P R O C E E D I N G S (8:07 a.m.)
DR. WOOD: Good morning, everyone, and welcome to the second day of the Minneapolis regional hearing of the Secretary's advisory committee on regulatory reform. For those of you in the audience who are attending today, at each of our meetings -- and this is the last one of several we've had around the country -- we try to identify one or two major themes and spend some time understanding the basis of the structure of regulation from a statutory and regulatory perspective and then get the perspective of people who live with this every day and might have some good suggestions for the future. We are solution oriented; and our greatest interest is in coming up with solutions to fix things, rather than identifying problems.
Today's discussion is state/federal coordination of program issues. It is one that this committee has talked about in several of the previous meetings, and we're now at a point where we can have an in-depth discussion.
And I'm pleased to introduce MissLeslie Norwalk from the office of the administrator. She is actually the policy director and counselor to Mr.Scully. We've been privileged to have her with us through all of our meetings, and she has worked extremely hard to make sure that some of the issues that we've identified can be moved through the agency very quickly, so we're grateful to her for her hard work on our behalf. And I'm going to let her talk with you this morning about at least the big picture of this problem of state/federal coordination. And then we'll probably get down to some specifics. So Leslie?
MS. NORWALK: Thank you. Good morning, everyone. There is a rather gigantic topic, state/federal coordination; so I'm going to ask in advance for your acceptance of my speed. In particular, I hope to go quickly through the first few slides because we have five really terrific panelists, which I want to thank for their participation, flying in from far and wide to talk about a number of these important issues.
There are three things that I hope to cover this morning. The issue of dual eligibility, the issue of data sharing and the issue of survey and certification. And again I apologize for the brevity of some of these, but just to get through them.
It's worth a couple of seconds to review the nature of the Medicaid program and its relationship to the Medicare program, as well as CMS's authority to deal with the issues of coordination of both programs. It's also worth discussing briefly federalism and the impact of the relationship of the federal government and the states.
The federal government and the states each have their own exclusive powers set out in the constitution. Each must respect the sovereign prerogatives of the other. Now, I know that that sounds a lot like American History 101, but it's a core concept that permeates the Medicaid program. And given the dichotomy on this committee and certainly the inherent tension between those of you who work for several states and those of you who are providers, you've seen some of this dichotomy and the tension throughout some of these hearings where the providers would like us, the federal government, to regulate the states with a heavy hand, and the states are saying, "Just wait one second."
Anyway, I'll take a couple of seconds to go over the statutory requirements of Medicare and Medicaid because these different requirements create a number of the barriers to coordination of the two programs.
Now, I'll go through these very quickly. Medicare, as you know, is fully administered by the federal government. The eligibility standards for the program are uniform across the country. Basically Medicare applies to people over 65, some people with disabilities and people with end-stage renal disease.
The Medicare program is intended to cover acute care. It does not cover generally annual screening or other preventative services except for a couple statutorily-enumerated exceptions. It doesn't cover long-term care, dentures, hearing aids, eye glasses or drugs except those that could be self-administered. Generally CMS cannot administratively add to this list of statutorily-defined benefits, which is why we have the discussion of prescription drugs that we do today.
Now, rules of coverage are specified in the Social Security Act and clarified by us in regulation. One of the important rights that Medicare beneficiaries have is known as freedom of choice, which is the beneficiary's right to choose their own provider service or managed care plan; and an additional right is the right to appeal eligibility coverage decisions.
Now, Medicare has some ability to waive a couple of the requirements in the Medicare statute, particularly CMS is permitted to waive payment rules. It's also permitted to provide services that are incidental to Medicare, other Medicare services, but only on a demonstration basis, which is to say we could provide them to a limited subset of Medicare beneficiaries or we could waive the payment rules to a limited subset of providers. Again, this is to demonstrate something; and it's also for a limited period of time. This is not something that we can do across the entire program.
We do not have the authority under Medicare to waive freedom of choice, mandated benefits, eligibility or appeal rights, even within a demonstration. The statute does not give us that authority.
Under Medicare, Medicare, as you know, is a state/federal partnership. It's administered by the states, not by those of us at CMS. It's a categorical grant program established by law that has, that matches federal dollars to state dollars if a number of things are met by the states.
The state must promise to follow the requirements of federal law and submit a state plan that lays out the terms of agreement. The state plan explains how the state will execute the mandatory efforts, which are the federal requirements, and whatever state options the individual state would like to have for its Medicaid program.
Now, of course, every state operates Medicaid programs differently, which means we have at least 50 different varieties out there, and that makes the coordination efforts considerably more difficult when you want to coordinate a Medicare and Medicaide beneficiary, and I'll get to that in a second.
The federal government pays states matching funds, which range from 50 to 75 percent of the state program's total costs. The federal government has the right to enforce the statutory requirements upon the states. And, on the other hand, the states have the right to make choices and administrative options-- or administrative decisions for their part of the program. They do pay 50 to 25 percent after all.
The Medicaid eligibility requirements, the Social Security Act lays out some mandatory eligibility standards; but each state can also have optional recipients, depending on how they want to run their program and provided that they get approval from us. Other populations that are often targeted include low income children, pregnant women, infants, blind, disabled individuals with a certain poverty level, etcetera.
There is certainly some overlap between Medicare and Medicaid, but for the most part the two populations are different. And not only that, the amount of overlap is going to vary depending on the state and the eligibility requirements of Medicaid in each state.
All right. In terms of what Medicaid covers, Medicaid is for more expansive than the acute care program of Medicare. Again, the Social Security Act lists a number of mandated Medicaid benefits which far exceeds those Medicare benefits that are mandated under the Social Security Act.
In addition, states obviously have the option to provide benefits well beyond this mandated list, again unlike under Medicare. They can cover prescription drugs, dental services, PT and OT, hospice care, etcetera.
Now, Medicare recipients also have freedom-of-choice rights like Medicare beneficiaries. However, under Medicaid the state can ask CMS to waive these requirements, which is unlike under Medicare. And consequently, states can have Medicaid managed care programs that are mandatory because we can -- we allow the states to waive the freedom-of-choice provisions.
In addition, Medicaid individuals have the same sort of appeal eligibility-- the same appeal ability to appeal eligibility decisions and claims decisions; and the state administers those appeal programs.
All right. As I mentioned before, the states can ask CMS to waive a number of things, including the freedom-of-choice program, state plan requirements, expand eligibility, etcetera. And that's basically a congressional requirement that looks -- I suspect when the programs were initially created, there is a difference between a means-tested benefit versus an insurance benefit under Medicare.
All right. So who are we talking about when we talk about dual eligibles? There are 40 million Medicare beneficiaries, 36 million Medicare recipients; and 6.2 million of those are dual eligible, so eligible for both programs. There are lots of different ways to skin that cat, but let's just be simple in our discussion this morning.
Individuals eligible for both programs do not lose any of their rights in the process of eligibility, so as a practical matter individuals who are dually entitled, have separate eligibility and coverage rights under each program and separate appeals rights and processes under each program including a right to make certain independent choices of providers under one or both programs, depending on the Medicaid waiver, a right to pursue choices and appeals of the rules under both programs at their own discretion. Of course, administered differently the state and federal government, depending on the program.
Because the beneficiary's entitlements are separate and often inviolate, it is not possible in most instances for CMS or for the states to coordinate their care. The laws allow them to live in the snarl of uncoordinated benefits. For these fundamental issues to be resolved, at least many of them, would require new laws establishing new relationships between the state and the federal government for these dual eligibles. There is hope. I'm getting there in a minute.
One factor that CMS considers in approving state requests for waivers and demonstrations is budget neutrality. Bottom line program costs must be the same before and after the implementation of the waiver or demonstration. And I'm sure my friend, Wendy Warren, who is on the panel and will be speaking to you later, will address this very crucial issue of budget neutrality.
Now, as a policy matter in determining budget neutrality, we've not permitted cross-program savings, which is to say we've not allowed the state to include Medicare savings for the waiver of certain benefits or the addition of additional benefits, et cetera, such as prescription drugs in their Medicaid program.
Now, with all issues that surround the budget and with demonstration projects and, of course, OMB, which is not CMS, is an integral part of this approval process. So even though that's our policy, it is not something that CMS has the sole authority to change.
All right. Dual eligibility from a beneficiary perspective. The statute limits our ability to change the Medicare managed care enrollment processes, which is to say because of freedom of choice and without lock-in, we can't require a dual eligible to stay enrolled in a Medicare+Choice program, even if that HMO had both Medicare and Medicaid. Now, the state could say, "If you want your Medicaid benefits, you have to be in it; but we can't, from a Medicare perspective, require that individual to stay in an HMO."
There is also clearly some confusion in Medicare+Choice materials that are distributed to the dual eligibles because a number of the things may not apply to them if they are enrolled in Medicaid managed care. For example, premiums and co-payments may not be relevant. The benefits may be different. And there is no doubt that there is confusion here. And our regulations, Medicare managed care regulations governing marketing are probably somewhat of an impediment at the moment to fix this, but apparently that impediment cannot be overcome-- or could be overcome.
With some limitations, demonstrations that focus on dual eligibles can't offer a single, comprehensive program of services, reducing confusion and allow the plan to streamline enrollment. But again given the freedom of choice under Medicare, they need to be voluntary from the Medicare perspective.
Now, what happens with duals and from a provider perspective, the statutory barriers and states rights to customize coverage and set fees on some occasions can prevent combined coverage and payment, which is clearly an issue. However, dual eligible demonstrations with integrated programs can provide provider networks. And we have a couple people on the panel this morning, Pam Parker and Mary Gavinski, who are going to talk about various demonstrations and how they have worked in meeting the needs of dual eligibles.
Now, from a health plan perspective, again these demonstration waivers have solved a number of the issues that exist, including the flexibility to determine whether to pay the health plan premium for enrollees in a Medicare managed care plan and to resolve some of the administrative requirements between Medicare and Medicaid.
