Thompson wants feds to take more responsibility for long-term care
As the nation heads toward the midterm elections of 2006 and what could be two lame-duck years for the Bush administration, major health system and Medicaid reform proposals have surfaced. A Medicaid Makeover plan proposed by former Health and Human Services secretary Tommy Thompson calls for the feds to take increased responsibility for planning, delivering, and paying for services to the elderly, especially long-term care services, while states take greater responsibility for caring for those younger than age 65.
Mr. Thompson introduced his four-element makeover plan at the National Governors Association annual meeting.
"Medicaid right now is a failing program," he told the governors. "It is costing too much. It does not adequately meet the health care needs of the diverse population it is meant to serve. And what's more, lines of responsibility are so crossed between the federal government and the state government that no one really knows who's in charge."
Mr. Thompson tells State Health Watch he decided to present his ideas in August 2006 because work on them had been completed, two public hearings had been held, he wanted to bring them to the attention of the nation's governors, and he wanted to help influence considerations by the Medicaid Commission.
"I thought this was something the governors and the commission could look at and use," he says. "Also, I wanted to get our proposal out before the fall political campaigns heated up so there could be dialog about it as part of the campaign. These ideas will become fodder for the 2008 presidential campaign. Candidates have to be well versed on Medicaid. They need answers to the problems and it's important to get this information out and to be part of the dialog."
Four challenges, solutions
Working with the Deloitte Center for Health Solutions, Mr. Thompson has produced a white paper on "four challenges and potential solutions on the road to reform." He notes that as some states are beginning to recognize, what is needed is not a fine-tuning of the current one-size-fits-all Medicaid system, but rather a fundamentally different system that more effectively and efficiently serves individuals.
"Without prompt, creative, and comprehensive action, this complex and unwieldy program, which serves as a lifeline to a vastly diverse group of disadvantaged individuals, will continue to deteriorate," he says. "Medicaid stakeholders — patients, payers, providers, and governments — must all be engaged and be part of the solution."
In his white paper, Mr. Thompson focuses on four core challenges he says the Medicaid program faces:
1. Meeting diverse needs. How can Medicaid more adequately meet the health care needs of the diverse group of low-income Americans it serves: pregnant women, children, the disabled, and the elderly?
2. Empowering individuals. How can Medicaid more efficiently encourage individuals to play an active role in their health care?
3. Updating structures. What steps can be taken to update Medicaid payment structures and technologies?
4. Addressing the problem of the uninsured. What can Medicaid do to help address the problem of the uninsured?
Do what you know best
So Medicaid can better meet the health care needs of the four groups that dominate the Medicaid population, he says, states and the federal government should be able to focus on the populations they know best. That would mean having the federal government take greater responsibility for delivering and paying for services for the elderly, especially long-term care services, while states take on greater responsibility for caring for those younger than age 65. He also recommends a Medicaid program that is nimble enough to allow states to address the needs of different populations differently, creating options for families and targeting chronic and serious needs.
"States should offer Medicaid families more options for meeting their health care needs," Mr. Thompson wrote, "including helping families obtain commercial insurance by providing subsidies to cover the cost of participating in employer-based programs. States also should provide more coordinated, comprehensive, and targeted care for individuals with chronic needs and other serious illnesses, through care management programs and other creative options."
Redefine federal and state roles
According to Mr. Thompson, the general concept in realigning government responsibilities would be to shift increased fiscal and policy responsibility for meeting the long-term care needs of the elderly to the federal government, while primary fiscal and policy responsibility for the acute care needs of all Medicaid beneficiaries, as well as long-term care services for the nonelderly would remain with the states.
"The realignment could be based on health care service, population, or a combination of the two," he said. "The precise allocation of responsibility between the states and the federal government would ultimately rest somewhere along a spectrum of options. One end of this spectrum would be marked by shifting full responsibility for all services furnished to elderly dual-eligible people to the federal government. The other end of this spectrum would be marked by shifting full responsibility for only specified long-term care services (for example, nursing home services) to the federal government."
While the Medicaid program was neither designed nor intended to become the largest primary long-term care program in the nation, Mr. Thompson said, in 2003 Medicaid payments accounted for 46% of all nursing home revenues nationwide and individuals with Medicaid coverage accounted for more than two-thirds of all individuals living in nursing homes. In 2002, Medicaid payments for individuals dually eligible for Medicare and Medicaid comprised 42% of all Medicaid spending, with 65% of that spending attributed to long-term care.
"Since the federal government presently spends significantly more Medicaid dollars on acute care than on long-term care, to remain whole, the states still will need to receive federal Medicaid funds following a realignment," Mr. Thompson said. "The funding mechanism selected will need to account for the fact that state spending on long-term care services vs. acute care services varies widely."
