The Senate Fiscal Agency Comments on Michigan's Dual Eligibles Plan

For a clear and concise overview of the Michigan plan for Dual Eligibles and its effects on the state, read the analysis from the Michigan Senate Fiscal Agency (SFA).  According to its Website, the SFA is "a nonpartisan legislative agency created to provide the Michigan Senate with sound and unbiased assistance in two principal ways: providing staff support to the Senate Appropriations Committee and assisting all members of the Senate on State budget-related issues; and providing analysis of all proposed legislation being considered by the Senate."

The report is called "The Snyder Administration's Proposed Dual Eligibility Waiver". You can link to it from the SFA Website under "State Notes"

From the SFA report:

Who will be affected by the proposal (page 2): 

The majority of the 211,000 dual eligibles in Michigan are low-income elderly people. However, there are many nonelderly who are Medicare recipients, in particular disabled individuals with work histories and many developmentally disabled and mentally ill individuals. In fact, over 40% of dual eligibles are under the age of 65, with developmentally disabled and mentally ill individuals under age 65 comprising 15% of the total dual eligible population. Because the population affected by this waiver extends beyond the low income elderly, designing a program is more complicated than just addressing issues surrounding medical care for the elderly.
…
The Administration's proposal would have a major impact on the public behavioral health system, that is, Community Mental Health (CMH) boards and the Pre-Paid Inpatient Health Plans (PIHPs). Due to many developmentally disabled and mentally ill adults being Medicare-eligible, nearly half of CMH and PIHP expenditures are for services to dual eligibles. The CMH and PIHP community expressed strong concern about the integration proposal as it was being developed.

Contracting with separate entities for physical health care (Integrated Care Organizations) and mental health services (Pre-paid Inpatient Health Plans) (pages 3-4): 

It should be noted that just because the State opted not to fold behavioral health services into the ICOs, one should not conclude that this could not happen in the future. The contracts would be for a specified period of time and the State could, in the future, choose to seek fully integrated care and have the ICOs cover all behavioral health services for dual eligibles.

When PIHPs were created a decade ago, the original proposal was to allow any entity, including private firms, to compete to provide behavioral health services to Medicaid clients. The final proposal gave right of first refusal to CMHs, which preserved the public mental health system's lead role in Medicaid behavioral health care. This waiver expires on September 30, 2013, and the State could opt to bid out the PIHP services at that time.

Continuity of Services (page 4):

Perhaps the greatest concern during any shift to an expanded managed care model is ensuring continuity of care. This is especially important for the dual eligible population, which includes many individuals with severe pre-existing health conditions. The Administration states that its contracts would include requirements to maintain existing services and providers"until an assessment is completed and care transition arrangements are made through the person-centered planning process"….

Savings (pages 5-6): 

On the savings front, the Governor's recommended FY 2012-13 DCH budget assumed savings of $29.7 million Gross and $10.0 million General Fund/General Purpose due to the dual integration waiver. Given that the waiver would not begin enrolling clients until July 2013, these savings, which would have to be realized for a subset of the population over the last three months of FY 2012-13, are questionable…

Assuming that savings eventually did occur, another concern is how they would be shared between the State and Federal government. The DCH estimates that, by the time the program starts, there will be about $9.0 billion in Medicare and Medicaid spending on the dual eligible population, and the vast majority of that will be Federal dollars (as all Medicare spending is Federal and almost two-thirds of Michigan's Medicaid spending is Federal). Therefore, assuming that the integration of care was successful in saving money, there remains the question of how the amount saved would be estimated and how it would be split between the State and Federal government. That matter would be determined in the negotiations between the DCH and CMS.

Conclusion (page 6)

This proposal represents certainly the most significant change in Michigan Medicaid policy since the shift to managed care for physical and behavioral health and arguably the most significant change in publicly funded health coverage since the advent of the Medicare and Medicaid programs over 40 years ago.