By Jay Greene of Crain’s Detroit Business
Michigan is slowly moving forward on a plan to place its $2.8 billion Medicaid nursing home and long‐term care services programs under the management of private health plans, Crain’s has learned.
The Medicaid managed long‐term care proposal is similar to controversial 2016 budget language that would move the $2.7 billion quasi‐public behavioral health system under health plan control over the next several years. Pilot projects are under development this year to test whether integration of mental and physical health saves money, increases services while maintaining quality and access.
In a tersely worded proposal in the 2017 – 2018 state budget, Section 1857 states: “By July 1 of (2018), the department (Health and Human Services) shall explore the implementation of a managed care long‐term support service.”
Dom Pallone, director of the Michigan Association of Health Plans, took credit for the language in the current year’s budget.
“We asked for it,” Pallone said. “We didn’t ask for this language. We asked for much more detail. Legislators compromised in the process, and the House and Senate agreed with the generalized approach, to evaluate using managed care in the long‐term care system.”
Pallone said MAHP wanted pilot program studies, language that they be linked to geographic regions already in place in Michigan and an implementation timetable.
“We were agnostic to how (the funding would flow), but it could be through existing Medicaid contracts, integrated care organization contracts or totally new contracts,” Pallone said.
At least 22 states are exploring ways to integrate long‐term care services into their Medicaid programs to reduce costs, increase services and improve quality, according to a 40‐page report completed for the state by the Center for Healthcare Research and Transformation in Ann Arbor.
CHRT studied the issue under a contract awarded it last summer from the Michigan Department of Health and Human Services.
The CHRT report found that some states also have begun to integrate long‐term care with behavioral health and physical health with Medicaid funding, said Marianne Udow‐Phillips, CHRT’s executive director.
“States have a variety of waiver options and are paralleling trend of (integrating behavioral and physical health),” Udow‐Phillips said.
Two years ago, Gov. Rick Snyder issued a controversial budget boilerplate, Section 298, that would have transferred administration of the state’s $2.7 billion Medicaid behavioral health program to Medicaid HMOs.
Mental health advocates protested in early 2016, and the state Legislature halted immediate implementation of the move to managed care. In 2017, however, the Legislature approved four pilot programs to test the move. They are expected to begin this year.
But state officials hope the controversy that erupted over the Section 298 language, which was created without public input, won’t be repeated with the Medicaid managed long‐term care proposal.
Except for questions by some state legislators, the Health Care Association of Michigan and the Area Agency on Aging Association of Michigan, the proposal has fallen mostly under the radar.
Senior advocates and nursing home officials are worried that turning over Medicaid funding for long‐term care services to Medicaid health plans could be a disaster for patients and a losing scenario for quality care.
State officials tell Crain’s that long‐term‐care services under consideration for managed care contracts include nursing homes, assisted living centers, rehabilitation facilities and various home and community‐based programs.
Linda Burghardt, director of the nonprofit Area Agency on Aging Association of Michigan, said Medicaid HMOs are not prepared to manage long‐term care services, especially home services for the elderly.
“The AAAs are the experts in long‐term care. We’ve been doing it for 45 years. We know all the providers and the supports and we operate with person‐centered planning approach,” Burghardt said.
Burghardt said Medicaid health plans want to take control Medicaid long‐term care funding for the same reasons they are pushing taking over the Medicaid behavioral health system: for profit.
“If the HMOs come in and take over, everything will be done from a cost perspective,” she said. “They don’t have the expertise and involvement in the community that we have.”
Melissa Samuel, CEO of the Health Care Association of Michigan, which represents 330 of the state’s nursing homes and about 125 assisted‐living facilities, said the association is concerned with the managed‐care proposal.
“Michigan has done a very good job with Medicaid (physical health) and has been doing it for a long time,” Samuel said. “Now they want to take over behavioral health and long‐term care. We are talking about very sick people with multiple diseases.”
Samuel said the association wants to be involved in the planning and discussion process.
In Michigan, Medicaid contracts with some 450 nursing homes, assisted living facilities, rehabilitation centers and other long‐term centers. Overall, state spending on health services in 2017 totaled $18.4 billion.
The major funding buckets are managed care physical health, $9 billion; behavioral health; $2.7 billion; and long‐term care, $2.8 billion, which includes $1.7 billion for nursing home and another billion dollars for a variety of home‐based and long‐term care support services.
