Dual-eligibles market creates opportunities for physician practices

Washington Physicians have new opportunities to partner with health plans to take advantage of the rapidly growing private market for beneficiaries who are eligible for both Medicare and Medicaid, according to a partner at a global management consulting firm.

“There’s been a tremendous interest and appetite around the so-called dual-eligibles population,” said Sanjay Saxena, MD, a partner in the North American health practice at Booz & Co. and co-author of a new Booz report (link).

Several years ago, discussions about changes in the private insurance market were all about health insurance exchanges, then about accountable care organizations, and “now it’s about the duals,” Dr. Saxena said.

The Booz report discusses ways in which managed care companies could leverage both the Medicaid and dual-eligibles markets by identifying states that present the best growth opportunities and then defining their operating models or “choosing a way to play” in these markets. Managed care organizations, for example, could enable care delivery by supporting or delegating care management activities to medical groups or hospitals, or going so far as to own or manage networks of hospitals or physician groups in an effort to integrate care management and create incentives to drive care coordination.

As managed care organizations engage in these models, physician groups also should think about how they want to participate in the growing Medicaid and dual-eligibles marketplaces, Dr. Saxena said. He said some medical groups may be proactive and well-positioned enough to reach out to health plans and say, “Look, we build medical homes, we have care coordinators, and have the kind of outreach and relationships with the community where we feel we could share in the incentives and savings and benefits and high-quality care.”

As high utilizers of care, dual-eligibles have complex health needs and rack up roughly $300 billion in costs annually to Medicare and Medicaid. These challenges notwithstanding, many health plans have been viewing government-subsidized markets as very attractive opportunities, Dr. Saxena said. “For physicians, whether we like it or not, those are the markets that continue to grow in size.” In looking at future avenues for growth, analysts have seen that employer-sponsored insurance markets have been declining steadily, and while the individual market is expected to expand through the Affordable Care Act’s insurance exchanges, that’s going to be a difficult market to navigate as well, he said.

WellPoint’s recent acquisition of AmeriGroup and Aetna’s purchase of Coventry Health Care are two developments that illustrate a growing interest in Medicare and Medicaid managed care, Dr. Saxena said. In Aetna’s case, “the major driver was greater exposure in the government market. For WellPoint and AmeriGroup, it’s a very similar story.” WellPoint and its competitors have shown recent interest in managing care for the dual-eligible population.

The health system reform law’s expansion of Medicaid, moves by states toward Medicaid managed care to get budgets under control, and a series of new federal demonstration projects that aim to find more efficient ways to manage the dual-eligible population “are three separate but related things that are creating this opportunity,” Dr. Saxena said. During the next five years, Booz & Co. estimates that the managed care market size for dual-eligibles alone could range from $86 billion to $183 billion.