New Opportunities to Advance Integrated Care for Dual Eligibles

Health Highlights

Editor’s Note: Dual eligibles—those eligible for Medicare and Medicaid—are among the most costly and complex enrollees in both programs. Though they represent 20% of Medicare enrollees and 15% of Medicaid enrollees, they account for about a third of each program’s total spending.

Given that dual eligibles include both older adults and people of all ages with disabilities, they are, by definition, a costly population. The disproportionate spending on their behalf, however, is reflective of misalignments between the Medicare and Medicaid programs that can result in uncoordinated care and poor outcomes. In a recent webinar, Manatt Health examined the unique challenges of navigating and accessing care across the Medicare and Medicaid systems—and explained the newest initiatives to drive improved coordination of care and benefits. In part 1 of our article summarizing the webinar, below, we look at key background information on dual eligibles, the state of integration, and recent federal initiatives to advance integration. Watch for part 2 of our summary in the September “Health Update,” focusing on state innovation in integrated care and key takeaways.

Click here to view the full webinar free on demand—and here to download a free copy of the presentation.


A High-Need, High-Cost Population

Dual eligibles are an exceedingly high-need, high-cost population. There are approximately 11 million individuals who are eligible for both Medicare and Medicaid. They have complex health needs and account for a disproportionate share of spending in both programs. To understand the complexity of the dual eligible population, consider that 60% have multiple chronic conditions, 41% have at least one mental health diagnosis, 20% live in an institutional setting, and 17% have Alzheimer’s or related dementia. In addition, 49% receive long-term services and supports (LTSS), with 80% of Medicaid spent on the dual eligible population going to LTSS. More than half the dual eligible population—60%—are 65 or older while 40% are younger than 65.

While dual eligibles make up 20% of the Medicare population, they account for 34% of Medicare costs. On the Medicaid side, dual eligibles represent 15% of Medicaid beneficiaries—but they are responsible for a third of Medicaid costs.

There have been a number of studies comparing the costs of dual eligibles with the costs of individuals who are Medicare-only or Medicaid-only beneficiaries. Findings show that the average annual cost of a dual eligible beneficiary is three times higher than the cost of the average Medicare fee-for-service beneficiary and seven times greater than the cost of a Medicaid-only beneficiary. It is also important to recognize that utilization is significantly higher among the dual eligible population than the Medicare-only or Medicaid-only populations. For example, 26% of dual eligibles have inpatient stays during the course of a year compared to just 16% of Medicare-only beneficiaries. While 13% of Medicare-only beneficiaries visit the emergency room over a year, that number jumps to 21% for the dual eligible population.

Fragmentation of Care and Misalignment of Incentives

Dual eligibles experience extremely uncoordinated care. It is exceedingly difficult to navigate two different insurance programs, with Medicare the payer for primary care, acute care and pharmacy services, and Medicaid responsible for behavioral health treatment and LTSS. Working with different insurers, beneficiaries have to utilize different provider networks, as well as try to understand different eligibility, enrollment, grievance and appeals processes.

States have no incentive to coordinate care since any related cost savings are not shared. For example, if the behavioral health interventions and LTSS that states support through Medicaid yield cost savings for the acute care services that Medicare covers, the states do not share in those savings. This has led to cost shifting across programs, resulting in inefficient and suboptimal care.

In addition, many plans don’t understand the total cost of care—and don’t have easy access to utilization data for services that are outside of their direct control. This limited access to comprehensive utilization data hinders the ability to manage episodes of care effectively.

A Brief History of Integration

Attempts to integrate Medicare and Medicaid go back to the 1970s and 1980s, with the introduction of Programs for All-Inclusive Care for the Elderly (PACE), beginning as state-by-state demonstrations. In the late 1990s, states, starting with Minnesota and Massachusetts, began experimenting with integrated care models, including through Medicaid LTSS programs. The number of states with managed LTSS programs tripled between 2004 and 2018 to a total of 24 today. These integration efforts have resulted in different program models with varying levels of coordination and integration of Medicare and Medicaid covered benefits, financing and administrative processes.

