Last week, federal and state officials released their long-anticipated Memorandum of Understanding (MOU) implementing a three-year effort to lower costs and improve the coordination of medical care provided to nearly half a million California seniors who are enrolled in both Medicare and Medi-Cal.  If approved by the feds, passive enrollment of program beneficiaries over a 12-to-18-month period will start in seven counties (Orange, Riverside, San Bernardino, San Diego, San Mateo, Alameda and Santa Clara) in October.  What this means is that the dual-eligible program beneficiaries residing in these counties will automatically be enrolled in the local Medi-Cal managed care (MMC) plan serving their area unless they exercise an option not to participate.  This opt-out option applies only to their Medicare benefits; their Medi-Cal benefits will be coordinated by their local MMC plan.

Under the MOU, a version of the program, called Cal MediConnect, will begin in Los Angeles County in October as well, though passive enrollment will not begin until January 1, 2014.  Until then, dual-eligible beneficiaries may elect to enroll in the program that will be capped at 200,000 participants.

For the first six months, the MOU requires MMC plans to allow enrollees to keep their current medical authorizations and to stay with their current caregivers for their Medicare-supported services.  This requirement is extended to 12 months for their Medi-Cal services. 

For out-of-network urgent and emergency services provided by nonparticipating providers, Medicare payment rates must be paid for Medicare services and Medi-Cal fee-for-service rates must be paid for Medi-Cal services.  Also, MMC plans must reach out to all non-network providers with information on how to become part of the network. 

In addition, the MOU calls for both Medicare and Medi-Cal savings of 1 percent in the first year, 2 percent in the second, and 4 percent in the last year of the program.  Also, 1, 2 and 3 percent for each successive year will be withheld by both payers and repaid depending on how the MMC plan performs against certain quality metrics.

Central to the success of any managed care program are enrollee stability and adequate premium support.  The decision to not include a six-month enrollee lock-in period along with the enrollee opt-out-anytime option championed by federal officials undermines the program’s stability. More critical, though, are the yet-to-be-disclosed capitation payments to be provided to the MMC plans by the feds for Medicare and by the state for Medi-Cal. Experience with a similar program – Seniors and Persons with Disabilities on Medi-Cal – suggests that state officials may underfund the Medi-Cal component.

Though it may be difficult to do politically, the MMC plans serving the eight counties could refuse to participate if inadequate premium support and overly burdensome rules are forthcoming. From an MMC plan perspective, the combination of the rules in the MOU and low capitation payments may justify refusal. 

Click here to read last week’s L.A. Times article on this development, and California Hospital Association members may look forward to receiving a notice regarding a webinar for an update and analysis to be held April 23 from 10:00 a.m. to noon (PT).

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