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Noting that "[w]e are excited about the demonstrations and would like them to succeed," the Center for Medicare Advocacy (the Center), and thirty-two other national consumer advocacy and provider organizations have called on the Centers for Medicare & Medicaid Services (CMS) to scale back the scope, size, and timing of state-based demonstrations that would change how health care is delivered to some of the seven million individuals dually eligible for Medicare and Medicaid. This request arises out of a concern that the demonstrations under consideration are too large, lack focus, do not adequately safeguard the rights of beneficiaries, and fail to articulate measures of meaningful improvement in service delivery – all factors that could ultimately lead to the failure of the programs.

The groups' recommendations were attached in summary and longer form to a letter dated July 18, 2012 to Melanie Bella, Director of CMS's Medicare-Medicaid Coordination Office (MMCO).[1]  This request follows on the heels of similar requests from, among others, Senator John D. Rockefeller IV, the Medicare Payment Advisory Commission (MedPAC), and the Federation of American Hospitals (FAH).[2]


The Affordable Care Act (ACA) created two entities in CMS that, together, are working to promote initiatives to improve the way health care is delivered to individuals dually eligible for Medicare and Medicaid.  The MMCO is directed to bring together employees from both programs within CMS to integrate more effectively the benefits of the two programs and to improve coordination between the federal government and the States to "insure that [individuals entitled to both Medicare and Medicaid] get full access to the items and services to which they are entitled [under both programs]."[3]  The Center for Medicare and Medicaid Innovation (CMMI) has as its purpose "to test innovative payment and service delivery models to reduce program expenditures [under Medicare and Medicaid] while preserving or enhancing the quality of care furnished to individuals under [those programs]."[4] The Secretary has broad authority under the CMMI provisions to waive aspects of the Medicare program where such waiver would promote the purposes of the CMMI.

Under the demonstration authority of the CMMI, the MMCO offered states the opportunity to submit proposals to provide the full range of Medicare and Medicaid services within a single delivery system to those dually eligible. Twenty-six states have submitted proposals that, if all were funded, would cover just under one half of the entire population of dual eligibles in the United States.  Although named as demonstrations, some state proposals identify their entire dually eligible population as the target of the demonstration. Fourteen states, including seven that will rely on private plans to deliver care based on a single payment blending the Medicare and Medicaid rates, propose to begin their demonstrations sometime in 2013.[5]  Total target population of states proposing to start their programs in 2013 is about two million individuals.


Recommendations from the 33 organizations cover twelve areas of concern: Specificity and Clarity of State Proposals; Size and Scope of Demonstrations; Enrollment; State Readiness; Plan Readiness; Plan Quality; Continuity of Care and Transitions; Quality Measurement; Appeals, Oversight and Evaluation; Rebalancing and Reinvestment of Savings, and Savings.

Particularly notable are the recommendations to:

  • Limit the demonstrations to fewer than one million beneficiaries nationwide (MMCO has proposed supporting up to two million; the state proposals, from 26 states, would cover more than three million if all were approved);[6]
  • ·Require a clearly identifiable and appropriately sized control group;
  • Require that enrollment be voluntary by the choice of the individual rather than through passive enrollment, as MMCO proposes;
  • Permit only the highest performing plans to participate (current proposals include poor performing plans);
  • Create a single unified beneficiary-friendly appeals process that includes continuing services pending appeal and
  • Not require demonstrations to show financial savings in the first year.

A summary of the recommendations is available at:

The complete document is available at:

Related Developments Concerning Savings from the Demonstrations

Earlier in the summer, 21 national and 50 state-based advocacy organizations wrote to Health and Human Services Secretary Kathleen Sebelius outlining concerns about how savings will be achieved through the state demonstration projects.[7]  The authority under which the demonstrations will be run requires that demonstrations reduce program expenditures without reducing quality, improve quality without increasing program expenditures or reduce expenditures and improve quality.[8] Yet many of the state proposals were vague or silent about how savings, if any, would be achieved.  According to the letter, in those states that discussed savings, "the underlying evidence for claims of savings has not been made publicly available…We believe it is essential for states and CMS to provide the public with these targets, along with the underlying financial assumptions, prior to CMS approving the project." [underlining in original]

The letter urges the use of risk-sharing strategies, especially during the early years of the demonstration, in place of an assumption that savings will come "off the top" in the form of a reduced payment by the state and federal governments to plans or providers.  As the state of Michigan noted in its proposal, fully developed and dependable risk methodologies applicable to the special populations prevalent among dual eligibles – those needing long-term care, those with developmental disabilities and/or serious mental illness, among others – are not yet available, "and hence risk is not adequately predictable." (Letter, p. 2)

The letter concludes "[W]e support the need to get health care costs under control.  But, we believe the emphasis must necessarily be on creating delivery systems that work for the population they serve.  If states can get that right, the savings should follow.  A rush to meet savings targets is short-sighted and dangerous."


Both state and federal-level comment periods have ended for all 26 state proposals.  The next step is for CMS, through the MMCO, to approve or disapprove the proposals and begin negotiating with states and plans on the specific terms and conditions of each approved demonstration.  The advocacy community hopes to be engaged in that process as it moves forward.


[1] See cover letter, summary recommendations and full document.
[2] Senator Rockefeller’s letter is here; the MedPAC letter is here and the FAH letter is here.
[3] Section 2602 of the Affordable Care Act (ACA), Pub. L. 111-148 (March 23, 2010)
[4] Section 1115A of the Social Security Act, as added by § 3021 of the ACA.  See letter of December 13, 2010 to Health and Human Services Secretary Kathleen Sebelius concerning provisions of § 3021 affecting dually eligible beneficiaries and signed by 38 individual scholars or practitioners, state and national advocacy organizations, available at:
[5] These states are MO, CA, IL, MA, OH, WI, CO, CT, IA, NC, WA, MI, MN, OK.
[6] Information about the demonstrations, including proposals from all 26 states, is available at:
[7] Letter of June 27, 2012 to Secretary Kathleen Sebelius, available at:
[8] Section 1115A of the Social Security Act, added by § 3021 of the Affordable Care Act, Pub. L. 111-148 (March 23, 2010)

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