Improving the Care of “Dual Eligibles”— What’s Ahead
Medicare and Medicaid, which were initially developed in 1965 as two distinct programs, jointly provide benefits to 9 million individuals commonly referred to as dual eligibles because their circumstances qualify them for both programs. Although Medicare and Medicaid come together to provide comprehensive care for dual eligibles, there are vast differences between the programs, which sometimes make their union seem more like a collision than a harmonic convergence. Here are a few basic differences between the two programs1:
• Medicare is paid for and managed by the federal government, whereas the Medicaid program in each state is managed primarily by the respective state and funded by the federal government and the state government. The proportion of state Medicaid funding matched by the federal government ranges from 50% to 76%, with an average “match rate” of 57%.
• Medicare is primarily responsible for covering basic medical services for persons ≥65 years of age and individuals of all ages who are disabled. Medicaid eligibility varies by state, but most state Medicaid programs provide for basic medical services and additional medical needs for low-income residents of the state who meet certain criteria. Many state programs exclude single adults <65 years of age, unless they are parents, pregnant, or disabled.
• Although Medicare serves as the primary payer for dual eligibles, Medicaid plays a significant role in covering their out-of-pocket expenditures and, depending on the state, may provide benefits that Medicare does not cover, such as dental, vision, hearing, and community-based services (eg, personal care services and home healthcare).
Despite these notable differences between Medicare and Medicaid, the line separating the programs has become blurred over the years. For example, Medicaid used to provide prescription drug coverage for dual eligibles, but the Medicare Part D provision of the Medicare Modernization Act of 2003 shifted that responsibility to Medicare as of January 2006.
While eligible for Medicaid benefits, many low-income individuals do not receive them. Some do not meet their state’s income and asset eligibility criteria, and others are likely eligible but have trouble navigating the application process.2 Poor health literacy is an especially common problem among older adults,3 and focus groups have demonstrated that dual eligibles often do not understand their plan or its benefits.4
Women, African Americans, Hispanics, and disabled Medicare beneficiaries <65 years of age make up a relatively large share of the dual-eligible population.5 Dual eligibles tend to have more functional and cognitive limitations and correspondingly greater medical need than beneficiaries enrolled in Medicare or Medicaid alone.5 As a result, they account for a disproportionate share of Medicare and Medicaid spending. Constituting just 15% of the Medicaid population, dual eligibles account for 39% of total Medicaid spending.6,7 They make up 21% of the Medicare population, yet are responsible for 36% of Medicare spending.7
Considering the significant level of need and the limited resources of dual eligibles, it is perhaps not surprising that long-term care (LTC) expenses account for an overwhelming share of medical expenses on behalf of this population, with dual-eligible individuals spending 70% of their Medicaid dollars on LTC services in 2007.6,8
Despite the high level of need that dual eligibles typically have, they are all too often subjected to uncoordinated payment systems in Medicare and Medicaid. To address this dysfunction and to improve coordination between Medicare and Medicaid, the Affordable Care Act (ACA) of 2010 established the Federal Coordinated Health Care Office within the Centers for Medicare & Medicaid Services (CMS). The ACA also created the CMS Innovation Center to develop and implement innovative payment and service delivery models for recipients of Medicare, Medicaid, and the Children’s Health Insurance Program, including dual eligibles. Additional assistance is expected from the Independent Payment Advisory Board and the Medicare Payment Advisory Commission, which have been tasked with assessing the unique needs of dual eligibles.
Role of the Federal Coordinated Health Care Office
At the payer level, Medicaid and Medicare have an incentive to implement coverage rules that minimize their financial liability. In attempting to limit their liability, inconsistencies have arisen between the programs in how they define certain services or apply coverage rules. These conflicts can contribute to misunderstandings and ultimately compromise care for dual eligibles and can increase the overall cost of care.