I'm not going to discuss PACE since we have someone -- since Mary Gavinski can talk about this. But just generally PACE started off as a demonstration project-- or demonstration program that Congress decided to do to target the frail elderly, dual eligible population and a couple of others, but generally that's the target.
Under the Balanced Budget Act of 1997 Congress decided to make it a permanent program. We are hoping to finalize regulations to do that over the next number of months. But there are lots of lessons I think that we can learn from PACE and a couple of other demonstration programs that are ongoing that we hopefully would be able to do across both programs.
But let me move on because time is short. Now, totally changing gears to a different topic, which is data sharing, we've been hearing from states that they want lots more access to the federal data in order particularly for the states to identify who is dual eligible.
Recently this past January CMS informed states that we have a new and improved process for computer matching capability, so Medicaid recipients can be matched to the Medicare enrollment data base. What states would really like to have is for us to turn over on-line access to the complete Medicare common working file of paid claims data because that access would facilitate coordination of benefits and cost avoidance.
However, Privacy Act does not permit access to the entire common working file. As you might imagine, there are a number or a significant number or most Medicare beneficiaries are not dual eligible, so we have to consider-- or even if they were dual eligible, a significant portion of them are not in any one given state.
Nevertheless, by utilizing trade partnership agreements with Medicare carriers and fiscal intermediaries, states can currently receive Medicare claims information of dual eligibles through the cross-over process. We are considering allowing state access to Medicare claims files for adjusted, denied and paid claims for dual eligibles directly from CMS on a one-time basis. And those will be retrospective claims. And then states will have current, complete data for all dual eligibles via prospective current Medicare claims through the trading partner agreements I mentioned earlier. So hopefully this will give states the information that they need to make sure that both programs are paying appropriately.
All right. Which brings me to the next point. One area where data sharing is vital is in third-party liability. Now, third-party liability is basically an issue that's caused by two different payers, Medicaid being the payer of last resort. And Medicare being a payer primary to Medicaid.
Now, coordination of payment and services for duals is complicated by many factors, all of which I've mentioned earlier; different benefits, different eligibility, different payment methods, etcetera. When a benefit is covered by both programs, Medicare must pay primary, which is to say before Medicaid.
Providers should submit bills to the appropriate program. It seems easy enough. Whether it be Medicare or Medicaid. Then we wouldn't have this problem. However, it isn't always that easy to determine which program ought to pay in the first instance; or you could submit a bill to Medicare, and Medicare says, "No, I don't think we're going to pay that." And Medicaid says, "Well, I think you want to."
All of these cause problems for providers either way. So if Medicaid pays first and later determines that Medicare should have paid for all or part of the service, then the state is required by law to chase Medicare for the payment.
Now, providers get caught in the middle, and here's why. Medicare contractors require significant documentation to verify a claim. And that documentation may not have been submitted to Medicaid in the first instance or the Medicare contractor in those instances where claims were denied. In some cases, the state will not provide the provider until the outstanding Medicare payment issue is resolved. So the provider is stuck holding the float until Medicare or Medicaid can figure out who should pay.
In other cases, Medicaid has already paid the provider and is looking to recoup its cost from Medicare. And the result is the provider is responsible for pulling thousands of pages of medical documentation for which it will receive no additional payment, just so Medicare can pay Medicaid. Both situations clearly can cause a financial hardship on the provider. And I'm personally working on a demonstration project in New England to try to resolve at least some of those issues.
All right. Next big topic. Survey and certification. I know something else near and dear to many people's hearts in this room. Beyond the structural issues that separate Medicare and Medicaid as programs, there are other issues that affect the coordination of services among the programs and also between the states and federal government.
For example, in Medicare, there are statutory requirements relating to survey and certification of health care facilities. Under Medicare that requires CMS, requires us to contract with state agencies that do facility licensing for the state to also do Medicare surveys and certification.
These same agencies also perform the survey and certification functions for Medicaid providers at the behest of the Medicaid agency, which is a separate state agency. Therefore, our ability to control the staff who perform the survey and certification activities is limited to the provisions of our Medicare contract with these state agencies. Now, we do require surveyors to successfully complete federal training and to maintain professional licenses.
These are a list of the providers that we are required by statute to survey using this process. The statute also dictates minimum inspection frequency, which varies by provider type. So, for example, nursing homes need to be inspected at least every 15 months and home health agencies at least every three years.
Now, in addition to these statutory inspection standards, we must also inspect when complaints are received. Now, when a single provider has multiple lines of business such as skilled nursing, home health, outpatient therapy, each of these are subject to a different statutory inspection cycle. Now, while the number of inspections may seem excessive to an umbrella company, by statute we must treat each provider type separately. And welcome to silo mentality. And we certainly heard a lot about this in Pittsburgh when we looked at the multiple review requirements and how onerous it is on provider types.
So, as I just said, state survey agencies answer to both CMS and to their own Medicaid programs; but they have the independence to make some decisions and management choices on their own authority, which causes for significant confusion and tangled processes which result when the state's procedures are not well organized or where there are dissimilar goals between the two programs.
Now, we have intensified our efforts working with our state partners by doing more needs assessments, outstate surveyors generally; and we hope to soon implement a university-style training management system which would track state surveyor participation in training conferences, and we would do some pre- and post-testing both formally and informally to make sure that there is some consistency across the states with our state surveyors.
Historically CMS's survey approach was directed toward identifying providers that provided poor quality of care or failed to meet federal minimum standards. Surveys today are conducted with outcome-oriented survey protocols designed to concentrate on patient outcomes rather than process-oriented requirements.
Now, as much as we are pressured to reduce burden, we also hear particularly from our good friend, Senator Grassly, that priority really needs to be quality of care, and he's less worried about the burden on providers. Now, of course, our objective is to have a balanced approach which combines our responsibility to ensure that the essential health and quality standards are met and maintained while not killing the provider community in the process.
Certainly patient safety and health is the first priority for all of us here. And at the same time I think we're all interested in reducing the burden of providers without sacrificing that quality.
All right. To recap, the issues relating to care of individuals with eligibility for both Medicare and Medicaid are certainly complex and go to the very heart of the relationship between the federal and state government. The states in individual benies have a variety of legal rights that the law does not permit CMS to coordinate. We are, however, committed to working as hard as we can to ensure that we and the states coordinate our efforts to the maximum extent possible.
And we are also committed to state flexibility as evidenced by the Medicaid waiver process, which we've approved a whole host of the state and managed care plans. And we're also committed to the demonstration process, which those poor demonstration people, we have them working very hard in order for us to identify ways in which Medicare and Medicaid can work together to provide the most effective and efficient services to joint beneficiaries and ask for data sharing and survey and cert as always.
We look forward to your suggestions as to how we can make improvements in both of those areas within the statutory confines. All right. Sorry for the speed, but that's a lot of information. I don't know if anyone has any questions.
DR. WOOD: We do have time for some questions. Tony?
MR. FAY: Thank you very for your very fine and informative presentation. My question deals with deemed status. In a hospital setting or a home care setting and other types of setting you have an accrediting organization, such as the JCAHO accredit that organization. What I have seen is in different states the state survey agencies will either still do state surveys or not do state surveys or do some very minor survey. Has that been noticed at all at the federal level?
MS. NORWALK: Probably by the state survey and cert folks. I suspect it has not gone unnoticed. I think as a general matter, provided that we're capable of doing it in our statute, I think it's terrific if we can give deemed status where, for example, in the Medicare+Choice program where we've done it under a whole host of different areas.
It just makes a lot of sense to have the experts. As Peggy is pointing out to me, the key is really that we validate the results and provided that there is still federal oversight. That's really the key. But inasmuch as we could give JCAHO or other accrediting organizations some ability to do this, they certainly have the expertise, provided we do the appropriate training and all that, I think as a general statute would permit, it's probably a good idea.
DR. WOOD: Mr.Cummings?
MR. DEVEREUX CUMMINGS: Again excellent presentation. I've always been struck through the years about the cascade of surveys, and I wonder if you could advise us whether surveys are announced or unannounced and/or the frequency with which they occur? Is that a matter of statute, regulation or of contracting?
MS. NORWALK: Well, the statute does make certain enumerated requirements in terms of the frequency of surveys. So in that regard again it depends on the provider type, but generally that's statutory. Also, depending on it's often complaint driven. So if there are complaints from a particular individual, there may be a more targeted survey, perhaps not being overblown -- or not necessarily overblown, but gigantic survey. That's a poor choice of words.
VOICE: Not at all.
MS. NORWALK: Yeah, I didn't think you would mind that. Anyway, when it's more complaint driven, it will be more focused surveys, so it really depends on the particular environment.
MR. DEVEREUX CUMMINGS: Let me, if I can quickly follow up, hospital surveys generally are announced, except when there is a complaint. Home health surveys by comparison are always done on an unannounced basis. And so I'm curious whether that is a function of the statute, of regulation or some other basis?
MS. NORWALK: I am told from my crack staff that it's a statutory requirement, so we're all stuck with it unless you can convince our friends somewhere else that it is unwise.
DR. WOOD: Mr.Redding?
MR. REDDING: Thank you, Mr.Chairman. One quick point. You mentioned that MissWarring I think will be talking about states not getting credit for savings to Medicare, so I will reserve any question or comment until I hear from her.
But, secondly, I understand there is an effort on the part of the CMS to establish what's called I think national institutional review teams to assist in state plan review efforts. Can you comment on that briefly?
MS. NORWALK: Well, if it's the same thing that I think it is -- and Dorothy and David, you can correct me if it's something different -- one of the things that Tom thought made a lot of sense was to have two CMS individuals for every single state out there to work on a regular basis with the Medicaid state agencies, so there would be a more seamless, easier process in getting state plan amendments and getting the waivers through CMS and just to have a more collaborative process up front so the back end things went more quickly.
I'm not sure if that's exactly the same thing?
MS. COLLINS: No.
MS. NORWALK: Dorothy, go ahead.
