The Challenge of Reducing Expenditures for Dual Eligible Beneficiaries

The Holy Grail of reducing expenditures associated with providing medical and long term care services (LTC) to this complex population is propelling states to look to managed care organizations (MCOs) for answers. The reasoning is something like: since MCOs are capable of managing the expenditures of younger Medicaid beneficiaries, surely they will be able to reduce them for older adults in ways that will not jeopardize quality of life. In these days of relying on private enterprise to achieve a public good, this strategy is lauded by those who have faith in the abilities of free-enterprise, while elder care providers and advocates for older adults warily look on, as MCOs rev up for enrollment in seven states over the next six months.

Dual Eligible Expenses in Community and Institutional Settings

A recently published research paper (here) offers a fresh perspective on how opaque the causes are of the disparate impact that duals have on Medicare and Medicaid expenditures. The chart (above) contained in the paper, captures the complexity of the relationship between setting (i.e. residing in the community or in a skilled nursing facility) and beneficiary status (dual or non-dual-Medicaid only).  As the authors note, increased frailty associated with needing LTC (columns A-D) results in higher medical and overall expenditures and increased medical costs than those who do not required LTC (columns E-G).

The researchers ponder why medical care expenditures for institutional duals (column C) are significantly less than those in the community (column A), but not as low as those non-duals who live in the community (column B). Seemingly, skilled nursing facilities (reimbursed through Medicaid) are somehow reducing medical care expenditures. But, how? Presumably more medical care is being delivered in the skilled facility than in the hospital, but more research is needed.

Clearly, MCO’s will need to rely on those providers who currently meet the challenge of providing quality, cost-effective LTC to duals living in the community and in the skilled center. There are innovative  providers of community-based  and skilled nursing services and skilled nursing services that are willing to partner with MCO's to meet this challenge. What do you think?

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    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 company providing skilled nursing services in communities throughout Illinois and Missouri.

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