More than 750,000 of America’s most vulnerable citizens — individuals dually eligible for Medicare and Medicaid — and their families have embraced new, more integrated systems of care implemented by states across the country. This group is a subset of the more than 11 million dually eligible beneficiaries who are among the nation’s highest-need and highest-cost populations due to their often multiple chronic conditions, physical or behavioral health disabilities, and long-term services and supports needs.

Integrating care for this high-need population is a priority for states, the federal government, health plans, providers, and other stakeholders, driven by expectations that integration will improve the quality of their care and reduce costs. This involves blending or aligning Medicare and Medicaid administrative processes, policies, and care management practices to make them work better together. Early results from integrated programs across the country are promising. Washington State, for example, reported more than $21 million in shared savings between the state and the federal government during the first 18 months of operation.

The majority of dually eligible individuals, however, still receive fragmented, uncoordinated care from two programs that were not designed to work together. Regardless of shifting political tides in the nation’s health care system, there are significant opportunities to continue the momentum on Medicare-Medicaid integration to improve care and control spending for dually eligible individuals.

Continued Opportunities for Integration

States have used several platforms to change how dually eligible beneficiaries receive Medicare and Medicaid services. Most notably, 12 states partnered with the Centers for Medicare & Medicaid Services (CMS) Medicare-Medicaid Coordination Office to launch the Financial Alignment Initiative capitated or managed-fee-for-service model demonstrations, which have enrolled nearly 450,000 individuals. While this option was made possible under the Affordable Care Act and is no longer available to new states, there are other mechanisms to advance integrated care, including:

  • Aligned Medicare and Medicaid Health Plans. More than 20 states have comprehensive Medicaid managed long-term service and supports programs, and several of these states have developed strong linkages between these programs and Medicare Advantage Dual Eligible Special Needs Plans to promote program alignment and care coordination. Nearly 250,000 people are enrolled in fully aligned Medicare Advantage and Medicaid health plans.
  • Program of All-Inclusive Care for the Elderly (PACE). PACE organizations provide comprehensive medical and social services to frail, community-dwelling individuals age 55 and older, most of whom are dually eligible beneficiaries. PACE organizations operate in 32 states and enroll nearly 40,000 individuals.
  • Medicare-Medicaid Accountable Care Organizations (MMACOs). As an alternative to a managed care arrangement, CMS recently released a new initiative to advance integration through MMACOs for individuals enrolled in fee-for-service Medicaid and Medicare. MMACOs encourage Medicare’s shift from fee-for-service to value-based payments by allowing Medicare providers to accept accountability for dually eligible beneficiaries’ Medicaid costs. CMS will partner with up to six states to test the MMACO model in 2018 with more states expected to start in 2019 and 2020.

Early Promise and Progress

While formal federal and state-sponsored evaluations of integrated care programs are still underway, early findings of positive beneficiary experiences and shared Medicare savings have convinced states to continue their efforts. Through beneficiary focus groups and surveys, Massachusetts found that beneficiaries were satisfied with its capitated model demonstration. Similarly, in California, data from rapid cycle polling and the first phases of a multi-year evaluation show beneficiaries are satisfied with its capitated model demonstration. Although in its January budget California’s governor proposed terminating certain elements in its demonstration program to meet a cost-effectiveness threshold in 2018, the state remains committed to preserving the integrated care option. A study of Minnesota’s Senior Health Options program, which uses aligned Medicare Advantage and Medicaid health plans, found that enrollees had lower hospital and emergency department use, and greater use of primary care and community-based long-term care compared to similar individuals not enrolled in the program. As noted earlier, initial results from Washington State’s managed fee-for-service model demonstration show a $21.6 million reduction in Medicare spending in 18 months — savings that will be shared between the state and the federal government.

Encouraged by these early successes, states are fine-tuning their programs. Through CHCS’ INSIDE project, supported by The Commonwealth Fund and The SCAN Foundation, leading states collaborate with peers to identify and prioritize refinements for their integrated programs. Key areas include:

  • Modifying care management models and requirements. States such as New York and Idaho have changed their care management program requirements to increase provider participation and simplify reporting for interdisciplinary care teams.
  • Improving beneficiary understanding of coordinated care. A number of states are improving their approaches to beneficiary communication to increase engagement.
  • Developing strategies to increase enrollment. Several states, including Arizona, Virginia, and California, have implemented new strategies to increase enrollment in Financial Alignment Initiative demonstrations and other efforts based around aligned Medicare and Medicaid health plans.
  • Enhancing administrative alignment between Medicare and Medicaid program rules. Several state programs continue to work with federal partners to address misalignments in Medicare and Medicaid related to health plan marketing, standards for assessing provider network adequacy, and rules governing beneficiary appeals processes, among others.
  • Supporting health plan sustainability. In some cases, states have worked with federal partners to adjust rate-setting methodologies when initial health plan payment rates did not accurately reflect costs of serving the dually eligible population.

A Continued Priority for 2017

As long as the majority of dually eligible beneficiaries continue to be in fragmented systems of care, efforts to integrate their care will be a priority. CMS recently announced that Massachusetts, Minnesota, and Washington will extend their Financial Alignment Initiative demonstrations for two years. Notably, the Senate Finance committee recently introduced a bill supporting future development of aligned Medicare and Medicaid health plans. Other states are thinking creatively about how to include this population in better coordinated arrangements. For example, Oregon’s recently approved Medicaid demonstration waiver now allows the state to passively enroll dually eligible beneficiaries into Coordinated Care Organizations.

As states learn more about what it takes to integrate Medicare and Medicaid, they continue to make targeted investments to refine their programs. Growing program enrollment and positive evaluation results are early signs of success. Although it will take time for more outcomes data to accumulate, states and their partners continue to make integrated care a policy priority for 2017 and beyond.

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