Improving care for dual eligibles will require the programs to make fundamental changes in how they finance and deliver care. It is essential that they integrate financing streams in a way that resolves the current conflicts in coordinating care for dual eligibles and remedies related deficiencies and inefficiencies. Ensuring that dual-eligible individuals, many of whom have complex medical needs, receive appropriate care depends on implementing an effective integrated approach.9
Financing stream conflicts are most evident in how coverage is delineated for skilled services such as rehabilitation therapy. Whereas Medicare covers services that are restorative or intended to improve a beneficiary’s functional status but denies payment for so-called “maintenance services,” Medicaid programs often cover services to prevent further deterioration of a patient’s underlying condition. One challenge in ensuring quality care for dual eligibles will be to define these types of skilled services, particularly when the nature of a service—whether it helps maintain the status quo or is restorative—is ambiguous.10
The current fee-for-service payment system was not designed to encourage integrated care delivery and precludes providers from discerning how their care practices affect total spending. Thus, providers have no incentive to use healthcare resources more efficiently. What a provider might do in the belief that it is in his or her financial short-term interest might cause the program to incur higher expense overall.
To address issues like these, the ACA bestowed primary responsibility for improving care for dual eligibles on the Federal Coordinated Health Care Office (“Duals Office”), which was established pursuant to Section 2602 of the act. The Duals Office is charged with improving access, coordination, and cost of care for all individuals eligible for both Medicare and Medicaid. This is to be accomplished through system transformation, innovation, and alignment of the programs’ administration practices and through changes in care delivery, financing, and quality measurement within and across the two programs. The following are some of the specific goals of the Duals Office11:
• To ensure that dual-eligible individuals have full access to the benefits they are entitled to receive under the Medicare and Medicaid programs.
• To simplify the processes that allow dual-eligible individuals to access the items and services to which they are entitled under the Medicare and Medicaid programs.
• To improve the quality of healthcare and LTC services for dual-eligible individuals.
• To increase dual-eligible individuals’ understanding of and satisfaction with coverage provided under the Medicare and Medicaid programs.
• To eliminate regulatory conflicts between rules of the Medicare and Medicaid programs.
• To improve care continuity and ensure safe and effective care transitions for dual-eligible individuals.
• To eliminate cost-shifting between the Medicare and Medicaid programs and among related healthcare providers.
• To improve the quality of performance of service providers and suppliers under both programs.
According to a letter earlier this year from Department of Health and Human Services Secretary Kathleen Sebelius to Speaker of the House John Boehner (March 1, 2011), the Duals Office is collaborating with the CMS Innovation Center to identify potential areas of reform in how care for dual eligibles is provided and paid for that can be incorporated into new models of care integration. It is expected that these demonstrations, which are provider-based, will complement the ongoing efforts by the CMS Innovation Center to develop other payment and delivery systems for Medicare, such as the recently introduced Pioneer Accountable Care Organization Model. All the reform efforts underway are being undertaken with one eye toward improving coordination of care for dual-eligible individuals.
One possible approach to integrating Medicaid and Medicare financially is to give each state a yearly block grant that is intended to fund all services used by state residents who are enrolled in either or both of the programs. States that spend less on Medicaid and Medicare services than the amount funded through the block grant would be permitted to keep the difference, but states whose Medicaid and Medicare spending exceeds the amount of the block grant would be obligated to make up the difference. Another suggested approach is for Medicare to bear full financial responsibility for dual-eligible beneficiaries.9,12
While the Federal Coordinated Health Care Office has only recently begun its work, other measures and programs have been enacted with the purpose of improving care for dual eligibles. For example, Section 3309 of the ACA contains provisions for eliminating cost-sharing for certain full-benefit, dual-eligible individuals. In addition, effective January 1, 2012, all cost-sharing under Medicare Part D will be waived for full-benefit, dual-eligible individuals who would require institutionalization if not for access to home- and community-based services (HCBS).