MS. COLLINS: I'm Dorothy Collins. I'm the regional administrator for CMS in Chicago. The national institutional reimbursement teams are set up to provide a national, consistent review of state plan amendments related to institutional reimbursement. These are critical, important; and it was felt to form a single national team to provide that review would provide a consistent review, speed up the process and assist in that.
MR. REDDING: Just a quick-follow-up. Is this something already underway?
MS. COLLINS: Yes, it is. The teams have already been established. They're a combination of field staff and central office staff.
MS. NORWALK: Learn something new every day.
DR. WOOD: Dr.Nielsen?
DR. NIELSEN: You talked about what the benefit package is under Medicare. We were sitting at breakfast this morning talking about wanting to do the right thing for Medicare recipients. And the idea that we came up with is the following, and after hearing your presentation I'm assuming you're going to say bag it.
But here was what we thought was the right thing, to request that the Secretary commission a study to evaluate the cost effectiveness of preventive health measures for Medicare recipients. Now, he could do that, depending what happens to it after that would be the issue.
MS. NORWALK: And I would put money on it there are many studies out there that look at that already. There is certainly no doubt in my mind that preventative health care can save lots of money in acute care costs. But the fact of the matter is until we modernize the Medicare program, which is to say until Congress decides to modernize the Medicare program, we are stuck with what we have, which is an acute care system which I'm sure a number of folks here on the committee know from the dual eligible system is really problematic when we look at long-term care and the costs it gives the state.
But, yes, you could commission a study; but I'm sure that Congress would be very interested in the results, and I'm sure that we at CMS would be very interested in the results, but I could guess what those would be already.
MR. JINDAL: A couple of things. Certainly the Secretary has been a strong proponent of adding preventive care benefits to Medicare and to reduce or eliminate the cost sharing. And that's actually one of the president's eight principles for updating the Medicare program announced last July.
We do anticipate the House hopefully relatively soon, meaning in the next several days, several weeks, will be acting on a Medicare reform package that would include preventive benefits. So the Secretary is on record being in favor of adding preventative care benefits, as is the administration, in the context as Leslie mentioned of overall Medicare reform.
Notwithstanding -- and this doesn't diminish the support. Just in terms of being cost effective, which the Secretary absolutely believes it is, the official scorers of that study would be the Congressional Budget Office. They're the ones who determine whether a new benefit costs money or saves money.
And to this date it's been very hard to get a score that shows that things like annual physicals or preventive benefits would actually reduce Medicare spending. Again that doesn't diminish the Secretary's support for it or his strong belief that preventive benefits are the right thing to do and are cost effective. We've often heard him say it makes no sense to have a health care system that only treats people when they're sick, as opposed to preventing them from getting sick in the first place. But the good news is, despite that lack of a score, he is in favor of it. And I do think the administration will be working very hard on that in a context of the Medicare reform.
DR. WOOD: Well, I think one of the things we ought to keep in mind is that we think about the future and then these are going to be important subjects. I would agree with Leslie that there have been a number of studies which demonstrate actually that preventive services do not reduce long-term spending. In fact, they probably increase. They may change the distribution of dollars and the spending you might do on acute care.
But I'm struck by the difference between Medicare and Medicaid in the sense that Medicare is very much acute care oriented, and in an older population you have a group of patients who have chronic conditions. So we have a program that's structured to treat something they don't have. They might have had it when they were forty or fifty, but it's different when they're sixty or sixty-five or seventy or eighty-five even.
So when we think about the difference, that's a fundamental structural issue. I think the other thing about preventive things that is difficult is that the orientation to the care of older patients with chronic conditions is very different than the acute care model, and I believe most physicians actually don't understand this.
Most physicians are indeed truly acute care oriented and fail to understand that the important principle in the care of older patients is to preserve function. And that may often be considered to be preventive in a sense if you look at the Medicare statute. And, in fact, there are carrier medical director decisions that routinely come down that are really a misinterpretation of what this word preventive means.
So I would urge the group to keep in the back of your mind how it is we restructure to deal with chronic disease, which is a very different perspective. And the word perspective is probably one filled with too many other connotations, and we need to think more one of preservation of function as being our primary orientation and how we then create a system that will do that as its primary objective. We do need to have a discussion later today, so it's a good question; and all of you should keep this in mind as we think about it.
The scoring also becomes interesting, so I'm glad somebody brought that question up. It was clear in the Secretary's comments yesterday that we need to think about the scoring. And we as a group need to start thinking about how we are going to score our individual recommendations. Because the circumstances are that whatever we recommend we need to find a way that we increase the efficiency of the program and not simply spend more money to do something that is already being done in one way or another. The resources are not limitless, and so we've got to find a way to work within those these constraints. Miss Gigliotti?
MS. GIGLIOTTI: A quick comment, then question. I was heartened to hear about those national review teams when you were having a discussion with Mr.Redding, and my quick comment is when those national teams are considering the states, if they could look back to see if other states have received similar, you know, okay's for waiver, demonstration programs and those are working if they could reduce the burden and perhaps--
MS. NORWALK: No, we understand certainly the burden of getting waivers approved, and that's why we moved to have a number of sample or protocol waivers like the HIPAA waiver and the Pharmacy Plus waiver, so that states can follow a template as much as possible for quicker approval, so we understand that.
MS. GIGLIOTTI: Okay. My question is we are also going to be considering process, regulatory process. And with regard to states and the state Medicaid letters, just could you please comment on the ability of states to maybe have some kind of input in the development of a state Medicaid letter and in particular the impact it might have on states, etcetera, before the Medicare letter is sent out?
MS. NORWALK: I-- state Medicare letters basically do what I consider something similar to a program memorandum that we require our FI's and carriers to implement across the Medicare program. It really is meant to be a further clarification of regulations or statute.
I notice that somewhere in the materials that the subcommittee put out there was a question about this, and it doesn't go through that normal notice and comment that a regulation would, which on the one hand gives us considerably more flexibility in the timing of getting them out so that we can respond to issues quickly, some of which you may like, I might add, some of which you may not. It just depends on the particular letter.
Anytime we-- as a general rule I'm delighted to work with people, so it really -- as a general concept, I don't have any problem with it. I suspect it would just depend on whether or not we were willing to be flexible in whatever the policy was that we put out as to whether or not it made sense to share with you in advance. So I mean just to be frank.
But as a general concept, I don't have a problem with that. Of course, that's playing in someone else's sand box, so I would need to ask Dennis Smith what his thoughts were generally.
DR. WOOD: Mr.Schaeffer?
MR. SCHAEFFER: I've heard your comments about Medicare and the issue of acute medical intervention versus chronic was very important, and I will talk about it later. The issue about prevention is equally important. An argument can made if it's done appropriately and much earlier than Medicare program, it will actually lead to higher costs because people live longer and have more chronic conditions.
But the way to free up the money to do it is within Medicare's purview, and that is to change the way people die. That's where the money is spent. If we could change that, we would have enough money to cover everybody probably in the whole world, not just the United States. And it's a little grim to bring that up, but that's really what the focus ought to be. If we want to save money, we should change the way people die in this country.
DR. WOOD: Other comments? Mr.Fay?
MR. FAY: I just had an overall question. Some folks in different Medicaid agencies have expressed to me that there is a frustration with trying to set formularies, drug formularies, for Medicaid plans and have cited vaguely without any specifics a federal mandate either not to have formularies or that limits their ability to do formularies. Is that an issue?
MS. NORWALK: Well, in terms of their ability I don't think it's an issue that comes from CMS per se. It really comes from the lawsuits that pharmas brought against the states for implementing certain formularies or prior authorizational requirements, et cetera, and how they implement that. And how it's implemented not so much in the Medicaid program, but whether or not they use the Medicaid program as a stick to cover, to require that pharmaceutical companies to give rebates or to have prior authorization, etcetera.
If they don't give a rebate, then they get prior auth or whatever, and whether or not they use that sort of across not just the Medicaid market but commercial markets or perhaps other federal poverty limit levels, etcetera. So I think that that comes probably more-- the issue is really more pharma driven, lawsuit driven. And then, of course, we're constrained to what the courts say, depending on a particular circuit that they happen to be in and whether the court agrees with pharma or the state as to whether or not we could approve that type of waiver. Does that make sense?
MR. FAY: Yeah.
DR. WOOD: Leslie, thank you very much. I would like to go on to the members of the panel, and I'm pleased to introduce in the order in which they will speak people who have in some cases come a long way today to talk with us. But first will be Mr.Richard Bringewatt, who is the president and CEO of the National Chronic Care Consortium. Dr.Mike Meiners, who is the director of the University of Maryland Center on Aging will follow. Third will be Miss Pam Parker, who is the director of integrated purchasing demonstrations here for the Minnesota of Department of Human Services. Fourth will be Dr.Mary Gavinski who is the chief medical officer of Community Care Organization, Incorporated. And then last Miss Wendy Warring, who is the Medicaid director in the State of Massachusetts. We're pleased that they would come and share their insights with us today. We're going to get a computer set up. We have all of presentations loaded across the bottom, I see, so you get the lead.
MR. BRINGEWATT: Everybody has a first-- this is the first time I have arrived to do a presentation with a slide where the disc I put in didn't have a slide on it. And so what I would like to refer you to there is a hand-out that does have a copy of the slides I was going to use as a part of this, and it would be very helpful to me and I think to you in understanding the comments if you could go to those, and I'm holding up the one here that contains the slides on which I'll talk from. It's entitled, "Coordination of program issues, a framework for regulatory reform." It should be in the packet of all the committee members here.
For those who are not familiar with the National Chronic Care Consortium, the consortium is an alliance of health leaders working across industry segments to transfer health care for people with chronic conditions. Members include the full spectrum of primary, acute and long-term care. And we work across the spectrum of national organizations, consumer and plan provider organizations, health policy centers and states who are dually eligible, have dually eligible initiatives as the states that are represented here today.
