Michigan's Plan for Dual Eligibles: Comment on cost savings, the DD population, and "Financial Realignment"

One of the rationales for integrating physical health care and mental health care for the Medicare-Medicaid Eligible (MME) population is that the expenditure of funds for this population is “disproportionate”. Considering that this population is overall older, sicker, and more disabled than the general population, as well as being poor, it is not surprising that a larger proportion of Medicare and Medicaid funds would be spent on their physical and mental health care

For people who are physically disabled and elderly there are large waiting lists for services that many people want and need to keep them in their own homes and avoid more expensive nursing home placements. People who have serious mental illness, on average, die at a much earlier age than the general population from preventable causes. Coordinating mental health care with improved access to physical health care is a worthy goal that may also save money in the long run by preventing expensive hospitalizations. There is nothing in the plan, however, that gives a coherent explanation of how money will be saved on the DD population unless savings come from cutting services.

The plan points out that in 2008 Michigan Medicaid spent over $843.6 million on behavioral health and developmental disability services for MMEs. Of that amount, $617.4 million was spent on people with intellectual/developmental disabilities (ID/DD). This is not surprising considering that community services for many people with DD, especially those with the most severe disabilities, are an alternative to institutional placements (all publicly operated institutions for people with ID/DD have been closed over the last thirty years.) Moving people out of institutions does not necessarily reduce their need for intensive and relatively expensive services. Furthermore, the promise that savings from closing institutions would support community services has not been fully realized.
 
Under the Michigan Proposal all the Medicaid and Medicare money for Dual Eligibles will go into one pot and spending will be “realigned”. No attempt is made to explain how this will be done, but we know that the state must find cost savings to get the plan approved by the Centers for Medicare and Medicid Services (CMS). In addition, the state will be renegotiating the state’s Medicaid Waivers that pay for community services for people with DD and others covered by the mental health system.  This makes the assurances in the plan that services will remain as they are an empty promise.

States have a great deal of leeway in determining the services they will provide and there is reason to believe there will be pressure on the state to reduce the services now in place. Programs and services for the DD population with their “disproportionate” expenditures appear to be an easy target for cost savings under the plan.