Special Needs Plans
Special needs plans (SNPs) are another type of program working to improve care for dual eligibles. SNPs are Medicare Advantage plans limited to enrolling three types of beneficiaries: dual-eligible individuals; residents of nursing facilities; and people with chronic conditions. Dual-eligible plans easily account for the majority of SNPs (approximately 62.5% of the SNP plan types).13
The Medicare Improvements for Patients and Providers Act of 2008 required SNPs to contract with individual states to provide Medicaid benefits, and it extended the SNP program through 2011. Section 3205 of the ACA allows SNPs to continue operating through fiscal year 2013, but restricts enrollment to individuals who have the specific special need the SNP is authorized to cover. Beneficiaries enrolled in an SNP who do not meet its qualifying criteria must be disenrolled by 2012. After 2013, additional legislation will be required for the SNPs to continue operating.14
SNPs that provide coverage for dual-eligible individuals are now required to be fully integrated and to secure contracts with Medicaid agencies for the states in which they operate. A fully integrated dual-eligible SNP is one that gives enrollees access to the full range of Medicare and Medicaid benefits—including LTC services—under the umbrella of a single managed care organization. The SNP must use aligned care management to coordinate delivery of benefits and has to offer specialty care networks for dual eligibles who are considered high risk. Beginning in 2012, fully integrated SNPs designed for dual-eligible individuals may be candidates for adjusted payments based on the overall frailty of their patient population.
Program for All-Inclusive Care for the Elderly
In 1997, long before SNPs and the Money Follows the Person (MFP) Rebalancing Demonstration Program (see next section) were established to coordinate care for dual eligibles, Congress authorized the Program for All-Inclusive Care for the Elderly (PACE) to integrate care for the frail elderly.15 PACE is offered as a Medicare benefit and, in some states, as a Medicaid benefit for nursing home–certified dual eligibles who are ≥55 years of age and live in a PACE service area. Although PACE enrollees are nursing home–certified, many beneficiaries are not nursing home residents.
Enrollees attend an adult day healthcare center, where they receive medical attention and support services from an interdisciplinary team consisting of healthcare providers and other professionals. For those individuals who require nursing home care, PACE continues to pay for and coordinate their care while they reside at the LTC facility. Because of the political desire to maintain PACE, the ACA held PACE programs harmless against the cuts being applied to Medicare Advantage plans.
Money Follows the Person Rebalancing Demonstration Program
Section 6071 of the Deficit Reduction Act (DRA) of 2005 designated $1.75 billion to establish the MFP Rebalancing Demonstration Program. The program is designed to help states reform their LTC systems and promote HCBS over institutionalization for Medicaid enrollees, assisting them with transitioning from LTC facilities back to the community, when feasible.16
CMS said the MFP Demonstration Program emerged from a growing consensus that states’ LTC services were weighted too heavily toward institutions and driven largely by provider needs and should instead give greater consideration to the consumer’s needs and emphasize community-based LTC services. The initial federal grant funded the program through 2011, stipulating the following goals16:
• Increase the use of HCBS, while reducing the use of institutionally based services.
• Eliminate barriers from state laws, Medicaid plans, and budgets that prevent Medicaid beneficiaries from receiving their choice of LTC.
• Bolster HCBS to allow institutionalized Medicaid beneficiaries to transition to the community setting if desired.
• Implement procedures to assure and enhance the quality of HCBS.
CMS reported that 13 additional states joined the MFP Demonstration Program in February 2011, bringing the number of states participating in the program to 43; the District of Columbia also receives an MFP Demonstration grant. Since its inception, the MFP Demonstration Program has helped states eliminate many of the obstacles that have hindered the transition of Medicaid beneficiaries from institutions to the community setting. From 2008—when the first transitions occurred—through 2010, nearly 12,000 former LTC residents rejoined their communities, with the number of individuals able to do so increasing each year.16
In recognition of the program’s success, Section 2403 of the ACA provides an additional $2.25 billion to allow more states to participate and to help those with existing programs to strengthen them. The law makes the following amendments to Section 6071 of the DRA16:
• It extends the MFP Demonstration Program through September 30, 2016, appropriating $450 million annually for fiscal years 2012 to 2016; any funds remaining at the end of each year will be rolled over to the following year and awarded to new and current participants until 2016.
