Financial structures must promote delivery of optimal care

While integrating responsibility and payment for all Medicare and Medicaid services into one entity has the potential to improve care coordination and improve the health of dual eligibles, dangers exist. Poorly designed risk-sharing and capitated payment models could lead to delays and denials of medically necessary care or “cherry-picking” of healthy, less costly enrollees. If the incentives to share savings are not structured carefully, the result can be decisions that are neither person-centered nor likely to improve care.

Whenever risk-based, capitated models are used, payment structures must encourage appropriate utilization of care and reward the provision of preventive care, intensive transition supports, and home- and community-based services. Rates should be adjusted for health status of the population using a variety of measures to facilitate this goal. Integrated models that function as managed care organizations must ensure that the rates they pay network providers are high enough to create and maintain adequate and sustainable networks as described above. This will likely mean basing most provider payments on Medicare rates since experience shows that current Medicaid rates, in many cases, have led to critical provider shortages. In addition, nothing in the rate structure should discourage the provision of home and community based services. For example, entities should not receive a higher rate for enrollees simply because they have been admitted to nursing homes. There must be some risk for the integrated model associated with that admission. Finally, the rate structure should encourage participation of non-profit and safety net providers by offering access to capital to start integrated models and by utilizing risk-sharing strategies that level the playing field between non-profit and larger, for-profit entities.


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