Over the past 20 years, these state efforts have been incrementally facilitated through the creation of Medicare Advantage Dual Eligible Special Needs Plans (D-SNPs), fully-integrated and highly-integrated dual eligible SNPs (FIDE-SNPs and HIDE-SNPs), and the federal Financial Alignment Initiative (FAI) or duals demonstration. In addition, the Affordable Care Act (ACA) created a Medicare and Medicaid Coordination Office to oversee coordination efforts. In just the past couple of years, states have been given more flexibility to advance integration efforts between the Medicare and Medicaid programs.

Many states are now making significant progress in integrating care for dual eligibles. States at the forefront of integration efforts include Tennessee, Pennsylvania, Virginia, Florida, Arizona, New Mexico, Minnesota, Wisconsin and Idaho. It is important to note there are now 129 PACE programs operating in 31 states with an enrollment of 46,000.

Dual Eligible Enrollment in Managed Care Remains Low

Fewer than 10% of dual eligibles are enrolled in any form of integrated care, with the majority of those (about 2.6 million) enrolled in a D-SNP. While enrollment is growing, there are still a number of states that exclude the dual eligible population from Medicaid managed care.

In addition, mandatory enrollment in managed care for Medicare services is still prohibited. Given the complexity of the dual eligible population, there are concerns around limited networks. Provider engagement and beneficiary education to understand program options also are continuing barriers to increasing enrollment.

Integrated Care Programs Demonstrate Modest but Promising Success

Integrated care programs have shown some early promising signs. Dual eligibles enrolled in Minnesota’s D-SNP were 48% less likely to have a hospital stay and 16% less likely to use an assisted living or nursing home facility than dual eligibles not enrolled in an integrated plan. In Arizona, dual eligibles enrolled in the state’s D-SNP had a 43% lower rate of days spent in a hospital and a 21% lower readmission rate than dual eligibles in Medicare fee for service.

In addition, while there have been serious enrollment issues in the FAI, 59% of those who did participate gave their plan the highest rating in 2016, compared to performance ratings for other Medicare Advantage plans. Finally, integrated care programs also have resulted in cost savings. On average, states pay PACE programs 13% less than the cost of caring for a comparable population through other Medicaid services.

Federal Initiatives to Advance Care Integration for Dual Eligibles: The Bipartisan Budget Act of 2018

The Bipartisan Budget Act (BBA) made key changes related to care integration, including:

1. Permanent SNP reauthorization

The BBA permanently reauthorized all SNPs, including D-SNPs, chronic condition special needs plans (C-SNPs) and institutional special needs plans (I-SNPs). Previously, the authorization for SNPs expired every few years. This resulted in SNPs being extended seven times between 2008 and 2018, causing anxiety for states that relied on the D-SNP platform. The permanent authorization gives both plans and states certainty that the D-SNP platform is going to remain a viable mechanism for integrating care.

2. New D-SNP integration requirements

As of 2021, D-SNPs will have to meet one of three requirements for integration;

  • Coordinate Medicare-covered LTSS, behavioral health services or both by meeting specific contract requirements, such as:
    • Notifying the state in a timely manner of hospitalizations, emergency room visits, and hospital or nursing home discharges of members;
    • Assigning one primary care provider for each member; or
    • Sharing data that would benefit the coordination of items and services.
  • Integrate Medicaid benefits by becoming a Fully Integrated Dual Eligible Special Needs Plan (FIDE-SNP) or providing LTSS and/or behavioral health benefits under a capitated Medicaid contract (i.e., a HIDE-SNP). (Created under the ACA, a FIDE-SNP is a single plan that offers coverage of Medicare and Medicaid benefits. It includes the comprehensive package of Medicaid services covered under managed care in the state, as well as provides aligned care management of medical and LTSS and integrated communications, enrollment, grievance and appeals, and quality improvement across Medicare and Medicaid.)
  • Assume clinical and financial accountability for all Medicare and Medicaid benefits for dual eligibles enrolled in a D-SNP and Medicaid managed LTSS or behavioral health plan offered by the same parent company.