• States will receive grant monies during the fiscal year in which the grant was awarded and for the subsequent 4 years, which means that a state awarded a grant in 2016 may continue to use remaining funds from the grant through fiscal year 2020.
• The legislation expands eligibility to individuals who have resided at an LTC facility for >90 consecutive days, excluding any Medicare-covered days spent at the institution solely to receive short-term rehabilitation services.
Beyond SNPs and the MFP Rebalancing Demonstration Program, several states have developed innovative programs of their own to provide care for dual eligibles, with an emphasis on LTC services:
• Arizona Long Term Care System
• STAR+PLUS (Texas)
• Minnesota Senior Health Options (MSHO)
• Partnership Program (Wisconsin)
• Massachusetts Senior Care Options
• Coordination of Long-Term Services (New Mexico)
• Medicaid Advantage Plus (New York)
• Washington Medicaid Integration Partnership
States’ coordinated care programs achieve care coordination using multidisciplinary teams that generally include nurses, social workers, and nurse practitioners. The Wisconsin Partnership Program, for example, arranges to have nurse practitioners attend physician visits with patients to strengthen the link between the community and medical care providers.17 Mandates from the Federal Coordinated Health Care Office and the CMS Innovation Center are likely to result in significant innovations to these coordinated care programs, which will enhance the services they offer for dual eligibles. Recent policy briefs by the Kaiser Commission on Medicaid and the Uninsured and by Mathematica provide excellent reviews of innovative proposed models for states to integrate delivery of services and payment provided by Medicare and Medicaid to dual eligibles.18,19
Affordable Care Act Expands Access
ACA expands Medicaid coverage to all individuals with incomes up to 133% of the Federal Poverty Level as of January 2014. The change is likely to affect many Medicare subscribers, with a resultant increase in the number of dual eligibles. Having access to coverage does not guarantee access to care for this patient population, many of whom find it challenging to locate providers—especially primary care providers—who accept Medicaid. ACA seeks to remedy some of the reimbursement issues that discourage providers from accepting dual eligibles.
One issue that has made providers reluctant to take on Medicaid patients is the disparity between what Medicare reimburses for a service and what the state reimburses, which is typically lower and varies greatly from state to state. Despite the fact that dual eligibles have Medicare coverage as well as Medicaid, they still face difficulty locating providers due to the way benefits are coordinated between the two programs.
For dual eligibles, the state is responsible for the 20% cost-sharing amount required of the Medicare beneficiary under Medicare Part B (Medicare pays the remaining 80%). If the amount that the state authorizes a provider to bill for a particular service under its Medicaid plan comes to less than the 80% share of the allowable fee that Medicare reimburses, the state has the option of capping reimbursement at that level, thus not paying the provider for the beneficiary’s 20% coinsurance amount. This could result in a 20% decrease in payment to providers for services to dual-eligible compared to non–dual-eligible Medicare beneficiaries. In addition, this loss cannot be billed to the dual-eligible patient because the law prohibits providers from trying to recoup this amount from the patient. To illustrate how this might work, if the provider is allowed to bill Medicare $100 for an office visit by a dual eligible and the state Medicaid program typically covers this service for Medicaid-only enrollees at $80, the state can pay the provider the $20 coinsurance amount on the beneficiary’s behalf, but it is not obligated to do so because the provider is already receiving an amount (from Medicare) equal to what the state pays its participating providers for that Medicaid-covered service.20
Recognizing the barrier to care that these reimbursement policies pose for Medicaid enrollees, ACA has mandated that in 2013 and 2014, reimbursement for primary care services provided under Medicaid be set no lower than the level authorized by Medicare. The act requires the federal government to fund the difference. This change alone is expected to substantially increase reimbursement for primary care services provided to the dual-eligible population in many states, and the hope is that this will translate to better access to primary care for the growing number of Medicaid enrollees anticipated in the coming years.
