Experiment To Help Frail Elderly Not Worth Cost, Detractors Say

Washington Watch

Social health maintenance organizations (SHMOs) — a long-running but generally little-known experiment by the federal government to combine social services with expanded Medicare benefits to keep the frail elderly in their homes — may soon come to an end.

Advocates of the program say that recommendations to Congress to drop it are based on flawed assessments.

SHMOs need to be developed further to help with the nation’s increasing long-term care needs, they argue. The four existing SHMOs that face possible extinction are Senior Care Action Network in Long Beach, Calif., Health Plan of Nevada, Elderplan in New York City, and Kaiser Permanente Senior Advantage II in Portland, Ore.

Justification sought

Randall Brown, senior fellow with Mathematica Policy Research, which examined the four SHMOs on behalf of the Health Care Financing Administration, says the issue for Congress — and the public — is whether the SHMOs are functioning to provide greater benefits to a medically fragile population in a way that justifies the higher level of payments they receive.

“We’re not saying that there aren’t any elderly people getting much-needed services from SHMOs,” Brown says. “The question was, ‘Is the taxpayer getting his money’s worth?'”

The Kaiser Plan and Health Plan of Nevada have “strong geriatric care and home care” components, he reports, and Kaiser in particular “enrolls a very sick population.”

As a result, Brown says, “You have two SHMOs that have good programs, that are spending money on extra services … and two that don’t seem to be spending that money.”

Those latter two HMOs have indicated that they misunderstood the questions posed to them by Mathematica. “We’re having some discussion about that,” Brown adds.

Lucy Nonnenkamp, Senior Advantage II project director for Kaiser, says that HCFA’s evaluation of the SHMOs was flawed. Her ultimate goal: legislation to give permanent status to the SHMOs. Kaiser’s plan, which is connected to a research center, Nonnenkamp notes, serves a “much frailer population” (48 percent of whom are over age 85).

“We thought HCFA would be evaluating some of the core things we were doing to achieve a delay in nursing home services,” she says. “The evaluation was incomplete … a little superficial … and didn’t address our core competencies.”

Nonnenkamp says the evaluation of Kaiser — and the other SHMOs — failed to include costs saved under the Medicaid program by keeping enrollees in their own residences and out of nursing homes.

“We always knew that HCFA wasn’t entirely behind us,” Nonnenkamp adds, noting that SHMOs have had to ask Congress “seven times” to extend or expand the demonstration. “We intend to go back yet again to ask Congress for permanent status.”

Brown says the Kaiser Permanente program does appear to be doing what was anticipated for SHMOs when they were authorized. “If they all looked like Kaiser Permanente, our recommendations would have been different,” Brown says.

Currently, about 95,000 persons are covered by the four SHMOs, he reports, with the largest numbers in the Long Beach (45,000) and Nevada (37,000) plans. The New York plan has about 8,500, while Kaiser Permanente enrolls about 4,000.

Looking at PACE

One expert says HCFA is looking to the PACE (Program of All Inclusive Care for the Elderly) program as a replacement — or successor — approach to the SHMOs.

The PACE program is described by HCFA as “a unique capitated managed care benefit for the frail elderly provided by a not-for-profit or public entity that features a comprehensive medical and social service delivery system using a multidisciplinary team approach in an adult day health center, supplemented by in-home and referral services in accordance with participants’ needs.”

PACE organizations are not-for-profit private or public entities primarily engaged in providing those services, and operating under a governing board that includes community representation. HCFA officials report that that program “has taken off” much more than the social HMO program.

Permanent status

Robert Greenwood, director of public affairs for the National PACE Association, notes that both programs started as Medicare demonstration programs, with PACE being granted permanent status in 1997.

Currently, Greenwood reports, there are 25 “dually capitated” programs that are fully operational, with more on the way. In addition to those 25, there are 11 that are operating in so-called pre-PACE status, where they are capitated under Medicaid, but providing Medicare services on a fee-for-service basis with the next step being transition to dual capitation.

Under the Medicaid program, the monthly capitation rate is negotiated between the PACE provider and the state Medicaid agency and is specified in the contract between them.

Section 710 of the Omnibus Appropriations Act of 1998 permits states to cover PACE enrollees under institutional groups and rules similar to those that apply under home and community based services waivers — meaning states can elect to cover PACE enrollees under the special income level group (also known as the 300 percent group).

How the PACE program fares — and the ultimate fate of the SHMOs — won’t be known for some time.

What’s the view on Capitol Hill? It appears that no one in Congress is making them a priority issue — and the likelihood is that SHMOs will disappear with little or no attention being paid to their demise.

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