Nine million individuals qualify for both Medicare and Medicaid health insurance. These individuals, known as dual-eligibles, rank among the most expensive Medicare and Medicaid beneficiaries. Duals are frequently hospitalized and often need long-term care. In fact, most state spending for dual eligibles focuses on long-term care supports and services.
The federal government pays the bulk of care costs for dual eligibles. Of the $319.5 billion estimated as spent on duals in 2011, 80 percent ($256.6 billion) are federal dollars, more than two-thirds of which flowed through Medicare.
Unnecessary hospital use is one of the main drivers of inflated Medicare spending on duals. One reason for this is that Medicare pays for all hospitalizations. Thus, State Medicaid Agencies have less of an incentive to prevent costly hospitalizations. Further, nursing homes also have an incentive to hospitalize duals. Nursing home who care for an individual after they are hospitalized receive a higher Medicare skilled nursing facility (SNF) rates rather than the lower Medicaid long-term care rates. Thus, nursing homes can increase their rates just by admitting their residents to teh hospital periodically.
Additionally: Dual eligibles experience far higher rates of “potentially preventable hospital admissions” than other Medicare beneficiaries: more than twice as high for pressure ulcers, asthma and diabetes; 52 percent higher for urinary tract infection; and over 30 percent higher for chronic obstructive pulmonary disease and bacterial pneumonia.
Many dual eligible individuals are enrolled in Medicare Special Needs Plans (SNP). [Dual eligibles constitute about a million of the 1.3 million people enrolled in SNPs.] Medicare pays these pays a capitated rate in exchange for providing a host of services to these beneficiaries.
The Affordable Care Act established of the Medicare-Medicaid Coordinated Care Office (known internally at CMS as the Office of the Duals), which has launched a number of initiatives to better align the programs. A paper by Feder et al. makes the following recommendations:
- finance nurse practitioners in nursing homes to coordinate frail residents’ care (United Healthcare’s Evercare program has already demonstrated, relative to control groups, that this strategy can cut hospitalizations and emergency room use in half);
- apply performance standards, like those now applied to hospitals, to penalize SNFs with excessive rates of preventable hospitalizations for their residents (whether or not they are receiving SNF care).
- Judy Feder, Lisa Clemans-Cope, Teresa Coughlin, John Holahan, Timothy Waidmann. “Refocusing Responsibility for Dual Eligibles: Why Medicare Should Take the Lead,” Robert Wood Johnson and the Urban Institute, October 2011.