The second slide will show a set of questions. My role here on this particular panel is to provide a framework for analysis, with special regard for three questions. How do we get beyond simply removing administrative burden to improving care? Secondly is what can we do in the short term to lay a foundation for fundamental reform over the long term without spending a lot of money? And, third, what are the most important coordination activities for states and federal agencies, public and private agencies.
There is a host of very important recommendations that I know is being considered. I won't go into the details of those, but there is a tremendous amount of administrative quality to them. And I think the question is what does this really mean long term for care of people with chronic conditions?
My first recommendation and the third slide organizing around the needs of people with chronic conditions is that you assess all of your recommendations in the context of the contribution it has to people with chronic disease and disability. People with chronic conditions are the largest, highest cost, fastest growing service segment in all of health care.
If you look at Medicare, 32 percent of Medicare recipients have four or more chronic conditions and account for 79 percent of all Medicare expenditures. And 80 percent of those dually eligible for Medicare and Medicaid have two or more chronic conditions, so it's a significant focus. And, unfortunately the insidious and destructive forces of chronic illness are really poorly addressed by this crisis-oriented acute care approach, as Dr.Wood just indicated a couple of minutes ago.
The next slide. Second, I would suggest it's absolutely vital to unlock our silo-based bunker mentality to decision making. As the chart shows, there is a plethora of programs for financing and regulating care for people with chronic conditions. And over time policy makers for each of these programs have come to view their own program as unique and distinct from all the other programs that serve people with chronic conditions.
And the programs and the provider types that are listed there have -- the providers have also adopted a similar kind of isolationist approach to protecting their own turf without necessarily having any regard for the cumulative cost and the cumulative quality effects.
Now, the fact of the matter is all of those programs listed on the slide are significantly involved in care of people with chronic conditions. I really applaud your effort to focus on the duals as a matter of priority. I would only suggest that you not forget the presence of other programs that also serve the chronically ill and maybe in particular those offered through the VA, which is really the largest provider of chronic illness care in the world. The department should do everything it can to help all programs serving people with chronic conditions to take off their blinders and to make whole cloth out of the current complex web of financing and regulations.
The third chart is intended to illustrate the progression of chronic illness over time and the relationship that exists among health and social service providers. The assumption is that all chronic conditions have their roots in a problem that is either genetically based or that is induced by an individual behavior, including smoking and proper diet, sedentary lifestyle.
And as these genetic codes and other behaviors progress with age, other environmental factors, biological symptoms begin to emerge that if left untreated can lead to a stroke or a hip fracture or another disabling event or to a stage of disability that requires permanent, ongoing support from the spectrum of primary, acute and long-term care providers.
Under our current health care financing and regulatory approach, we function as if care is managed from the front door to the back door of each health care institution, most of which have their roots in 1965 health policy. We function as if there is really virtually no relationship between public health, primary care, acute care and long-term care.
We develop policy without any regard for the inter-dependence that exists among those who serve the very same person either at the same time or in sequence to one another as their conditions evolve over time. Our current system undervalues prevention, and I might add not only primary prevention, but secondary and tertiary prevention.
The approach, the orientation of how we approach care yet undervalues collaboration, innovation and community care services. And it contains disincentives for targeting and serving the most vulnerable and the most complex and the most high cost cases.
Specifically CMS research shows that current M+C financing overpays the most costly 20 percent of Medicare enrollees by about 50 percent in relation to fee-for-service and overpays the least costly 20 percent by almost two and a half times. It is highly unlikely that any risk adjustment method will fully compensate a plan for targeting and serving high risk beneficiaries as a matter of priority without some sort of frailty adjustor or other supplemental payment.
Similar problems also exist in fee-for-service. Physicians who specialize in care for frail, medically complex beneficiaries report major financial and regulatory impediments to serving this high risk population. Hospitals generally experience more frustration in financing their medical unit than in their surgical unit. Nursing homes frequently have more difficulty in financing care for the complex care patients. Home health agencies find it easier to a serve a simple post-acute problem than those with multiple medical and functional complications.
Health systems that want to offer a full continuum of care and want to specialize in care of the chronically ill find it much easier to reinforce hospitals or nursing home as their core business and to not take into account the cumulative costs in quality effects, even though they may have an interest in doing so.
So if HHS wants to have the greatest impact on cost and quality over the long term, I would suggest that the department focus most of its energy on resolving the complex financing and regulatory issues associated with serving people with or at risk of late stage chronic conditions or where the presence of frailty and co-morbid conditions produce a quagmire of financing and clinical confusion.
Problems of chronic illness care cannot and will not be resolved until the focus of financing and regulations moves from fine tuning payment for existing provider segments to paying for performance in serving people with complex, acute and long-term care needs, regardless of the method or industry segment that may benefit or not benefit. The last two slides-- quick comment.
DR. WOOD: Your time was elapsed, so can you wrap up quickly, please?
MR. BRINGEWATT: Okay. The last slide shows ten recommendations that I think have a potential for leveraging the kind of reform that's necessary in the short term that has potential for producing long-term results. And if you would like to get into specific questions regarding each, there is a position paper that has also been distributed in conjunction with this, and I would be available for question and comment.
DR. WOOD: Very good. Thank you for a good start. Dr.Meiners?
DR. MEINERS: Good morning, everyone. I'm happy to be here. My name is Mark Meiners. I'm a professor of economics and policy at the University of Maryland, and I've had the opportunity over the years I've been at University of Maryland to work on a number of multi-state initiatives with the Robert Wood Johnson Foundation.
And what I'm going to talk to you about today most is the one dealing with Medicare/ Medicaid integration, since that's the topic of the day. I did just want to comment on a couple of things that I've heard. The notion of silos, for example, I think one of the things we're concerned about in doing this initiative is that in some sense silos exist in CMS. Medicare/ Medicare.
And the notion over the years has always been that Medicare is the big dog. In essence it's the big program that gets most of the attention. And I think what we're trying to emphasize here in focusing on the duals is not just that it's an important group of folks to work on because they're quite vulnerable and costly, but also that they can help us invest in lessons learned for all Medicare reform, so that's kind of going to be the theme of my talk today.
The program that we've been working on with a number of states is an $8 million investment of the Robert Wood Johnson Foundation as well as CMS, and we've been working with fourteen states around the country. And you can see that we've got a web page, and we do technical assistance meetings and have technical assistance materials, many of which have found their way actually into some of the materials that you have I'm pleased to see.
Just to emphasize again -- I think you're kind of getting the drift of the dual eligibles being an important population -- these statistics really hit home for me when I look at it. Because you can see that not only do the duals make up a significant proportion of both Medicare and Medicaid, but they also disproportionately, dramatically disproportionately comprise significant amounts of each of those program's costs.
But as you've heard today already and as you'll hear more, Medicare and Medicaid are very different programs, and they don't work well together. And so the point of this is we've really made an investment already. It's probably that we don't to anywhere near as well as we could.
So why the interest in duals? Well, of course, the important financial considerations. But once you get beyond that, there are many other considerations that, and that really goes to the heart of why I wanted to invest in this notion of Medicare and Medicaid really working well together on behalf of all Medicare beneficiaries.
Because when you have this kind of situation where programs are quite -- are different, you can have cost shifting, as we've heard about, where people really aren't sure who is paying the bill, where people are trying to get away from paying the bill, energies that aren't really very productive.
We can have a situation where there are very many unintended consequences for the consumers in particular. Situations, for example, where you might have as many as one or two different care managers, both thinking that they're the one sort of coordinating this person's care, when in fact part of what the struggle is to just deal with a whole another person who has the same responsibilities.
So I would argue that it's really an opportunity to do better with limited resources that we have. The resources aren't that limited, but we all know, as with any of these problems, you know, there aren't going to be unlimited resources, and so we need to do better.
I think it will have implications for managed care. I know that we have sort of a love/hate thing going with managed care, but I think managed care is better than unmanaged care. And as we look to the future, particularly for populations who are in need of chronic, who have chronic illnesses and are in need of the full continuum of care, which is the aging population, we're going to have to do a better job with respect to how those services work better together. And managing that continuum is inevitably important.
Now, the good news is that we've really been struggling with this issue of integration of acute and long-term care for years. We've got some models out there. Social HMO, PACE, EVERCARE, things you may or may not have heard of. But the reality in PACE you heard about this morning has actually become a national program.
But the reality is that the details of those programs have morphed into some of these dual eligible programs. You'll hear today from two of them. Actually two of our, quote, unquote, holy grail models in the sense that they do fully integrated care. Minnesota Senior Health Options and Wisconson Partnership embody elements and learning from each of the other programs that are on that slide. And I won't go into those details. I'll let other people use their time for that. But suffice it to say that we have models. We have lessons learned. They're working models. It's always good to have a place to start from that you can really point to and learn from.
There has been a lot of challenges. When we got started in this in 1996, 1997, we knew we needed waivers. You're not going to escape, and that has always been a tough challenge, but then BBA came along and introduced different payment structures. And we had sort of a backlash on managed care, which was kind of the way the program was predicated in the first place.
There is also state turf battles with different competing agendas, and now we have sort of an ebb and flow in the business cycle and economic problems, so it's not without its challenges. But I think the pay-off is going to be there be, and we need to invest and think of it as an investment in the lessons learned by focusing on duals to really learn how to do chronic care systems for all people.
Now, one of the things additionally that we've learned from the struggle, and it's a frustration, but it's also a good thing, is that when you work with states -- and states are key actors here because they've got the action on the Medicaid program -- there is a lot of different diversity, a lot of program diversity related to their goals. Who do they want to target in the program? Things like variations in the managed care infrastructure. Differences in the Medicaid program. All these things lead to different mind sets.
So even if you take one idea and introduced it into five states, it's very likely that the nuances of those five of that one idea would be quite different in those five states for the reason that there is this diversity.
In fact, we've experienced a situation. I mentioned before this holy grail over here, the fully integrated care model. Well, as we've worked on this program we've realized that you need to have a broader mind set, or you will get in the way of progress. We need to embrace states like Texas and Florida that have taken what we call a partially integrated strategy, where some of the benefits are managed on a fee-for-service basis where others are capitated.
