
Altogether, if the three-year Michigan Health Link demonstration is successful, spending for Medicare hospital and physician care and Medicaid will be reduced by one percent in year one, two percent in year two and then four percent in the third year.
The central delivery reform in the demonstration is a relatively simple idea billed as a "Care Bridge" -- a care coordination platform to help clinical and support teams develop care plans and monitor services as they're provided.
In tandem with that new delivery model will be a capitated payment system.
The capitation model
The capitated payments will be blended, with CMS covering Medicare hospital, physician and drug benefits and the Michigan Department of Community Health paying for Medicaid services. The first year will include a risk corridor program "to account for possible enrollment bias and to protect ICOs and payers against uncertainty in rate-setting that could result in either overpayment or underpayment until actual program experience is available," according to the MOU.
The integrated care organizations, including UnitedHealthcare and Molina Healthcare, "will have full accountability for managing the capitated payment to best meet the needs of enrollees according to individual integrated care and supports plans developed by enrollees, their caregivers, and integrated care teams using a person-centered planning process."
"Person-centered planning" is a fairly nebulous but nonetheless significant new component that CMS is mandating in dual eligible demonstrations. The aim, as CMS describes it, is to "promote enrollee choice in all aspects of the program."
For long-term support services, ICOs will be required to "offer enrollees' arrangements that support self-determination as an option within its LTSS benefit package," letting beneficiaries choose support providers within an individualized budget.
That "patient-centered planning" mandate, however, also comes with provisions for the integrated care organizations to have "significant flexibility to innovate around care delivery and to provide a range of community-based services as alternatives to or means to avoid high-cost services if indicated by the enrollees' wishes, needs, and individual integrated care and supports plan."
Anatomy of the roll-out
Michigan's Health Link program will start later this year and cover four regions: all of the Upper Peninsula, an eight county area in the southwest, around Kalamazoo, and Macomb and Wayne counties, in greater Detroit. In three of the four regions where there will be more than one ICO, beneficiaries will have a choice of which to enroll in, and will also have a choice of providers within an ICO's network.
In the 15 county Upper Peninsula, there will be only one ICO, managed by Upper Peninsula Health Plan, a provider service organization launched as a health plan in 1998.
In the eight county region of greater Kalamazoo, the two ICOs will be managed by Meridian Health Plan, a physician owned Medicaid HMO operating in five states, and Aetna's Coventry.
In Wayne County, west of Detroit, and Macomb County, north of the Motor City, beneficiaries will have the choice of AmeriHealth, Coventry, MidWest Health Plan (a subsidiary of the Henry Ford Health System's Health Alliance Plan), Fidelis SecureCare, Molina Healthcare and UnitedHealthcare.
Federal and state regulators are planning to review a range of financial, claims and encounter data to "assess the ongoing financial stability of the ICOs and the appropriateness of capitation payments," according to the MOU.
"At any point," the Michigan Department of Community Health "may request that CMS staff review documentation from specific plans to assess the appropriateness of capitation rates and identify any potential prospective adjustments that would ensure the rate-setting process is meeting the objective of Medicare and Medicaid jointly financing the costs and sharing in the savings."
As they are in most other markets, medical loss ratios are being set at 85 percent for ICOs in Michigan's demonstration -- and they're actually expected to be a bit higher.
In the second and third years of the demonstration, CMS and state regulators are planning to review rates and payment parameters if two or more ICOs have MLRs below 90 percent in all their regions, or if they have losses exceeding five percent in all their regions.
Michigan's is the ninth state dual eligible demonstration testing capitated payments approved by CMS since the Affordable Care Act authorized the reforms. Two states, Colorado and Washington, have demonstrations approved to test managed fee-for-service, while Minnesota is testing an alternative managed care model.