In terms of empowering Medicaid recipients to become more involved in their own health care, Mr. Thompson said a good first step would be to identify barriers now preventing them from taking this initiative. Steps also should be taken, he said, to ensure that each individual receiving Medicaid benefits has a health care home, since fragmented care often results in poor health outcomes, in addition to fostering frustration with a system that may discourage future utilization of services.
Mr. Thompson notes that health literacy programs, disease prevention programs, outreach and education programs, and flexible incentive programs should receive funding priority because everyone wins if the Medicaid population becomes healthier. "Individuals clearly reap the most rewards," he says, "but state coffers would benefit as well, since healthier individuals are generally less expensive to treat."
He suggests the federal government reward states that work to improve the health literacy of their patient populations, and states should in turn reward providers for such efforts. He also suggests the federal government require states to make disease management programs available to Medicaid recipients, and offer states financial incentives, such as enhanced matching, for services furnished in connection with such programs.
Mr. Thompson also calls for more patient outreach and education programs so individuals can learn about their own health care and status. States, he says, should be working toward educating patients on a variety of issues, including understanding risk factors for disease prevention; providing knowledge about specific diseases to sufferers, their families, and caretakers; and promoting healthier lifestyles. And he says healthy populations should be given an opportunity to exert more control over their health care expenditures, reflecting the private sector trend toward consumer-directed health care.
Mr. Thompson's third area of focus is updating core structures such as outdated Medicaid payment structures and technologies that end up causing increased costs and diminished quality. He calls for updating payment systems to reward quality of care rather than simply quantity of services, and says states should be encouraged to undertake eHealth initiatives to improve quality, safety, and cost-effectiveness across the Medicaid care continuum.
Finally, he says Medicaid is not doing its share to address the problem of the uninsured, and states must be encouraged to expand Medicaid coverage to lessen the strain on the health care safety net. He suggests states develop creative options for covering the uninsured through public-private partnerships and otherwise.
Helping his business interests?
Mr. Thompson's proposals have drawn some fire from critics who say they would help companies with which he is affiliated. The former Health and Human Services secretary is now on the board of Centene Corp., which operates Medicaid-funded HMOs in several states. His interest in seeing more Medicaid recipients in HMOs could help that company's bottom line, critics told The Washington Post. He's also chairman of the Deloitte Center for Health Solutions, part of the Deloitte & Touche USA consulting firm that has contracted with states to help improve their Medicaid programs. He is a partner in the law firm Akin Gump, which has health care and insurance clients, and part-owner and board member of VeriChip Corp., which makes microchips that store data and can be implanted in humans. It could become a player in any move to expand electronic medical records.
Mr. Thompson has responded that his efforts to change Medicaid began "long before" his corporate relationships.
He tells SHW that while none of his proposals are new and all have been discussed before, they haven't been packaged in this way before and no one has taken an active interest in pushing them.
"I can't imagine we're going to be ignored," he says. "The governors are pushing for changes and Congress wants to do something."
But some observers question how much impact this proposal can have. Urban Institute Health Policy Center director John Holahan tells SHW he doubts the Thompson Makeover proposal will gain much political traction, although the Medicaid problem is a serious issue for states that deserves attention.
"It would cost the federal government probably $25 billion to $30 billion to shift the dual-eligibles," Mr. Holahan says, "and that's just not going to happen."
He notes that the National Governors Association had advanced the idea and then stopped talking about it because of the federal deficit and the realization that it is "not remotely likely."
Mr. Thompson's Medicaid Makeover proposal could play an important role in overall Medicaid reform, according to Mr. Holahan, but wouldn't be a total solution because it doesn't address other problems such as disparities between states and intergovernmental transfers. "It all depends on what your goal for Medicaid is," he adds.
Medical College of Virginia department of health administration associate professor Robert Hurley tells State Health Watch he also doesn't see much new in Mr. Thompson's approach.
"The notion of a state-federal 'swap' has a lengthy history and to date has not progressed," he says. "Perhaps the enhanced attention to the dual eligibles embodied in Part D and the Special Needs Plans indicates more appetite to consider putting funding together in a more rational way. But it looks like this would have significant federal budget implications and that would seem to be a nonstarter."
But Mr. Thompson says he's just getting started. He tells SHW he will be speaking out during this year's political campaigns and will be talking with individual governors to secure their support. And he plans to start working with members of Congress to find some leaders willing to turn his proposals into legislation to be introduced either as a standalone bill or amended into another bill.
Download Mr. Thompson's proposal and background information at www.medicaidmakeover.org. Contact Mr. Holahan at (202) 261-5666 or e-mail [email protected]. Contact Mr. Hurley at (804) 828-1891 or e-mail [email protected].
As the nation heads toward the midterm elections of 2006 and what could be two lame-duck years for the Bush administration, major health system and Medicaid reform proposals have surfaced.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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