The Challenges Ahead
The aims of the Medicare-Medicaid Coordination Office and related programs are to improve quality, reduce costs, and improve the beneficiary experience. Of course, making improvements in quality and costs will be challenging. Many of these challenges are addressed in the recently released report, “Medicare and Medicaid Alignment: Challenges and Opportunities for Serving Dual Eligibles.”21
Achieving the goal of reducing costs depends on realizing savings from eliminating wasteful use in excess of the costs for expanding use of currently underutilized services, such as preventive care, and for covering services provided by social workers, pharmacists, and other members of the multidisciplinary team, as seen with the PACE and MSHO models. Although it has been demonstrated that the quality of care and enrollees’ access to services improved under PACE and remained relatively stable under MSHO, research shows that costs for an individual under these programs are higher relative to costs for the same type of individual under the current fee-for-service Medicare and Medicaid programs.22,23
As health outcomes and longevity improve, Medicare and Medicaid will be responsible for meeting the needs of an ever larger population and bear an even greater financial burden. Thus, there is genuine concern that a failure to reduce overall costs will lead to a retreat from emerging and existing programs that have demonstrated the greatest potential for increasing care coordination and improving outcomes for dual-eligible older adults. Going forward, careful stewardship of resources is vital if these promising programs are to survive. With improvements in care coordination for dual eligibles, new opportunities are likely to emerge for geriatric providers, especially for those able to meet the complex and challenging needs of this select group of older adults through the implementation of coordinated care strategies.
The author reports that he currently works for Mercy LIFE and previously worked for NewCourtland LIFE Program. LIFE Programs are Programs for All-inclusive Care for the Elderly (PACE).
Dr. Stefanacci served as a CMS Health Policy Scholar for 2003-2004, is Associate Professor of Health Policy, University of the Sciences, and a Mercy LIFE physician, Philadelphia, PA; and is Chief Medical Officer, The Access Group, Berkeley Heights, NJ.
Dr. Spivack is Associate Physician Editor, Clinical Geriatrics; Medicare Medical Director, UnitedHealthcare Medicare & Retirement, Westport/Trumbull, CT; Founder, Connecticut Geriatrics Society; Consultant in Geriatric Medicine, Greenwich Hospital, Greenwich, CT, and Stamford Hospital, Stamford, CT.
1. Henry J. Kaiser Family Foundation. Kaiser Commission on Medicaid and the Uninsured. The role of Medicaid in state economics: a look at the research. January 2009. http://www.kff.org/medicaid/upload/7075_02.pdf. Accessed August 18, 2011.
2. Jacobson G, Neuman T, Damico A, Lyons B. The Kaiser Family Foundation Program on Medicare Policy. The role of Medicare for the people dually eligible for Medicare and Medicaid. http://www.kff.org/medicare/upload/8138.pdf. Published January 2011. Accessed August 18, 2011.
3. US Department of Education, National Center for Education Statistics. The health literacy of America’s adults: results from the 2003 National Assessment of Adult Literacy. http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2006483. September 2006. Accessed August 12, 2011.
4. Ryan J, Super N. National Health Policy Forum. Dually eligible for Medicare and Medicaid: two for one or double jeopardy? http://www.nhpf.org/library/issue-briefs/IB794_Duals_9-30-03.pdf. 2003. Accessed August 12, 2011.
5. Henry J. Kaiser Family Foundation. Demographic characteristics of dual eligibles, 2006. http://facts.kff.org/chart.aspx?ch=1764. Accessed August 18, 2011.
6. Kaiser Commission on Medicaid and the Uninsured. Dual eligibles: Medicaid’s role for low-income Medicare beneficiaries. http://www.kff.org/medicaid/upload/4091-08.pdf. May 2011. Accessed September 2, 2011.
