Refocusing Responsibility For Dual Eligibles : Why Medicare Should Take The Lead*

1. Refocusing Responsibility For Dual Eligibles: Why Medicare Should Take The Lead* October 28, 2011 Judy Feder Georgetown University/Urban Institute federj@georgetown.edu *Feder et al., 2011

2. Experience with managed care for “dual eligibles” is limited • Most Medicaid managed care plans do not deal with dual eligibles. Medicaid has come to rely heavily on managed care for the bulk of its beneficiaries who are low-income children and families. But Medicaid managed care plans lack both experience and capacity to handle the care needs of the most expensive dual eligibles. (Verdier et al., 2011) • Most Medicare managed care plans do not deal with dual eligibles. About a million dual eligibles are enrolled in Special Needs Plans.But Medicare collects limited information on these plans and does not hold them accountable for quality, as measured by patient experience, hospital admission or readmission rates, emergency room use, medication errors, or institutionalization for long-term care. (MedPAC, June 2011)

3. Managed care plans may not “manage” care • Economists find that, in general, savings from managed care plans—in both private insurance and Medicaid—reflect lower payments to providers rather than more appropriate or more efficiently-delivered care. (Duggan and Hayford, 2011) • Medicare’s reliance on managed care actually increased, rather than decreased, program costs, leading to significant savings from payment reforms enacted in 2010 . • Effective care management or care coordination requires delivery reformthat includes primary care with coordination of other services, in-person patient-coordinator contact, timely information on hospital admissions and emergency room visits, and close relationships between care coordinators and primary care physicians.

4. Better managing Medicare-financedcare is the key to spending control • Delivery and payment reforms (like ACOs and medical homes) promote care coordination to prevent unnecessary hospital use—experienced by dual eligibles at far higher rates than by other Medicare beneficiaries. (Jiang et al., 2010) • Medicare, not Medicaid,pays for virtually all dual eligibles’ acute care. • Not counting Medicaid payments for Medicare Part B premiums, 77 percent of Medicaid’s total spending for dual eligibles goes to long-term services and supports—used by only 30 percent of dual eligibles. (Feder et al., 2011)

5. Federal government finances 80 percent of spending on dual eligibles Taken from : Feder et al. 2011. “Refocusing Responsibility For Dual Eligibles: Why Medicare Should Take The Lead.” Washington, DC: The Urban Institute

6. Dual Eligibles are primarily a federal responsibility • States should partner with Medicare to better coordinate services for dual eligibles—especially for long-term services and supports—and can share in savings that result. • But allowing states to benefit from these savings without sufficient constraints risks enabling cost-shifting from state to federal budgets-- allowing states to substitute Medicare funds for expenditures Medicaid would otherwise make. (MedPAC, June 2011) • Dual eligibles, as Medicare beneficiaries, get consumer protections not always available to low-income Medicaid beneficiaries. A shift of responsibility for their Medicare services to Medicaid programs puts these protections at risk and creates financial incentives to limit care. (Center for Medicare Advocacy)

7. Medicare should lead in improving care for dual eligibles with: • Aggressive oversight and “pay for performance” in Medicare Special Needs Plans (SNPs). • Emphasis on dual eligibles, especially those using long-term supports and services, in ACA-authorized Medicare payment and delivery reforms. (Komisar and Feder, 2011) • SNF payment policies to prevent unnecessary hospitalizations for nursing home residents.