Reducing Costs for Dual Eligible Medicaid and Medicare Beneficiaries is Tricky

It is impossible to write about elder care in America, without consistently revisiting the subject of caring for dual-eligible beneficiaries. Older adults (those +65 years of age) account for 61 percent of this population of 7 million who are eligible for full benefits under the Medicaid and the Medicare program. The remaining dual-eligible beneficiaries are  younger Americans with physical disabilities who qualify for SSI benefits. Dual-eligibles tend to be low-income individuals with few financial assets and unfortunately also tend to have significantly higher rates of serious health conditions, ADL limitations and cognitive impairments. As the chart (below) illustrates, they represent a disproportionate portion of total expenses for both the Medicare and Medicaid programs. It is not surprising that reducing spending (while improving care delivery) for this population is the holy grail of policymakers in Washington and every state capital in the nation.

Dual Eligible Beneficiary % Population/% of cost
Nationwide Illinois
% of Medicare Population 21%
% of Medicare Costs 31%
% of Medicaid Population 15% 9%
% of Medicaid Costs 39% 27%

Over the past 10 years, numerous programs have been implemented in pursuit of this holy grail. In October, the Kaiser Family Foundation published a white paper  assessing  nine studies that evaluated existing programs and interventions to reduce Medicare costs for dual-eligible beneficiaries, and another nine studies that evaluate care management programs for high-risk Medicare beneficiaries. To my eyes, the paper's conclusion is rightfully circumspect. Despite the prominent exception of UnitedHealth Group's Evercare Care Model, what success would look like is easier to describe then to achieve. The paper's authors found that numerous challenges (e.g., differing health needs among the various sub-groups within the dual-eligible population) make it devilishly difficult for large scale programs to achieve dramatic results either in creating better health outcomes, decreasing costs, or both. As the paper concludes:

A careful review of the evidence thus far suggests that generating modest net Medicare savings and better outcomes for dually eligible beneficiaries is possible, but will require tailoring, targeting, and monitoring. Taken together, these studies provide strong evidence that care management might be effective at reducing costs for some subgroups of dual eligibles, such as those with severe chronic illnesses or at high risk for hospitalization. However, the estimates of potential net savings from these interventions are typically modest.

It is important to note that the paper did not address current efforts by the CMS Medicare-Medicaid Coordination Office which is dedicated to improving care delivery and lower costs to dual-eligible beneficiaries. Additionally, the report did not measure any savings to the Medicaid program that were achieved by the programs. Nevertheless, as Illinois prepares to implement the proposed Medicare-Medicaid Alignment Initiative (here), a demonstration managed care program for its dual-eligible citizens, this report should caution the policymakers that there is no silver bullet to slay the beast of ever expanding health care expenditure. What do you think?

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    Bruce Lederman

    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a multi-facility skilled nursing facility company.

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