7. Henry J. Kaiser Family Foundation. The Kaiser Family Foundation Program on Medicare Policy. The role of Medicare for the people dually eligible for Medicare and Medicaid. January 2011. http://www.kff.org/medicare/upload/8138.pdf. Accessed August 18, 2011.
8. Henry J. Kaiser Family Foundation. Distribution of Medicaid spending for dual eligibles by service (in millions), 2007. http://www.statehealthfacts.org/comparetable.jsp?ind=661&cat=6. Accessed August 18, 2011.
9. Medicare Payment Advisory Commission. Report to the Congress: aligning incentives in Medicare. http://www.medpac.gov/documents/Jun10_EntireReport.pdf. Published June 2010. Accessed August 18, 2011.
10. Medicare Payment Advisory Commission. Coordinating the care of dual-eligible beneficiaries. http://medpac.gov/chapters/Jun11_Ch05.pdf. June 2011. Accessed August 12, 2011.
11. Affordable Care Act, HR 3590, 111th Congress, § 2602 (2010).
12. Lambrew JM. Making Medicaid a block grant program: an analysis of the implications of past proposals. Milbank Q. 2005;83(1):41-63.
13. Henry J. Kaiser Family Foundation. Medicare special needs plan offerings by plan type, 2011. http://www.statehealthfacts.org/comparetable.jsp?ind=333&cat=6&sort=
a&gsa=2. Accessed August 18, 2011.
14. Centers for Medicare & Medicaid Services. Medicare Managed Care Manual. Chapter 16-B: Special Needs Plans. https://www.cms.gov/manuals/downloads/mc86c16b.pdf. Revised May 20, 2011. Accessed August 18, 2011.
15. Centers for Medicare & Medicaid Services. Program of All-Inclusive Care for the Elderly. https://www.cms.gov/pace. Revised December 7, 2010. Accessed August 18, 2011.
16. Centers for Medicare & Medicaid Services. Community services and long-term supports: money follows the person. https://www.cms.gov/CommunityServices/20_MFP.asp. Revised July 12, 2011. Accessed August 18, 2011.
17. Grabowski DC. Special needs plans and the coordination of benefits and services for dual eligibles. Health Aff. 2009;28(1):136-146.
18. Kaiser Commission on Medicaid and the Uninsured. Policy Brief: proposed models to integrate Medicare and Medicaid benefits for dual eligibles: a look at the 15 state design contracts funded by CMS. http://www.kff.org/medicaid/upload/8215.pdf. Published August 2011. Accessed August 18, 2011.
19. Verdier JM; Mathematica Policy Research, Inc. Coordinating and improving care for dual eligibles in nursing facilities: current obstacles and pathways to improvement. March 2010. http://www.mathematica-mpr.com/publications/pdfs/health/nursing_facility_dualeligibles.pdf. Accessed August 18, 2011.
20. Mitchell JB, Haber SG. State payment limitations on Medicare cost-sharing: impacts on dually eligible beneficiaries and their providers. http://www.rti.org/pubs/StatePaymentLimits.pdf. Published July 31, 2003. Accessed August 18, 2011.
21. Burke G, Prindiville K. Medicare and Medicaid alignment: challenges and opportunities for serving dual eligibles. National Senior Citizens Law Center. August 2011. http://www.nsclc.org/areas/medicare-part-d/dual-eligibles-encounter-problems-accessing-needed-benefits/at_download/attachment. Accessed August 18, 2011.
22. Chatterji P, Burstein N, Kidder D, White A. Evaluation of Program of All-Inclusive Care for the Elderly (PACE) demonstration: the impact of PACE on participant outcomes. www.npaonline.org/website/download.asp?id=1933. July 1998. Accessed August 12, 2011.
23. Kane RL, Homyak P, Bershadsky B, Lum T, Flood S, Zhang H. The quality of care under a managed-care program for dual eligibles. Gerontologist. 2005;45(4):496-504.