Important Update: Virginia's Proposed Medicare/Medicaid Financial Alignment Demonstration for Dual Eligibles

The Virginia Department of Medical Assistance Services (DMAS) submitted a proposal in late May 2012 to the Centers for Medicare and Medicaid Services (CMS) to implement a three-year pilot which would combine Medicare and Medicaid funding for dual eligible beneficiaries.  All health care services provided to these individuals would be coordinated through, and payment made by, health plans (managed care organizations or MCOs) in each of the designated geographic areas comprising the Demonstration.

With respect to those geographic regions, in its original proposal to CMS, DMAS planned to conduct the Demonstration in four areas of the Commonwealth: Northern Virginia, Tidewater, Richmond/Central and Charlottesville/Western.  Last week, DMAS mailed to providers a Medicaid Memo dated January 14, 2013 which announces that a fifth region, Roanoke and 23 surrounding localities have been added to the Demonstration.  A map showing the five proposed geographic Demonstration regions is available here.

Through discussions with DMAS leadership, VHCA was able to obtain two key assurances related to network participation under the Dual Demonstration.  First, DMAS agreed to a provision that guarantees that any Medicaid-participating nursing facility is eligible to participate in and contract with MCOs.  Second, DMAS will stipulate that MCOs can pay nursing facilities no less than Medicaid rates in effect under the current fee for service methodology.

MCOs will be required to submit information about their planned networks to both DMAS and CMS in order to satisfy the network adequacy analysis as part of the MCO selection process.  The CMS timeline establishes February 21, 2013 as the deadline for MCOs to submit their networks to the Health Plan Management System (HPMS).  DMAS is now targeting the end of January for getting Requests for Applications (RFAs) out to MCOs and would require MCOs to submit networks information and composition to the Department sometime in the winter/ spring of 2013.

For the past several months, MCOs have been reaching out to nursing facilities for introductions.  MCOs appear to be taking significantly different approaches with respect to their efforts to include nursing facilities within their provider networks.  Some MCOs are requesting that facilities sign fairly simple letters of intent while others are attempting to get facilities to sign fairly specific provider agreements.

The Dual Demonstration initiative being pursued by CMS and DMAS represents unchartered waters for Virginia's nursing facilities.  We strongly encourage member facilities to read and listen carefully to information presented and available on the topic.  Given the overall lack of specific details from either CMS or DMAS, we see no compelling reason for facilities to commit at this time to a formal agreement with MCOs.  Facilities should keep in mind that MCOs are simply preparing to respond to CMS network adequacy requirements and a future DMAS RFA.

VHCA recently asked Peter Mellette, an attorney with significant experience in nursing facility operations, to assist the Association in better preparing members for their discussions with individual health plans.  Mr. Mellette has drafted a two-page document, Contract Review Considerations, that we encourage all facilities to review prior to formalizing any MCO relationship.  In our recent discussions directly with representatives of MCOs, it appears that non-binding letters of intent with individual health care providers are sufficient for them to meet their CMS network adequacy submission requirements in February.  

Finally, we believe that the Commonwealth's stated plan to implement the Demonstration on January 1, 2014 is unrealistic and potentially reckless.  Earlier this month, in a letter to DMAS Director Cindi Jones, we asked her to formally seek a delay in the initial implementation date.  While we have received no written response, verbally Ms. Jones has indicated that she plans to move forward with the originally-proposed January 2014 implementation date.

VHCA will continue working with the Association's Ad-hoc Medicaid Managed Care Committee and with DMAS to make certain that the requirements stipulated in the RFA recognize the need for MCOs to work collaboratively with nursing facilities to ensure that providers can continue to provide high-quality services to the dual eligible beneficiaries we now care for in a payment environment that promotes long term financial viability.

Those of you planning to attend the VHCA Legislative Conference being held in Richmond on February 12th and 13th will have the opportunity to hear more about the Demonstration from a panel presentation to include perspectives from DMAS, MCOs, nursing facilities and a health law attorney.  Additionally, senior DMAS leadership typically attends the Legislative Reception to be held on the evening on February 12th providing members a unique opportunity to talk directly with those tasked with implementing Virginia's Dual Demonstration.  We encourage all members to attend this important event.