Managed care a growing force in post-acute care

Post-acute care, in many ways, is the final frontier for delivering coordinated services tied to performance-based reimbursement.

Most payers throughout the healthcare continuum are making significant progress in linking integrated care with financial incentives. Medicare and Medicaid, on the other hand, which are the dominant forces in post-acute care (compared with the hospital and physician sectors and their emphasis on private health insurance), are playing catch-up with skilled nursing and home healthcare, where well more than $200 billion in annual government expenditures are at stake.

With an eye on improving efficiency and outcomes, federal and state governments are inserting managed care companies into what historically has been a disjointed post-acute care equation. Twenty-two states are in various stages of redirecting skilled nursing and home healthcare toward managed care for dual-enrolled individuals and those receiving Medicaid only: Arkansas, Arizona, California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Michigan, Minnesota, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Vermont, Washington and Wisconsin. This movement sets the stage for consolidation of funding and oversight of the highly fragmented post-acute care system.

With risk-based managed care increasingly calling the shots, Medicare and Medicaid are preparing to step back and cede administrative responsibility as the capitation rates, provider networks, quality standards, utilization reviews and contract negotiations that are so prevalent throughout the rest of healthcare begin to envelop post-acute care. At the same time, growing concern about the disproportionate costs and risks associated specifically with the dual-eligible population is about to reposition Medicaid in the post-acute care continuum, leading to a much closer alignment with Medicare.

This change means that as spending for dual-enrolled individuals “snowballs,” due in large part to the increasing prevalence of chronic disease comorbidities and complex medical conditions as well as the addition of 16 million Medicaid recipients under the Affordable Care Act, the traditional Medicare and Medicaid reimbursement dichotomy is about to be upended. Capitation and managed care programs already are part of the Medicare and Medicaid mainstream for hospitals and physicians. The next step is to extend their service coordination and cost-containment reach by bridging the dual-eligible divide.

Three initiatives

Various initiatives aimed at overcoming the inefficiencies, fragmentation and overlaps associated with the dual-eligible system include:

  • A Centers for Medicare & Medicaid Services (CMS) Center for Medicare and Medicaid Innovation pilot to test two models for improving the delivery of dual eligible services is under way in 15 states. Under the capitated model, a state, CMS and a health plan enter a three-way contract, with the plan receiving a prospective blended payment to provide comprehensive, coordinated care. Meanwhile, the managed fee-for-service model calls for a state and CMS agreement that allows the state to support integrated delivery systems and share in savings that accrue to Medicare.
  • Insurers with Medicare Advantage plans and other managed care programs serving seniors are reaching for greater market share. UnitedHealth Group, for example, with a Medicare customer base exceeding seven million individuals, recently purchased XLHealth, a managed care provider for Medicare members with chronic illnesses such as diabetes and heart disease. About half of XLHealth’s enrollees are dual-eligibles.
  • The CMS Federal Coordinated Health Care Office (Office of Duals) was created under healthcare reform to improve federal/state coordination of dual-eligible services by developing new care coordination and integration models. The goal of these initiatives is to eliminate financial misalignments that lead to poor quality and cost-shifting; conduct demonstration projects for fully integrated Medicare/Medicaid care models; introduce programs for sharing state and federal data and standardizing analytics; and develop models that overcome financial misalignment between Medicare and Medicaid.

Future is clear

When Humana and WellPoint, two of the nation’s largest insurers and most influential forces in healthcare, make strategic acquisitions that immerse them in managing chronic care services for seniors and overseeing dual-eligible populations, it is clear that market forces increasingly will exert more control over post-acute care operations.

WellPoint’s $4.4 billion acquisition of Amerigroup makes it the biggest Medicaid managed care company in the United States, with a considerable stake in capitalizing on new programs to control dual-eligible costs.

Humana, meanwhile, purchased SeniorBridge, a national care management network with 44 locations specializing in serving seniors with complex chronic conditions such as congestive heart failure, Parkinson’s disease and Alzheimer’s disease.

The future is clear: Managed care is a growing force that will become far more prominent in post-acute care and will exert much influence over day-to-day operations.

Jim Bowe is principal of GlenAire HealthCare, LLC, in Bloomfield Hills, Mich. GlenAire works to realign the continuum of care with an emphasis on rewarding quality outcomes and cost efficient operations through developing, expanding and repositioning post-acute care and senior living operations. Contact him at (248) 904-6766 or

Topics: Articles , Executive Leadership , Medicare/Medicaid