Dual eligibles need integrated programs

Nearly 8 million people are dual eligibles: elderly or disabled Medicare beneficiaries who also qualify for Medicaid coverage because of their poverty. Caring for these patients cost U.S. taxpayers an estimated $239 billion in 2008, according to a recent study by the Lewin Group. They represent about 40% of all Medicaid spending and about 25% of Medicare spending, and account for roughly 10% of all health spending in the United States.

On paper, dual eligibles have what George Mason University Professor Mark Meiners calls "the gold card" of coverage. They receive acute care coverage under Medicare, while Medicaid fills in the gaps and covers long-term care. But what's on paper often bears little resemblance to reality.

Experts generally agree that lack of coordination between the Medicare and Medicaid systems is a major stumbling block. Medicare and Medicaid often force dual eligibles to access services from different systems with different rules, case managers and telephone numbers, using different identification cards and procedures. That duplication not only drives cost, it impacts quality of care.

But bridging the two systems presents an enormous challenge. As director of the Robert Wood Johnson Foundation's Medicare/Medicaid Integration Project, George Mason University's Meiners has been studying the dual eligible population since 1995. He's studied states with fully integrated models, partially integrated systems and managed fee-for-service programs.

"There are a lot of models out there, but after 13 years, I haven't seen a lot of progress on the issue," he says. Meiners believes that's partly due to the fact that useful strategies, such as care coordination and disease management, can be difficult to weave into a FFS environment.

Roughly 85% of dual eligibles receive care under a fee-for-service arrangement.

At the same time, moving a special-needs population such as dual eligibles into a capitated environment, where health management and outreach services could be more easily integrated, is problematic because it "erodes the insurance principal" of spreading risk, he says.

Ultimately, Meiners says, a solution will depend on "creating some flexibility and stepping out of the rigid boxes that the two programs represent so you can work more creatively and appropriately to meet the needs of individuals."

Richard Surles, chief development officer for APS Healthcare, which provides disease management and other services to state Medicaid programs, agrees a different benefit design is necessary.

"The current system is failing dual eligibles," he says "The benefit is badly bifurcated, and there is a lack of coordination, but I don't think full risk capitation is the answer. To me the business model for a full-risk capitation sets up some incentives for overmanaging utilization and not really managing care."

Capitation advocates disagree. The Lewin Group study, conducted on behalf of the Association for Community Affiliated Plans (ACAP) and Medicaid Health Plans of America, concludes that integrating care for dual eligibles using a capitated model already in use in a number of states, including Minnesota, Massachusetts and Wisconsin, would translate to enormous savings.

If all dual eligibles were moved into an integrated setting, Medicare and Medicaid would realize a 2.7% savings immediately and that would grow to a 4.7% savings after 15 years. What's more, the report states, integrated care would improve clinical outcomes.

While advocates on both sides of the issue debate how best to attack the issue, the ranks of the dual eligible population and their needs, are destined to swell. Baby boomers are aging, chronic diseases are on the rise, and the economic crisis is increasing Medicaid roles. Given those trends, the study projects annual spending on duals will top $775 billion by the year 2024.