And we've even learned in a number of our states where there is not a managed care infrastructure and maybe there is a fear of managed care that managed fee-for-service, the notion of trying to introduce principles of what sometimes is referred to as primary care case management is something that will help Medicare and Medicaid work better together.
I would submit to you that each of these levels of integration are important. And we need to support each one, and they each have nuances that things get in the way of helping. And that's some of what you're going to be discussing I'm sure.
Now, that last slide reflects from my perspective the opportunity to do the macro, allow structures within which we can learn the lesson of integrated care to be done. Once you do that there are many what I call micro issues, the building block issues that we focus on. The notion of care management and how you do it well. How do you target beneficiaries and who do you target? The role of the primary care physicians which I think is critical. Quality measures and methods always is important, very challenging.
And even more challenging sometimes is the notion of putting together information systems. It tends to be a black hole. Big, expensive things that everybody seems to want to do their own way. These are the micro things, though, that we don't get right unless we have sort of the macro structures within which to work. And so we're working on that.
I would suggest that's one of the reasons why you want to be supportive of demonstrations, because you won't get to the real micro, personal, consumer-based fixes unless you have that mind set of letting the structures really entice people to seek those out.
So the demographic imperative, which is what we're all kind of up against -- well, let's face it, it's still in the future, you know. If we want to, we can think it's in the future, but I would suggest that we need to invest now so that we're really ready for the future. I think all of those in the room know that.
There are many complimentary and competing agendas that you can look to and really fit within the structure we're talking about, be it prescription drugs, be it uninsured, focusing on people who are pre-duals and not yet eligible. We talk about prevention. You want to prevent people from becoming a dual. You want to intervene when they're Medicare only so they don't become duals if you can. States certainly want that.
Olmstead is prompting more interest in home and community care benefits. That's embraced here. Chronic care management rather than just disease management, the motion that you need to be looking at multiple diseases and what that means.
Consumer focus. Ultimately we need to be and want to be consumer focused. That's getting a lot more attention, but it's more that buzz word. But in spite how "consumer knows best" is not as well embraced in health care it is really should be, and it's going to need to be, consumers need to be co-producers of their own health; and we need to seek out models that do that.
Finally, I just wanted to highlight that in all my remarks so far I've really been focused on a program that's been near and dear to me for some time now, and that's this Medicare/Medicaid integration program. We've got working models, a lot to learn. But there are a couple other programs out there, and I don't think when it comes to sort issues of the long-term care that there is any one fix.
There is another program out there that's operating in four states that I saw mentioned by someplace in the materials you have. Public/private long-term care insurance partnership. A number of states have actually figured out a way to use Medicaid as an incentive to help people solve in essence the very difficult trail between good quality products and affordability of those products. And I would suggest that right now there is some regulatory restrictions on those that really get in the way of replication of what a model that I think is very important to encourage people who aren't yet eligible for Medicaid to put aside the resources to pay for that long-term care side of the equation that can fit well with Medicare.
And also the notion of consumer direction that I just touched on. There is another program that's experimenting with actually offering cash to people to help them find their own way of delivering services, personal care services. And there are some restrictions on how personal care services are defined. And so allowing those personal services to be defined to include assistive devices, for example, is another thing that I would suggest the committee might want to take a look at.
These are small fixes, but they create an atmosphere of "can do, want to do" to solve problems. And I would suggest that working with demonstrations and working with some of these strategies and with other players like the Robert Wood Johnson Foundation is a real great way to get there. A lot of lessons learned. I think it is an investment in the future; and sometimes you invest in poor, vulnerable people not just because they're poor and vulnerable. Because what we're trying to do for them needs to be done well, and that's something we want done for all of us. So I think with that I'll just close.
DR. WOOD: Thank you very much. MissParker?
MS. PARKER: Good morning, everyone. Thank you for the opportunity to be here today. I want to talk to you a little bit about what is possible under the current regulatory authorities and what we've been able to do with a lot of help from CMS in Minnesota with a special demonstration. We have worked out the myriad of details between Medicare and Medicare to make them work better in this demonstration. We call it Minnesota Senior Health Options, and we have now added another program called Minnesota Disability Health Options, and we have one of the founders of that program here today, Jeff Banesberg.
CMS approved a Medicare payment demonstration waiver for us. We are able to integrate all Medicare, Medicaid and long-term care services through these demonstrations. We've been operating since 1997, and we have about five thousand enrollees, close to it. Forty-eight hundred and some.
It is a voluntary demonstration. We're in ten different counties in Minnesota. Services are provided by three fully capitated health plans; Medica, Metropolitan Health Plan and U-Care Minnesota. We have representatives of those plans here today. And a number of the providers, care systems, clinics that are focusing on dually eligible and chronic care for seniors and persons with disabilities now added through our disability program, that's what makes this program go, those providers and health plans working together.
We have been a local marketplace success. We've had health plan interest, provider interest in expansion. Consumer satisfaction has been high. We've had high market shares. We've increased access to community service, as well as reducing institutional services, and we serve a very ethnically diverse group. In the senior program, 40 percent of our community groups are Hmong seniors or southeast Asian seniors.
We have taken the existing models out there of PACE, M+C, and EVERCARE, if you're familiar with those programs; and we've put them all in one program, rather than having them all in separate programs. And we've gone beyond them. For M+C we use that as a base. We add Medicaid and long-term care to Medicare. And that helps align the clinical and the financial incentives to support better practice patterns and better clinical care.
We've gone beyond PACE by adding the community population that's not yet frail, although they're becoming more so, and we can do more prevention, keep them out of the nursing home before they get there. And then we also bring, mainstream, bring chronic care resources to mainstream clinics where most the people are going to be served, anyway.
And we go beyond EVERCARE by adding Medicaid. Where EVERCARE program serves people in nursing homes and just serves mostly provides the Medicare services, we add Medicaid to that. And then we also do the community population, which EVERCARE isn't able to do under its national demonstration. So we combine all those things, and EVERCARE participates here in Minnesota in our program, too.
And we're able to link then primary acute and long-term care services, kind of a one-stop shopping for all the services for an individual. It helps them navigate the system better. And we're able to be more flexible in our provider payments. Pay for some of the things that you don't get paid for under the fee-for-services to like extended visits, nurse practitioners, that kind of thing.
And we've also streamlined the administration. And some of the ways that we've streamlined the administration for the dual consumers, I was glad to hear Leslie talking earlier about the issues of the enrollment patterns -- or the enrollment forms and the member materials and things like that. We really feel that we've arrived here finally, Leslie, when we're hear CMS talking about same issues; and we really appreciate that.
But we've been able in this demonstration to merge those member materials so they don't, they aren't conflicting for individuals that are dually eligible. We've got a single enrollment process. We've been able to coordinate the Medicare and Medicaid coverage in appeals process, so that you don't have to wait until Medicare has decided what it's going to do until you can go ahead and pay Medicaid. These plans are at risk for the whole thing. It's a no-brainer. If they know they're going to cover it, they don't have to even worry about that part of it.
So-- and the health plan, from the health plans standpoint, we've merged all these contract requirements for Medicare and Medicaid and made them make sense. So resolve some of the conflicts in policy that we have between the two programs. And for the providers I mentioned the flexibility in payments, the contracting. Our health plans are able to contract with them in a variety of ways that suits their purposes so that they can do what they need to do.
And I think we've increased collaboration and innocation, and we can substitute benefits without worrying about cost shifting because we're all in one big pot, and they're both capitated and we know what we're each going to have to spend.
Our waiver process was difficult because of the confusion and because of the newness of these ideas of how do you resolve the conflicts between Medicare and Medicaid. But I have to say there was at lot of creative leadership at the staff level, low levels of staff at CMS to helped get us to the point where we are.
We have some recommendations what we can do to improve these programs, to keep them going and to encourage more programs like them. I think we need to make it clear what this waiver path is, develop some clear templates to make it easier for states and providers to pursue these integrated demonstrations.
We need to address the risk adjustment problem. The new 61 condition model that's being considered for M+C plans is not appropriate for the small, concentrated plans that have all high end people. You know, dually eligible are much more costly than the normal population. You don't have an average distribution you're providing care for these people. So we need some kind of other risk adjustment factor. We've been using the PACE risk adjusted factor, the risk adjustment factor, that's what's been applied to our program. But OMB objects to that factor and says it's not properly researched.
And so here we're wondering what's going to happen to us because the future says we're going to have risk adjustment. We believe in it. We know we need it, but the models that are out there aren't appropriate. CMS has promised to work on that with us, and we are looking forward to that. But, of course, that injects a lot of instability into our demonstration with providers being very nervous about what's going to happen. So we're asking to be very involved in that.
We also see that you can do some of what we're doing by not having a special demonstration. In some states maybe just piggy-backing your Medicare and your Medicaid on top of each other with no demonstration whatsoever and just the state and the health plans getting together and deciding what they're going to do.
But we need some administrative clarification of whether some of these administrative things that we've been able to do in the demonstrations like merging materials and doing enrollment processes and things like that that are more streamlined, can we do those outside of a payment demonstration? It's not clear whether Medicare has authority to do that. We think maybe they could, but I think they'll have to be the judge of that, and we're waiting to hear from that.
We want you to consider the interactive effects between Medicare and Medicare in terms of budget neutrality. Wendy is going to talk about that.
We love the PACE program. It's wonderful, but it's too limited. We want to see expansion and see CMS embracing expansions of that concept by going beyond it to serve, to have similar programs like what we're doing here in Minnesota for all the chronic care populations, not just the frail elderly in the community, which PACE serves so well, but also the people that are before they're frail, the dually eligible prior to their frailty status and the nursing home residents who need it also, like in EVERCARE.
So we want to see models like ours and combine all of these things so you don't have to go, you know, enroll in one program when you're like this and then in another program when you're like that and you meet another criteria in a different program.
And we need to also expand PACE concept by bringing the kinds of chronic care resources that PACE has to the mainstream clinics where most people are going to be served because most people are not going to give up their primary doctor to enroll in a little, tiny staff model, which is what most of the PACE programs are.
