A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation examines efforts to better manage and coordinate care of more than nine million Americans covered by both Medicare and Medicaid, also known as dual eligibles. This heterogeneous group includes the sickest and most vulnerable adults, many with complex chronic medical or behavioral conditions and developmental disabilities. More than half have annual incomes of less than $10,000. An estimated $329 billion was spent on their care in 2011 alone.

To improve care for the dual-eligible population and to lower costs, the Affordable Care Act established the Medicare-Medicaid Coordination Office within the Centers for Medicare and Medicaid Services (CMS). This brief describes some of the new approaches that the office is testing.

Topics covered in this brief include:

  • The complexities and challenges of coordination. As two programs with different benefits and payment mechanisms, Medicare and Medicaid have historically served different populations with unique needs. Thus, the brief describes the ways that many dual-eligible patients currently receive services that can be duplicative and unnecessarily expensive. Coordinating the two programs will represent a significant departure from past practice.
  • New initiatives underway.The Medicare-Medicaid Coordination Office and Center for Medicare and Medicaid Innovation have awarded 15 states grants to create new approaches to care coordination and provider payment. Other partnerships with at least 26 states are underway. Models being tested: first, devising “blended rates” for health plans to provide both Medicare and Medicaid benefits to their dual-eligible beneficiaries; and second, giving states responsibility for coordinating care with financial incentives available if quality and Medicare savings targets are met. A third initiative aims to reduce avoidable hospitalizations among nursing facility residents.

As more new programs are being developed, there is debate over whether many existing managed care plans have the expertise to handle the complex and diverse health needs of the dual eligibles. Meanwhile, with new CMS demonstration projects due to start next year, it is clear that concerns about restraining costs while improving quality for the dual eligible will remain in the forefront.

About Health Policy Briefs:

Health Policy Briefs are aimed at policy makers, congressional staffers, and others needing short, jargon-free explanations of health policy basics. The briefs, which are reviewed by experts in the field, include competing arguments on policy proposals and the relevant research supporting each perspective.

Previous policy briefs have addressed:

  • Workplace Wellness Programs. The Affordable Care Act will expand the ability of employers to reward workers who achieve health improvement goals.
  • Essential Health Benefits: States will determine the minimum set of benefits to be included in individual and small group insurance plans. What lies ahead?
  • Premium Support in Medicare: The nation’s fiscal crisis has renewed the focus on structural reform. Can a market-oriented solution cut costs and improve care?

You can sign up for e-mail alerts about upcoming briefs. The briefs are also available from the Robert Wood Johnson Foundation’s website. Please feel free to forward the briefs to any of your colleagues who are tracking health issues. And after you’ve taken a look, we welcome your feedback at: hpbrief@healthaffairs.org.