Program to manage care of poor, disabled sustains losses

A first-in-the-nation program aimed at controlling costs and improving health care for some of Massachusetts’ poorest and sickest residents has sustained deep financial losses since its launch in 2013, dealing a setback to the state’s efforts to control rising medical spending through more coordinated care.

The three insurers in the pilot program lost a combined $54 million in 18 months, according to a recent report from the Executive Office of Health and Human Services. And as losses mount, insurers and state officials say it is too early to tell whether the program is improving the health of its members.

“This is a very expensive experiment — at public expense,” said Al Norman, executive director of Mass Home Care, a network of nonprofit agencies monitoring the program. “I don’t think we can say a lot about health outcomes, but there’s a whole lot of spending going on here.”

The disappointing results of the program, called One Care, underscore the difficulties of reining in medical spending for people struggling with both poverty and complex health problems, from diabetes to drug addiction. And, according to the state’s agreement with One Care insurers, taxpayers will have to cover a chunk of the program’s financial losses — at a time when health care spending is already straining the state budget.

After Massachusetts launched One Care in October 2013, 11 other states began similar programs. Federal officials declined to comment on how other states are faring.

In Massachusetts, One Care is designed to coordinate services for 100,000 poor and disabled adults under 65 who are covered by both Medicaid, the government program for the poor, and Medicare, the program for seniors and the disabled. The state and federal governments pay insurers a set rate to manage care for enrolled patients.

The goal of One Care is to control costs and improve care by putting patients into a single, integrated health plan with a coordinator to help them navigate services. The program also includes expanded dental, vision, and mental health benefits. But so far, the three nonprofit insurers in One Care have enrolled fewer than 18,000 people. Boston-based Commonwealth Care Alliance lost more than $40 million on the program. Fallon Health of Worcester lost about $13 million. Tufts Health Plan of Watertown lost nearly $1 million.

The financial challenges are so severe that Fallon plans to drop out of the program at the end of September, laying off 45 employees and leaving the state scrambling to reassign its 5,400 members to other plans.

In a statement, the insurer said it “very reluctantly” decided to exit because the program was “not economically sustainable.”

The state will cover some of the losses insurers sustained. Daniel Tsai, assistant secretary for the state’s Medicaid program, known as MassHealth, said state officials are considering raising reimbursement rates to help insurers cover costs in the months and years ahead, but the federal government also must approve such an increase.

“We are committed to trying to make sure [the rates] are as adequate as possible,” Tsai said.

People covered by both Medicare and Medicaid, known as dual eligibles, account for a disproportionate share of health care costs. These patients are 14 percent of the national Medicaid population, but represent 35 percent of Medicaid spending.

Massachusetts has for years offered managed care plans for poor seniors, but One Care is the first attempt at managing care for dual eligibles under 65.

Insurers attribute the program’s financial losses to the difficulties of managing care for people with exceedingly complex lives. Many patients are homeless. Many don’t speak English. Most have problems with addiction or mental illness. Finding the patients and persuading them to join the program can be immensely challenging. “This is a population that has really lived in the shadows of our society,” said Commonwealth Care Alliance president Lois Simon.

Commonwealth Care Alliance, a nonprofit that specializes in insuring and providing care for the poor, has spent $377 million to manage care for 10,000 One Care members, more than $40 million above the payments by the state.

Tufts Health Plan, with 1,700 One Care members, lost less money than the other insurers, but its membership is smaller. Dr. Christopher “Kit” Gorton, president of Tufts’ public plans division, said Tufts is being cautious in adding members to keep expenses under control.

One Tufts patient illustrates the complexity and expense of caring for a population often living with health problems that go unaddressed for years. The man was homeless, and checked in and out of detox facilities. With help from the One Care program, he controlled his alcohol addiction and found an apartment. Then he needed dental work and help monitoring his weight and diabetes.

“All of the resources to meet these people’s needs are scarce and expensive resources,” Gorton said. “All of these people are way more complex than the typical members we see.”

Executives at Tufts and Commonwealth Care Alliance say higher reimbursements for One Care would help them manage patient care without losing millions of dollars. But they say they are taking other steps to make the program viable. Commonwealth Care Alliance, for example, recently opened two residential facilities that can treat people with mental illness at about half the cost of psychiatric hospital stays.

The insurer is looking for other opportunities to move patients to lower-cost settings, said Simon, the president. “It’s the right model of care, I think we all agree to that,” she said. But she added, “We’ve got some fixing to do. We have to get this right for this population.”

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey @globe.com. Follow her on Twitter @priyanka_dayal.

Program to manage care of poor, disabled sustains losses

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