So and then finally I would like to say, of course, what we're-- the providers that are here today that have put so much investment and so much time in MSHO and MnDHO, our two programs here in Minnesota, they're sitting out there in the audience, and they're waiting to hear what their future is going to be. We're hoping that there is a way to make this program permanent. We've been going for five years. We've had a lot of success. We're concerned about how we can become a specialized M+C plan or something like that, so we can go beyond the demonstration status and become a permanent part of the way of doing business here in Minnesota for both Medicare and Medicaid.
And so that's what we're looking forward to in the future hopefully with your help. So we think a lot is possible. We're one model that demonstrates how much can be done under current authorities. And I think with maybe some tweaking of those authorities or even expansion of just what we're doing under those authorities, you can do this in other areas. And we would like to help support that, and we would also just like to say it's very important to preserve the energy and the efforts that these providers have made to make this happen here. And that's what our main point here is today. So thank you very much.
DR. WOOD: Thank you. Dr.Gavinski?
DR. GAVINSKI: Thank you for giving me the opportunity to speak with you today. I'm going to be talking as a representative community care organization, and we have been running the PACE program in Milwaukee since 1989. We also run the Wisconsin partnership program in Milwaukee serving the frail elderly in that program.
In the short amount of time, I am sure that I'm not going to be able to cover everything that's in my written comments, but I would like to say that it is very important that you look towards these programs for the dual eligibles and look to not only what has worked because I think the high quality of care is definitely there, but also some of the struggles that we've had in the regulatory environment. And then give you some keys into looking at incorporating to your project.
Both of these programs I hope you are familiar with. They are dually eligible people. We coordinate and provide either directly as in PACE or through contracts the full range of preventative primary, acute and long-term care services needed to maximize our participants' independence and functioning in the community. And as Dr.Woods was saying, that preventative or keeping people functional is really important when you're talking about the dually eligible, frail, elderly populations.
The PACE program has been working with CMS and the Medicaid services to address operational rigidities created by the initial interim final regulations. And I'm framing my comments and suggestions based on my experience as a clinician as I remain a primary care physician in our PACE and our partnership program as the medical director and as the past president of the national PACE association's primary care committee. I've been working with community care organizations since 1989, and in 1996 is when we operationalized the State of Wisconsin's adaptation of PACE.
I hope to-- I'm not sure what I have to push here. I hope to convey my unequivocal belief that these programs truly demonstrate the highest standard of care for the dually eligible population. One would be hard pressed to find the combination of extraordinary high quality, outstanding care coordination; and I think these models definitely show the care coordination that can occur in these type of programs and the safety net for our most vulnerable populations.
This ongoing management of the care, cost transitions in care settings, health status changes and functional changes is essential to a model of integrated care. I believe that these models should be seen as the standard of care for this population and perhaps the elderly population as well. So a lot can be gained not only in how these programs do care for their populations, but also what is the standard of care that Medicare should look to or Medicaid should look to when they're looking at both acute care and long-term care services?
The integration of Medicare and Medicaid dollars, along with the flexibility to develop care plans based on the frail older adult's needs instead of rigid Medicare or Medicaid guidelines allows us to improve the quality of care they receive and deliver more cost effective care and care plans.
I think that our ability to intervene quickly when a family member comes to us or an ancillary staff member comes to us, that a physician or a nurse practitioner can come in, see that person, make a diagnosis and begin treatment in a few hours in what may take a few days to a few weeks in the traditional system is really the key elements in these programs.
It's important that the federal government looks to integrating the states and the community systems in looking at some of the standardized operational programs that are going on and eliminate opportunities-- and not to eliminate opportunities for individual programs and their states to integrate the model within states' existing long-term care settings and allows us to continue to adapt to the conditions of the state, consumer preferences, work force availability, physician hiring practices in efforts towards this end.
We are enormously appreciative of Congress's passing the legislation as part of the Benefits Improvement and Protection Act of 2000 calling for more flexibility in implementing PACE. And I think that as Pam has illustrated, I think PACE has really gone beyond the operational model that was initially suggested; and we're looking to CMS and working very closely with our state to continue to push the model.
Indeed, the State of Wisconsin, Wisconsin's partnership program was developed as an adaptation to the PACE program. And I think that in this program we are really looking towards taking the best elements of both of these programs and continuing to improve the kind of health care that we can give. I'm hoping that five years from now our program of Wisconsin partnership and PACE program will look different but being able to combine the elements that are important.
In addition to the federal PACE and Wisconson partnership regulations, PACE programs comply with federal requirements that also apply to Medicare, managed care programs, Medicaid managed care programs, our individual provider-type regulations and varying levels of state and local regulations.
Because of the broad range of services we provide and our role as both a direct service provider and a payer for contract services, PACE programs are subject to an array of requirements infrequently applied to a single entity. Further complicating the situation is that some PACE providers are relatively small. While size is not an impediment to providing high quality care, many do not have large numbers of non-clinical staff to devote exclusively to regulatory compliance.
I am hopeful that these programs do not get so micro managed, as the nursing home industry currently is, that we see that the amount of time being spent on regulatory and survey oversight is more so than the clinical care. I think I've seen as an experienced clinician in some of the large urban nursing homes in Milwaukee, we have half of the clinical staff just doing paperwork. And I can tell you that that clinical-- that the care that has occurred in the last five years has not improved because of that.
Also because both programs serve a large dually eligible population, we face both federal and state requirements and some of which are overlapping or even conflicting. PACE provides a working example or laboratory that can be used to analyze the prevalence of duplicative and/or overlapping requirements. And this may be difficult to undertake in the abstract; but I think if you look at the PACE program, you would be able to see where we might be able to streamline some of this data collection.
Also, we're faced with the communication of regulatory requirements from the federal government and states. And we're looking to you to make sure that the regulatory requirements are planned, that there is clarity, that they're timely, that they're coordinated with our state, and that perhaps that there could be a compendium of all the requirements reviewed by one entity.
I would like to say that because we are now falling under the Medicare+Choice requirements, we spent over nine months and a hundred thousand dollars -- and we're not a large organization -- on the data require elements that we were going to have to do before the 61 elements came into place. Then they decided to halt that process and revise how these data requirements were going to be asked of us.
Of that hundred thousand dollars and hundreds of-- or over a thousand person hours of time, we're probably not going to use much, if at all of that effort. All of that money could have been used or a lot of that could have been used on much more improved quality for our participants.
So in wrap-up recommendations, allow and encourage the states to grow, expand and innovate integrated programs. These programs really do work. They are not the "end all, be all," but they are an evolution. Use them as a model. Use them as standards of care. And allow the states, allow the programs to work with the states to continually innovate.
Allow and encourage continued innovation and adaptation of existing programs. Don't lock us into our current programs when health care systems change and health delivery systems change and we learn new things.
Review duplicative or conflicting federal and state regulations and develop a compendium of these requirements.
And, finally, as a request from the national PACE association, we're asking that you review the hiring of staff requirements for new PACE programs. A one-size-fits-all requirement for integrated programs is not always feasible. So the M+C choice plans do not always fit what these integrated programs need. Thank you.
DR. WOOD: Thank you, Dr.Gavinski. MissWarring?
MS. WARRING: Good morning. My name is Wendy Warring. I'm the commissioner of Medicaid or Mass. Health in Massachusetts. It's a pleasure to go at the end of a very erudite panel. I've been at Medicaid in Massachusetts for a year and a half and have about probably a sixteenth of the experience with dual eligibles that everyone else on the panel has.
Nevertheless, I'm here today to try to give you a little bit of the state perspective. There is testimony that we have filed on behalf of the National Association of State Medicaid Directors. It's the testimony with APHSA at the top of it. And that has sort of the compendium of comments from our dual eligible tag, which was recently formed and which Gail Arden and I are heading. I assume that is mainly why I'm here.
But, nevertheless, I'm going to talk to you about three issues, which aren't quite connected, but I like to think of them as cost, access and quality. The first, cost, is the TPL maze. The third-party liability maze. This slide is just intended to illustrate primarily the three ways in which we deal with third-party liability issues. Nursing homes, pharmacy and home health. Leslie talked a little bit about a demonstration, and I'm going to give you just a second of background into that demonstration and what we're dealing with the home health arena.
As Leslie mentioned, the third-party liability issues are very difficult not only for providers, and they are very difficult for providers, but they're also incredibly difficult for the Medicare and Medicaid programs. I think in this area, both programs share increased burden and increased cost. And the name of the game, as somebody here said, is making sure that we're not adding to the system in a way that makes the system unsustainable. This is an area in which we are adding cost to the system without adding value, and we need to figure out how not to do that.
The third group affected, of course, in addition to providers and the Medicare and Medicaid programs, is the beneficiaries themselves. Because of conflicts between the rules in Medicaid and Medicare, home health providers have sometimes unintended incentives to provide care in a certain way or to bill in a certain way because of the lack of coordination among the programs.
This slide simply illustrates that over the years we have-- we cost avoid and we select a group of claims in which to review. And the process by which we review those claims eventually yields 58 percent recovery, so we do better than half. The question is in doing better than half, meaning recovering more than half of those claims that we question as being, instead of being Medicaid claims being instead Medicare claims, is it worth all of the time and effort that has gone into recovering that amount? Clearly under the Medicaid rules, we are obligated to do that. We must demonstrate that we are the payer of last resort. On the other hand, if you're looking at the amount of effort that goes into it, the question is is that cost effective?
This slide simply shows some of the administrative burdens of the three providers. We have the lost ability to cost avoid, lost credibility with providers, potential to jeopardize care. Medicare has an entire system, the FI's and ALJ's.
In the interests of time I'm just going to describe our system. We have not solved the problem. We have fashioned what we think is a good temporary solution to the problem. And that is as follows: Instead of aligning, as I know this committee is trying to do, all of the complicated Medicare, Medicaid rules with respect to home health, we have agreed that we will take a sample of claims every year that we identify by certain trigger events. Those include, for example, high skilled nursing provision.