3. Strengthened authority of the Medicare and Medicaid Coordination Office (MMCO)

Created by the ACA, the MMCO is the office within the Centers for Medicare & Medicaid Services (CMS) responsible for promoting and improving delivery of care to dual eligibles. The BBA requires the MMCO to:

  • Provide guidance and act as a dedicated point of contact for D-SNPs.
  • Establish uniform processes for distributing information to state Medicaid agencies.
  • Provide resources for model integration.
  • Develop rules and guidance for appeals and grievances.
  • Develop rules and processes for integrating and aligning Medicare and Medicaid.

4. Unified grievance and appeals for health plan items and services

There are significant differences in the appeals and grievance processes between Medicare and Medicaid, causing confusion for both beneficiaries and providers. Some FAI demonstrations used a unified appeals and grievance process through waiver authority, which stakeholders identified as a bright spot in the program. The BBA extended the authority of CMS to allow for a unified appeals and grievance process beyond the demos earlier this year. Beginning in 2021, D-SNPs that have exclusively aligned enrollment (i.e., FIDE- and HIDE-SNPs) will utilize a uniform process at the plan level. CMS has indicated its willingness to work with states interested in implementing unified procedures for D-SNPs in 2020.

CMS Is Providing Additional Flexibilities to Promote Integrated Care

In 2018, CMS sent out a Medicaid director’s letter that shared 10 approaches states can use to further integrate care for dual eligibles. Highlights include opportunities for states to:

  • Utilize Medicare Improvements for Patients and Providers Act (MIPPA) contracts to support local integrated care models through state-specific requirements. One way to create a more integrated product is by having MIPPA contracts limit enrollment in D-SNPs to members who are also enrolled in affiliated Medicaid managed care products.
  • Use default enrollment for newly Medicare-eligible beneficiaries to facilitate enrollment into D-SNPs affiliated with the same Medicaid managed care plan. (Beneficiaries may opt out of default enrollment.)
  • Passively enroll full-benefit, dually eligible individuals from an integrated D-SNP that is no longer available to a comparable D-SNP in instances when integrated care coverage would otherwise be disrupted. Plans receiving passive enrollment are required to inform enrollees of their ability to decline enrollment, return to original Medicare or choose another plan.

CMS Invites States to Test New Care Integration Models for Dual Eligibles

Earlier this year, CMS sent another letter to Medicaid directors in which it invited states to test integration models. CMS laid out three options:

  • FAI states can revise the terms of their participation, for example, changing the geographic scope of their models. States new to FAI can partner with CMS on opportunities for state customization.
  • Within the FAI, states may share in Medicare savings resulting from Medicaid fee-for-service interventions.
  • States can propose their own, state-specific models to better serve dual eligibles.

The PACE Final Rule Provides Administrative Enhancements

PACE is a fully integrated model that’s been around for decades. Historically, however, enrollment has been very small. In addition, the model can be challenging to scale, because it involves the use of an adult day health center that members go to on a regular basis, as well as a much more intensive coordinated care team. The federal government has undertaken a number of efforts to try and make the program more scalable, such as expanding it to for-profit entities rather than limiting it to nonprofits.

In its latest efforts, earlier this year, CMS finalized revisions to the regulations governing PACE programs to increase flexibility and reduce administrative burden. To increase flexibility, the PACE Final Rule allows one individual to fill two separate roles on the PACE team in certain circumstances. It also permits certain nonphysician primary care providers to provide some services in place of primary care physicians. To reduce administrative burden on PACE organizations, provisions in the Final Rule codify CMS’s practice of relying on automated review systems for processing initial applications to become a PACE organization, as well as existing PACE organizations’ applications to expand. The PACE Final Rule also eliminates the need for PACE organizations to request waivers for many of the most commonly waived provisions.

It is important to note that Congress passed the PACE Innovation Act of 2015, which could provide further flexibility to test PACE-like models for additional populations. We’re currently awaiting a finalized set of guidance from CMS on how the Innovation Act will be implemented.

NOTE: Watch for part 2 of our summary in the September “Health Update,” focusing on state innovation in integrated care for dual eligibles.



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