Medicare and Medicaid are the two of the major government programs that provide health care benefits. While Medicare primarily covers seniors aged 65 and above, as well as younger people with certain disabilities, Medicaid focuses on people with insufficient income and resources. It’s not uncommon that seniors are covered by both of these two programs – which is usually referred to as dual eligibility.
Medicare dual eligibles are often considered high cost beneficiaries, since they often have complex medical conditions that require a lot of care and due to costs arising from the lack of formal coordination between the two programs. Even though they are a minority among beneficiaries, they account for large portion of expenditures.
To better manage the needs of this growing group, and ensure proper cost management, the Centers for Medicare & Medicaid Services (CMS) is closely working with several states through the Financial Alignment Initiative (FAI). By enabling functional alignment between Medicare and Medicaid, they are hoping to streamline both the administration of financial resources and the long term health management of the Medicare-Medicaid enrollees. They are offering two different models – the Capitated Model, whereby a state, CMS and a health care provider enter a three party contract or the Managed Fee-for-Service Model, whereby a state and CMS agree on specific initiatives. If a state prefers a different model, CMS also offers solely coordination oriented support.
CMS is currently doing demonstrations, and has signed memorandums of understanding (MoUs) with several states which is expected to lead to CMS implementing either the Capitated Model or the Managed Fee-for-Service Model in many parts of the country. During the test periods, beneficiaries, participating either by passive or active enrollment, have had the change to opt out in order to safeguard their right to avoid any changes in the current service delivery. While CMS has sent invitations to all 50 states, it’s uncertain how many of them will actually choose to be a part of the on-going project.
Test periods are showing mixed results
The demonstrations have so far been somewhat problematic. In the thirteen test states, participation has remained low due to lack of enrollment and administrative challenges. This has called into question whether or not CMS will be able to live up to the expectations. It seems as if both states and individuals are uncertain about the supposed benefits.
Among participants, satisfaction has been high and in some cases a majority has rated the experience favorably due to low costs and good coordination. Nine out of ten participants give the experience a seven out of ten rating, and surveys are showing that the percentage of people giving the highest possible rating has been steadily increasing. As far as saving goes, the program is estimated to have reduced per-capita expenditure by 4.4%.
Uncertainty regarding improved coordination
The chance to improve coordination and cooperation between Medicare and Medicaid, leading to better management of both costs and beneficiaries, was a major driving factor in launching the Financial Alignment Initiative. But as yet, the demonstrations have not actually proven such benefits. This may largely be due to administrative issues leading to problems when doing follow-ups and re-occurring changes in demonstration design.
What does the future look like?
As it stands, it’s simply not possible to say for sure whether the Financial Alignment Initiative will live up to its promises. According to the Medicare Payment Advisory Commission (MedPAC), we simply don’t have enough information to know for sure. But even though demonstration implementation has been marked by difficulties, MedPAC says that things are generally positive and that the quality is improving. In the midst of promising indicators, we’ll simply have to wait and see. What we do know is that it seems to be a step in the right direction.