We have identified certain cases in which it is clear that Medicare and Medicaid have conflicts. We will take a sample of those, review them in detail with Medicare, identify the percentage of claims, of those contested claims that should be paid by Medicare, those that should be paid by Medicaid. And then apply that to the entire sample of cases that are in dispute. In other words, instead of adjudicating every claim and determining in every case whether it's Medicare or Medicaid that will be responsible, we will use a sampling methodology that will take the provider out of the picture.
And that is the most important piece. We think it's creative. We don't think it's the big fix. Nevertheless, in an effort to take costs out of the system, we've got to have these interim solutions. What we hope it will do-- let me go back. What we hope it will do is solve one of the bigger problems, and that is identify and allow us to educate fiscal intermediaries, as well as home health providers, about ways in which they should apply the rules more efficiently. We will identify certain problems that come up repeatedly. We will educate both the FI's and the providers about ways to treat claims initially differently so that we eventually reduce the sample of errors.
This is just a sample of other sort of administrative issues in the other areas that we've talked about; nursing homes, especially pharmacies. This is an example of ways in which Medicaid and Medicare continue to develop separately and continue to multiply the problems that they are going to have in the future. So as we talk about solving problems on an interim basis, what we need to also make sure we're not doing is continuing to multiply the problems.
The MDS system is an example of a way in which I think we are multiplying problems. We have now the minimum data set, and we had -- which we're using in nursing facilities. The instrument that is compatible with that which could be applied with community populations was MDS home care. Instead we are using OASIS.
This is causing enormous problems for providers. It is making it more difficult to integrate information in the future, and it will continue to accelerate not only all the data integration problems that you've heard about, but also administrative problems for providers by adding costs to the system. And there are other examples of that.
You've heard a lot about the fact that I'm going to talk about the budget neutrality and pharmacy waivers. The first thing I would say there is we've got to decide what program is supposed to provide pharmacy benefits for our dual eligibles and for our senior citizens. In one way, the states thought that Medicare had sort of finally awoken to the idea that it could really save money and decrease pressure on the program by granting waivers to the states.
In other words, instead of providing a pharmacy benefit at full federal cost through the Medicare program, it could provide that program by sharing it with the states. And so we thought great because they will be very flexible. Medicare will be very flexible. Medicaid will be very flexible in the way that it allows those pharmacy waivers to be granted since it should realize that in fact it is getting half of the states' contribution to costs that could be sole federal costs. Yes and no is the answer to that.
It is allowing -- Illinois has the template that has just been approved. And that template in essence tries to cap the expenditures for elderly and disabled populations and thereby puts states at risk for covering-- for bringing in a pharmacy benefit for seniors that puts states' entire Medicaid program at risk of losing FFP once it exceeds that cap.
I don't have time today to sort of go into all of the budget neutrality models, nor to sort of explain sort of the difference between an 1115 budget neutrality model that states have been using and the budget neutrality model in the template. Kaiser has put together a nice, four-page explanation of the Illinois waiver and what the risks are.
Needless to say, the main risk is a caseload risk, as well as sort of an unusual cost risk. For example, what goes into the base? We are all facing pressures now that are increasing nursing facility rates because of decreasing occupancy, meaning nursing facilities are operating on a smaller base that causes their rates to increase. There is no flexibility in the cap for that.
We have been working in the tag with OMB, and it has been terrific having discussions directly with OMB. We understand the issues of not allowing the-- of being concerned about applying Medicare savings in this context to the Medicaid program, that it will open up a whole list of issues not only for the Medicaid and Medicare programs, but for programs across the federal government.
But the one thing we heard was that we can't demonstrate that there are savings that will inure to Medicare from pharmacy waiver, and we think that's not true and that we should take lessons learned from the PACE and other integrated care models and apply them.
PACE does show-- I'm going to skip over all these slides -- that in fact there are great savings from providing integrated care, including pharmacy benefits, to reduce hospitalizations. And that is if you're going to run a demonstration like PACE or the other integrated models you've heard about, you should be able to learn from those and apply them to other issues like the pharmacy waiver.
Here states have demonstrated in fact that by providing integrated care with pharmacy benefits, they are able to reduce acute hospitalizations. And that's a direct Medicare savings; and it should be, therefore, at least discussed as to what the issues are in not allowing those savings to inure to the states or in some way working out the integration of that.
The last issue is Olmstead. Olmstead is an issue that we consider because it looks to us like this is just going to increase in terms of the balance between Medicaid and Medicaire in caring for those with chronic illness and carrying for dual eligibles. Olmstead is an initiative that is going increase the state's burden because, as you know, Medicaid pays for long-term care services. And the emphasis in Olmstead is on really supporting people through very flexible benefits in the community, reducing sort of the kind of model that has acute care.
I laughed the other day -- when I first learned about CMS, the letter that I got introducing CMS. There was a small typo. It said this is the center for Medicare and Medicare services. The other day I got a letter introducing, discussing the Independence Plus, a demonstration program for family and individual directed community services template. You know, something again asking the states to be creative and think about how they can improve community care developed by the centers for Medicaid and Medicaid services.
I think that sort of says it all. And we really do need to discern how we are approaching sort of our models. Olmstead should be-- is a directive really to the government. It does apply to the states and not the federal government, but without Medicare's participation, it is almost going to be impossible for states to comply. In fact, Medicare rules will make it harder for states to comply.
Policy recommendations, I'm going to run through these very quickly. I don't know about you but sitting here today it is very difficult to integrate all of the information that you have heard. There are many recommendations. I did read the initial report. There are both statutory and regulatory changes.
Some of this is going to be about process, about how to coordinate an agenda and decide priorities. As you heard today, scoring is going to be important. We do have to decide our priorities. We have created a high level strategic planning group for dual eligibles sort of with a tag, but again it has taken a long time to try to get Medicare fully invested in that process. This is still seen as a Medicaid issue.
We've got to increase the number of CMS staff dedicated to dual eligible issues. In order to really cross-fertilize, Medicaid does have to appreciate more Medicare's issues, but the other way around is true as well.
Prepare policy guidance for states and dually eligible beneficiaries. Consider dual eligibles in Medicare reform discussions, and that's going to be especially true with respect to nursing facilities and institutional care.
And amend budget neutrality policy to consider Medicare. Because without that, we are going to be doing creative math to say the least. Thanks very much.
DR. WOOD: Thank you. Are there comments or questions from committee members? Mr.Redding?
MR. REDDING: Mr. Chairman, in the interests of time I'll try to be as brief as possible. There are several questions that I have, but I won't ask them all. I will start by making a comment that I heard some numbers recently that estimated that either this year or sometime in the near future that-- and this gets to Dr.Meiner's comment about Medicare being the big dog, but that the spending for Medicaid will outpace the spending for Medicare. I don't know if that's this year or not, so that paradigm certainly is changing in terms of the dollars spent on the program.
MissParker, if you will, a couple quick questions. You said that the enrollment is voluntary in the program. Can it be mandatory, or are there rules against that?
MS. PARKER: It can't be mandatory under Medicare law. And all of Medicare managed care is voluntary. And since we do run this program as a combined Medicare/Medicaid program, we have to follow-- I always use the term Medicare trumps, and we have to follow the Medicare rules for voluntary enrollment.
But we've been able to enroll quite a large number of people, and I think we could enroll more if we knew what the future was going to be for these kinds of programs.
MR. REDDING: Just a quick follow-up. The payment that's made obviously if Medicare and Medicaid are included together, how does that get divvied up between the state and the federal government?
MS. PARKER: Well, that's an excellent question. Medicaid puts in what it would normally put in. It capitates, so it develops managed care rates for both the acute care piece and the long-term care pieces of Medicaid. And, you know, that's all actuarially determined and appropriately. Obviously we don't want to pay more than we should for these rates.
Medicare pays what they normally pay to managed care plans, except for one thing. We also have a PACE risk adjustor that's a small risk adjustor for people who are frail in the community, people who meet nursing home level-of-care standards but live and remain in the community. So we have that little extra risk adjustor, and that's what the focus of our future is. What is that risk adjustment going to be if that PACE risk adjustor goes away. Mary and we both share this same problem, Wisconsin Partnership and our program. And what is the new risk adjustment going to be? Is it going to be adequate? Will our providers still participate? Can we still do this?
MR. REDDING: Just briefly.
DR. WOOD: Go ahead.
MR. REDDING: Does this program also include folks who are in nursing homes?
MS. PARKER: Yes, it does. And for those people we pay just what Medicare+Choice would normally pay. We have a very large number of those people in nursing homes. We've adopted and embraced the EVERCARE model here in Minnesota. We have a number of providers. We have EVERCARE participating here in Minnesota; but we also have other providers that are trying to do what EVERCARE does, using nurse practitioners in the nursing homes. And it's been a very popular model here, and it has worked very well.
MR. REDDING: Thank you very much.
DR. WOOD: Dr.Crosby?
DR. CROSBY: Several of you mentioned the difficulty of adequately risk adjusting for this population of chronically ill, disabled and frail elderly. Do any of you have suggestions for regulatory reforms that we could make to better risk adjust, other than the waiver programs you've mentioned?
MR. BRINGEWATT: First I think it would be possible to use demonstration authority to activate and test and move into other kind of payment models. But CMS is already pursuing some risk adjustment as it, you know, in relation to looking at different ways of paying high risk populations. Unfortunately, there isn't really a large enough pool of high cost beneficiaries to fully know what some of those factors, how they might apply to some high risk populations. So it's important to pull together other groups of people. Certainly the duals as a population where you can look at some of the implications. But I would say use the demonstration authority to move forward with a more focused kind of look at high risk populations.
MS. PARKER: If I could speak to that, actually Rich's organization, National Chronic Care Consortium, and Dr.Meiners in Minnesota are collaborating right now on a project to examine the impact of the 61 condition model on dually eligible beneficiaries in at least Minnesota and perhaps in also some other states. And we have a number of researchers that are looking at that.
