Constrained Innovation in Managing Care for High-Risk Seniors in Medicare + Choice Risk Plans. 3. Off-Policy Benefits


The organizations differed in their reliance on “off-policy” benefits, those which are not explicitly linked in the MCO’s Medicare + Choice Contract. Such benefits are commonly initiated by the care management staff. Plans that will authorize off-policy benefits do so selectively. Examples of off-policy benefits at our four case study organizations include:

  • Providing services in the home in situations where the patient is not homebound. This might be done in lieu of placing a malnourished or dehydrated patient in a hospital or nursing home. Home visits were also used to assess seniors in care management, even when the senior was not homebound.

  • Paying for transportation to the physician’s office for a low-income enrollee if there is concern that deterioration will result from lack of medical care

  • Providing durable medical equipment not covered by Medicare, such as rails in showers, repairing stairs to prevent falls, and glucometers for persons with diabetes who are not insulin-dependent.

  • Providing home intravenous antibiotics rather than placing the patient in a hospital or nursing home

The four organizations differed in their procedures for authorizing off-policy benefits and in the extent to which they went beyond the Medicare coverage guidelines. The organizations sought to balance their interest in helping care-managed seniors with their concern that beneficiaries who do not receive additional benefits will complain or bring a formal grievance, arguing unequal treatment.16

All four provided care management services that clearly go beyond the Medicare benefit package. As for other off-policy benefits, HMO Oregon seemed to offer care managers the greatest latitude. These case managers can preauthorize any home health care service or durable medical equipment purchase, and they also make occasional use of off-policy benefits. They are guided by written procedures but still enjoy some latitude to use their best judgment. On a day-to-day basis, the HMO Oregon medical directors perform a largely consultative role and do not review most decisions of care managers. The major criterion in deciding whether to authorize off-policy benefits is whether such benefits have the potential to prevent emergency room or inpatient use.

Keystone East allows for off-policy benefits but requires approval by the medical director or the patient’s primary care physician. For example, all in-home services recommended by care managers had to be approved by the primary care physician. Care managers can request an exception to the Medicare fee-for-service rules in order to meet a specific need for a senior in care management. A care manager in our focus group, however, indicated that such requests are seldom made and that, by and large, the Medicare coverage rules are rarely exceeded.

Aspen follows the coverage rules established by Medica, the health care plan in which beneficiaries have enrolled prior to selecting Aspen as their primary care clinic. Medica hews closely to the Medicare coverage rules and therefore does not permit Aspen much latitude with respect to off-policy benefits.17 Although care managers can authorize home health visits for beneficiaries who do not meet the Medicare fee-for-service criteria for such care, most other care must be provided through referrals to community agencies.

Kaiser Colorado care managers can provide some off-policy benefits with approval from their supervisor. For the most part, such benefits are limited to covering home health nurse visits for evaluating patients and assessing their home situation. Otherwise, use of off-policy benefits is rare.

Managed care plans are under contractual obligation to provide only the Medicare benefit package plus any extra benefits included in their contracts. Some may go beyond that package in response to the requirements of the Medicare payment system. In general, plans will provide additional coverage or services only if they think it is to their (1) financial advantage, in terms of reducing the overall cost of care; or (2) marketing advantage, because of favorable word-of-mouth advertising. Furthermore, it is often very difficult to decide whether a possible innovation might meet these criteria, because there is little evidence about cost-effectiveness of such services.

In the focus groups, several physicians noted that the flexibility provided by managed care increased their ability to treat their patients effectively. A physician in a capitated medical group (in this case, not Aspen) noted that the capitation payments allowed him to arrange for durable medical equipment that could greatly improve treatment. To illustrate his point, he discussed his frustration with the restrictions typically imposed in the Medicare fee-for- service section:

I had a [fee-for-service] patient in a nursing home with a decubitus ulcer that didn’t meet the guidelines for getting an air bed. He had a Grade I ulcer, which went to Grade II and is headed to Grade III. He absolutely needed an air bed, but he didn’t meet guidelines. So he landed in the hospital to get a skin flap. Even then I had trouble getting him the air bed he needed. The guidelines require that he has to stay in the hospital for at least three days before he could get into a skilled nursing facility and get an air bed. But he did not need to be in the hospital that long. I actually called the regional director of Medicare in San Francisco and was told that I cannot admit somebody to a skilled nursing bed until they’ve been in the hospital for three days. That’s a Medicare guideline.

Physicians also complained about the inability to order home visits to evaluate seniors who might face substantial risks but who are ineligible for home care under the Medicare fee-for- service rules. These physicians indicated that they could arrange for such visits under managed care, and one physician went so far as to say that because of the Medicare restrictions he “felt sorry for his fee-for-service patients.”

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