The Department of Social Services is seeking public comments on an application to run a federal demonstration program aimed at saving money while improving the health of a small group of Medicaid clients whose care represents a significant portion of the program’s expenses.

But there’s still disagreement between the department and many members of the committee that developed the proposed model, centering on how health care providers would be rewarded for meeting the program’s quality objectives.

At issue is a proposal to create a new model for providing and coordinating care for state residents who receive health care coverage through both Medicaid and Medicare. The program would include just over 57,500 people, known as “dual eligibles,” a group that includes poor seniors and younger adults with disabilities, many of whom have serious mental illnesses. Their care costs more than $3 billion a year, an average of $53,500 a person. And despite the price tag, it’s often inadequate and poorly coordinated, with clients unable to find health care providers to treat them.

Under the proposed demonstration project, dual eligibles would receive care coordination and case management. The state would encourage teams of health care providers to serve as “health neighborhoods” for the dual eligibles that would take a more holistic approach to their care, focusing on preventing and addressing problems, making sure care is coordinated, and, if necessary, addressing a person’s living environment and housing.

Providers who participate in the demonstration would receive fees for the services they provide. But they’d also get other funds, and exactly how that money would be awarded remains a matter of dispute. The program would give health neighborhoods start-up funds, quarterly payments for care coordination activities, and — the one in dispute — performance payments.

DSS has proposed using a staged approach for the performance payments, in which health neighborhoods would receive money in the first year if they meet quality targets. After that, though, they would only get the performance payments if they meet both quality targets and produce savings.

Some members of the committee charged with designing the model have bristled at the idea of giving health care providers a financial incentive to save money, saying it could encourage them to deny care. Other committee members have said health neighborhoods that meet quality goals but don’t save money should still be rewarded, even if they receive less than those that meet both quality and financial goals.

At a meeting earlier this month, committee members agreed to a compromise plan under which health neighborhoods would receive performance payments if they meet quality targets. After the first year, savings would also be taken into account, and the health neighborhoods that produce savings while meeting quality targets would earn more than those that meet quality goals but don’t save money.

But DSS did not incorporate the compromise arrangement into its application. Medicaid Director Mark Schaefer said during a meeting Friday that it’s not clear whether providing payments regardless of whether health neighborhoods produce savings would achieve one of the aims of the program, getting providers to focus on offering the most appropriate services, not simply more of them. He said he’s confident that the health neighborhoods will work hard to achieve quality benchmarks because doing so is required to get any performance payments.

In addition, Schaefer said, splitting any savings the program produces between multiple health neighborhoods even if only one generates savings would dilute the incentive to try to reduce costs. He said that could make it harder to get providers to participate in health neighborhoods.

In response, several committee members urged Schaefer to follow the compromise model instead. Matthew Katz, executive vice president of the Connecticut State Medical Society, said if the program produces savings overall, any health neighborhood that improves quality should be rewarded for it, even if those that don’t save money receive less than those that do.

The application is expected to be submitted to the federal government at the end of May, after a 30-day comment period. A copy of the application is available here, or by requesting it from the Division of Medical Administration, Department of Social Services, 25 Sigourney St., Hartford, Conn., 06106, or emailing

Written comments should be submitted to Kate McEvoy, associate director of health servicse and supports, DSS Division of Medical Administration, 25 Sigourney St., Hartford, Conn., 06106. Comments can also be submitted by email to More information on submitting comments is available here.

Arielle Levin Becker covered health care for The Connecticut Mirror. She previously worked for The Hartford Courant, most recently as its health reporter, and has also covered small towns, courts and education in Connecticut and New Jersey. She was a finalist in 2009 for the prestigious Livingston Award for Young Journalists, a recipient of a Knight Science Journalism Fellowship and the third-place winner in 2013 for an in-depth piece on caregivers from the National Association of Health Journalists. She is a 2004 graduate of Yale University.

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