Richard Miles, MDHHS’ director with the bureau of Medicaid policy and health systems innovation, said Michigan has been considering managed long‐term care going back to debates in 2013 related to approving Healthy Michigan Medicaid expansion.
“There is a section in there that says the department should move populations not in managed care into managed care,” Miles said. “All that is left is long‐term care.”
Miles said the overriding purpose is to integrate all the various programs connected with the long‐term care system in Michigan.
Long‐term care programs include nursing homes, but also home health programs, MI Health Link for people eligible for both Medicaid and Medicare; and the My Choice waiver program (home and community based services). It also could include the Program of All‐Inclusive Care for the Elderly, or PACE, a program funded by Medicaid and Medicare designed to keep elderly at home.
Funded by a $150,000 grant from the Michigan Health Endowment Fund, MDHHS has contracted with the CHRT and Public Sector Consultants to help it study options to integrate long‐term care.
As part of its grant application, MDHHS told the health endowment it will develop a plan to redirect “funding and resources toward home and community‐based services, allowing for better coordination with primary care and aligning with individuals desires to live at home.”
CHRT is researching what other states are doing and Public Sector Consultants will help with the stakeholder input process. MDHHS staff is conducting a financial analysis, Miles said.
Udow‐Phillips said the state hired CHRT to research what other states are doing with their long‐term care funding. She said CHRT contracted with Public Sector Consultants to hold focus groups and interviews with interested parties to hear feedback from them on what is working in long‐term care services and where it should go.
“Many states have implemented managed long‐term care programs and 22 states have obtained waivers for Medicaid,” Udow‐Phillips said. “They have a variety of waiver options and are paralleling trend of (integrating behavioral and physical health).”
But Udow‐Phillips said the goal also is how to keep seniors in the community as much as possible.
Miles said the state is interested in moving long‐term care into managed care programs, but also how it can integrate long‐term care, acute care, physical health and behavioral health.
Samuel said the state’s cost‐based Medicaid reimbursement system works well for nursing homes and patients and there is no reason to make wholesale changes.
“There are adequate rates to providers to provide good care for the system,” she said. “If the goal is to provide cost‐effective, high‐quality care, can we guarantee that moving to managed care is better? Can we reduce costs and improve outcomes?”
Pallone said there are many good state models for Michigan to study. They include Ohio, Arizona, Kansas, Pennsylvania, Florida, Texas and California.
“They are all different and may not exactly what we want to do, but we can learn lessons from those and cherry‐pick the good parts,” he said.
Samuel said other states that have moved to long‐term managed care haven’t fared well and have run into problems.
“States undergo budgetary pressures and look to managed care as a panacea, but Medicaid rates are underfunded anyway,” Samuel said. “They look to managed care and put a program in place to control costs, looking to erode provider rates. Is that the answer to maintain quality care?”
Miles said some, like Ohio, are integrating Medicare and Medicaid long‐term care in the dual‐eligible program.
Ohio’s Gov. John Kasich is pushing hard to move Medicaid members who need long‐term services into managed care plans. He has said he believes coordinated care can reduce costs and increase services.
In 2013, Ohio put dual Medicaid and Medicare enrollees, including some long‐term care patients, into managed care plans under a pilot program called MyCare Ohio. Long‐term care advocates objected.
Miles added that one of the goals with managed care will be “to achieve the appropriate balance with home‐ and community‐based programs to keep them out of nursing homes.”
Data shows that care costs Medicaid more than $250 a day in a nursing home, $113 per day for assisted living, and $80 per day for adult day care or home health services, according to a recent survey by MetLife Mature Market Institute.
Pallone said health plans would contract with the state under full‐risk capitation, which means reimbursement would be based on a monthly per‐member fee that would cover a fixed set of services.
Medicaid health plans also would develop provider networks of nursing homes, home and community‐based care to keep seniors in their homes as much as possible, he said. There would be quality metrics to meet and ways for consumers to complain and appeal.
Pallone said there would be savings to the Medicaid program to the state. But he said the biggest advantage would be for the consumer.
“We would have more comprehensive care coordination and ideally one main point of contact that would make it easier” for the beneficiary, Pallone said. “We would make sure quality of care is improving and we believe strongly we can find savings for the state.”
But would nursing homes object? The majority of nursing homes are owned by for‐profit businesses that have slim profit margins of about 2 percent, lower than hospitals.
“It depends on their value proposition. They might come out better than fee for service structure,” Pallone said. “I believe nursing homes are becoming more and more comfortable with managed care. They know it is coming.”