And we have been communicating with CMS about what our efforts are, and they're just beginning. But we're hoping to share that information with CMS. I think there are ideas, even within CMS about what to do about this. It's just that we don't know the results yet. We haven't all done the analyses, and we need to work together on this.
The PACE associations, of course, are also very concerned because if the risk adjustment for PACE goes away, I mean we need something that's going to work for them, too. It is possible I think to design a risk adjustment system that goes across the different types of frail people, the people in the nursing home versus the community versus the community more well groups.
And what the issue really is is when you apply that to a plan or a small provider who has all of those kinds of people and focuses on that group, they're going to have a high end of that. And so any model is going to have to be adjusted to represent that high end. And I think that's some of what we're talking about right now, is the special factors that would adjust it.
DR. MEINERS: Could I make a quick comment on this? Whenever you're doing risk adjustment, particularly in a budget neutral environment, there are winners and losers and one of the reasons I keep using the term "investment." Because I think the notion of investment in systems of care is going to have to take into account the notion that some of these demonstrations need the kind of PACE bump in the rates that Pam is talking about.
In a budget neutral world, that would have to come out of some other place. That creates a political dynamic that's very tricky. So the mind set of investing in this learning process is something I think that is necessary to help move this agenda item along, or we'll constantly get bogged down with OMB worrying about the budget neutral aspect.
DR. GAVINSKI: I think the other portion of this is that we can't look at the dual eligibles the same as the whole M+C population. The M+C population has healthy elders, as well as frail elders. And so a risk adjustor that just looks at conditions, looks a lot at hospitalizations, which these programs are, they try to reduce, try to only hospitalize those people who need it, get people out so that they don't have an adverse consequence in the hospital and intervene quickly.
We have to have some other elements, unfortunately, as both Pam and Mark spoke to. We don't know what all of those elements are. And at the same time wanting to balance the issues of the burden of collecting data. I think as an administrator I know the importance of needing certain data elements to have quality and to have to look at cost.
On the other hand, there is a sort of diminishing return, and I think that's some of the things that were talked about before about OASIS or OBCQI or other things, other data collection elements we add. Each individual increment begins to add up to a lot of different things. So I still think that these dual eligible programs are a valuable laboratory that you could use to say what is the appropriate reimbursement structure?
DR. WOOD: Mr.Jindal, did you have a comment?
MR. JINDAL: Yes, I want to ask the panel right before the panel spoke about she wanted to ask an intriguing question -- or she made an intriguing point about the cost at the end of life in Medicare. Several states have documented the fact that that is one of the most expensive episodes either on the beneficiary or on cohort basis. I was just curious from this panel's experiences, did you have any insights into the question? In your experience, have you seen any dramatic savings; or have you seen any changes on the spending at the end of life for your dual eligibles or other Medicare populations?
DR. GAVINSKI: Definitely. I think if you look at the percentage of people in the PACE program who die either in their home or in a protected environment but not in the hospital, you'll see that the cost is much less than it would be in the general Medicare population.
And I think the key there is that the discussions about end-of-life issues begin the minute they come into the program because we're talking about in the PACE program people in the last, usually in the last 27 months of their life. If you've got populations like in Minnesota, again the care coordination begins earlier. They may not begin the same kind of discussions that we do at the very end of their life, but they can begin there. So that again we are using the resources that they need in a much better way so not only cost effective, but also markedly improved quality.
DR. MEINERS: Just a quickie. The whole concept of dealing with costs at the end of life is something that is going to be best handled when you can think in terms of a unified strategy of medical services, along with social services. And that doesn't happen unless you have sort of the integrated care mind set that we're trying to introduce today. And I think that that opens the opportunities that Mary is talking about. It's precisely why I think end of life has a better shot of being dealt with well when you have an integrated care system focusing on the problem.
DR. WOOD: Mr.Bloom.
MS. PARKER: I think, if I could just say, I think one of the issues that arises there is that if Medicaid agencies are successful, even outside of demonstrate, but, for instance, people in nursing homes and not sending them to the hospital for the end of life, it shifts that cost to Medicaid and it doesn't appear then in the Medicare costs, and it actually kind of becomes a penalty to the state because it doesn't show up anywhere except on the Medicaid side, and nobody on Medicare is looking at that. And so we're not getting credit for it. It becomes another one of those issues that Wendy was talking about. And tracking that is very difficult.
DR. WOOD: Mr.Bloom?
MR. BLOOM: Thank you, Mr. Chairman. MissParker, this a question for you. And I've been on Medicare since 1994, and as my Medigap rates are rising, I'll probably be dual eligible soon. In hooking up to the MSHO web site, I'll probably move to Minnesota. Congratulations. The program is quite good. I was looking for something wrong with it. And I really couldn't find anything. It was very, very comprehensive.
But the question is there were two tiers of programs that people could join with a monthly fee. How is that monthly fee handled for dual eligibles? Obviously, I would assume that the co-pays are picked up for the dual eligibles, but the monthly fee for enrollment and do they have a choice of picking one or the other programs, or do they have to enroll -- I think one was $86 a month and one was like $112 per month for enrollment fee. How is that handled?
MS. PARKER: I think you're referring to our, maybe our Medicare+Choice plans in Minnesota. And because this is a special plan that is authorized through Medicare payment demonstration and because we only are able to enroll dually eligible people, we don't enroll the general public in terms of the non-duals, there is no fee whatsoever. A person must be eligible fully for Medicaid, and that already is a very low income level, though we, in our new disability program we are enrolling people in the work program, the disability work programs.
Some people may have what is called a eligibility spend-down, and then they do have to to pay that to the state as part of their Medicaid eligibility maintenance, but it really doesn't have to do with our program. There really is no fee. And, as you suggest, the co-insurance and deductibles for Medicare are incorporated in the Medicaid payment.
MR. BLOOM: Thank you.
DR. WOOD: Dr.Dennis, I'll give you the last question.
DR. DENNIS: Yes. First of all, great program. I have some questions about it, though. It seems like you were suggesting there was a 1915A and C waiver program that allowed this to occur. What I would like to know is a couple things. One is how long did that process take for this to occur, No 1? No. 2, do you have the authority within this program to pay for services, say the end of life, that are in the home rather than in the nursing home, so that services that ordinarily wouldn't be paid for would help keep a patient at home where the family might understand better what the circumstances and the wishes of the patient were, and then the patient wouldn't end up in a hospital spending millions of dollars trying to sustain a patient who clearly didn't want that?
MS. PARKER: Well, thank you for that question. Yes, I'll answer the last one first. We are able to substitute benefits. That is one of the nice things about incorporating both the Medicare and Medicaid benefits in one package like we're able to do, because we can substitute. And there isn't as much disincentive to do that substitution because we have both parts of the money. So I know our plans are very active with the advanced directive planning and our care systems are very good at that.
And we are working on increasing the ability to stay at home. And particularly for our southeast Asian population. Those people are not-- they don't like our western way of medicine, and they really avoid those hospitalizations. Now I've forgotten your first question which was such a good question.
DR. DENNIS: How long does it take?
MS. PARKER: Well, we started, we conceptualized this idea that, wow, wouldn't it great to have Medicare and Medicaid work better together for these same people that we're serving back in the early 1990's? I believe it was actually 1991 when we submitted our first proposal to both CMS and Robert Wood Johnson Foundation.
In 1992 we got our first grant from RWJ and a joint visit with at that time HCFA. And it took from then until 1997 to work out all the details about how to do this. And we got our waivers in 1995. We didn't start out with the kind of simple waivers we have now. We had to go with an 1115 waiver, and that brought a lot of problems with it, so we dropped that.
And through very, very creative-- and this is where I really want to give some credit to very low level staff in ORDI within CMS. These people, you know, put their thinking caps on and said how can we do this stuff? And even without their higher-ups really understanding it, I think they figured out how to do it and helped us through.
So now we have a very simple waiver process, and I think the message needs to get out that it is simpler to do these things now. CMS has figured out how to do it, and we need now to make that more into a path and a template for other states and organizations to be able to move forward.
MS. WARRING: Can I just add a comment to that? Because there have a lot of questions about these integrated models. Massachusetts has been working on an integrated model, which we think we're finally going to implement this year. It has not been Medicare's problem. It has been the state's problem. There are a lot of issues regarding elders and managed care, which Medicare actually feeds into. But it took us six years to get to this point. It is an enormous effort.
But the other point that I do want to make, however, is that the integrated models, both PACE and the models that Pam and Wisconsin had implemented and the one Massachusetts is about to implement cover a fraction, a small fraction of those who are dually eligible. And I think that's an important point to keep in mind as you think about the panoply of regulatory reforms that are needed.
You know, the question about cost at the end of life. If you compare cost of end-of-life care with cost of pharmacy care, there is a huge difference. The cost to the Medicaid program for pharmacy services for dual eligibles, disabled and elderly is significant. Two-thirds of Medicaid costs total are going to care for dual eligible beneficiaries. And I just hope we don't lose that perspective. I think these integrated models are absolutely terrific. I think we have to keep working on them, but not if it is at the expense of considering other reforms in the larger context.
DR. WOOD: I want to thank our panel members for their very tremendous contributions this morning. You've gotten us to a very much better understanding of a very complex circumstance, and I think it will help us tremendously as we make our recommendations.
We now will move to public comment, so I will dismiss the members of the panel unless you actually want to sit here and listen to it from here. We invite you to stay in the audience. As they are leaving, Pam has reminded me that she and her colleagues have set a video up outside. There is a short video presentation with some materials which shows their efforts at doing outreach. And so if you have time, committee members or if there are members of the audience who are interested, please take the time to look at that very quickly.
As we consider public comment, for those of you who are here in the audience who have come to speak today, here in Minnesota we've had more commentors than we had originally scheduled time to accommodate, so we tried to give everyone a chance to speak by doing a couple things. One is to shorten the committee's time for business. And then the other is to ask each of you to