Policy & Regulation News

Will integrated Medicare and Medicaid benefits save money?

By Elizabeth Snell

- Individuals who are disabled, under the age of 65 and qualify for both Medicare and Medicaid benefits are known as disabled dual-eligible beneficiaries. In 2009, the Medicare and Medicaid programs spent an estimated $103 billion on those individuals. Congress and the Centers for Medicare & Medicaid Services (CMS) want to create benefit integration, which they believe will improve care and reduce program spending.

However, these expectations that there would be a lower use of certain Medicare services might be optimistic, according to a report by the US Government Accountability Office (GAO).

“Moderately better health outcomes for disabled dual-eligible beneficiaries in [Dual-eligible special needs plans] relative to those in traditional MA plans did not translate into lower levels of costly Medicare services (that is, inpatient stays, readmissions, and emergency room visits),” GAO explained. “These results were also similar whether dual-eligible beneficiaries were at risk for high Medicare spending (those with six or more chronic health conditions), aged (those age 65 and over), or aged and enrolled in [Fully Integrated Dual-Eligible Special Needs Plans].”

GAO found that high Medicaid spending for disabled dual-eligible beneficiaries drove high combined program spending for these beneficiaries. Specifically, beneficiaries that were in the top 20 percent of spending in their respective states accounted for more than 60 percent of national combined program spending for disabled dual-eligible beneficiaries.

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  • Additionally, 63 percent of combined program spending was on Medicaid spending, while 37 percent was Medicare spending.

    The report also showed that high Medicaid spending states typically often had lower Medicare spending. However, they almost always had greater overall spending for disabled dual-eligible beneficiaries. The service use and health status often differed widely between high-Medicare-expenditure and high-Medicaid-expenditure disabled dual-eligible beneficiaries, according to GAO.

    Individuals with high Medicare expenditures were considerably more likely than those with high Medicaid expenditures to have multiple health conditions and use inpatient services. However, they were far less likely to use long-term services and supports.

    If dual-eligible beneficiaries are enrolled in plans that are designed specifically for them and if there is moderate improvement in the performance of health outcome measures, it still might not be enough, GAO said. This is because the conditions still are not necessarily sufficient to reduce disabled dual-eligible beneficiaries’ use of costly Medicare services.

    “Despite moderately better performance on health outcome measures for both disabled and aged dual-eligible beneficiaries, the fact that D-SNPs had similar levels of costly Medicare-covered services (i.e., inpatient admissions, readmissions, and emergency room visits) as traditional MA plans for this population has significant implications for program costs,” the report said.

    Additionally, although D-SNPs had better relative performance on health outcome measures than dual-eligible beneficiaries with six or more chronic conditions, they still had similar – if not higher – levels of costly Medicare-covered services.

    Essentially, GAO found that operating specialized plans and integrating benefits could lead to improved care. However, these conditions might not decrease dual-eligible beneficiaries’ Medicare spending in comparison to Medicare spending without integrated benefits.