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Designing the Future of Care for Dually Eligible Medicare–Medicaid Enrollees

Designing the Future of Care for Medicare-Medicaid Enrollees
  • Ann Hwang, M.D.
    Ann Hwang

    Senior Consultant, Bailit Health Purchasing, LLC

  • Ann Hwang, M.D.
    Ann Hwang

    Senior Consultant, Bailit Health Purchasing, LLC

  • New integrated care models for dually eligible Medicare and Medicaid beneficiaries can improve care while reducing costs

  • Continuous program monitoring and evaluation will be a critical part of creating care models that improve the lives of people enrolled in both Medicare and Medicaid

Misaligned incentives across the Medicare and Medicaid programs can result in higher costs as well as worse health outcomes for people who are eligible for both programs, so-called dual eligibles. To address these issues, policymakers have worked to develop approaches to improve coordination of services across programs.

The Financial Alignment Initiative (FAI) is perhaps the most prominent recent example, but other approaches include:

  • the Program of All-Inclusive Care for the Elderly
  • Medicare Advantage Dual-Eligible Special Needs Plans (D-SNPs)
  • Fully Integrated Dual-Eligible SNPs.

Several recent developments are likely to transform the landscape of care for dual eligibles. In early April, the Centers for Medicare and Medicaid Services (CMS) released regulations specifying the new integration requirements for dual-eligible special needs plans. A few weeks later, the Center for Medicare and Medicaid Innovation announced new incentives for managing the cost and quality of care targeted to managed care organizations that provide Medicaid benefits for dual-eligible beneficiaries. The same week, CMS announced that it is reopening the FAI, inviting additional states to launch programs. These states can use the two models currently in the FAI or propose their own models of integrated care.

Several recent developments are likely to transform the landscape of care for Medicare–Medicaid dual eligibles.

Moving Toward the Promise of Integration

These initiatives seek to improve alignment between Medicare and Medicaid, with the rationale that integrating financing and delivery of Medicare and Medicaid services can reduce cost and improve quality of care. Experiences in Wisconsin, Minnesota, and Massachusetts established the early evidence base for the potential benefit of integrated programs. In Minnesota, dual-eligible older adults enrolled in integrated Medicare–Medicaid plans were 48 percent less likely to have a hospital stay and had fewer emergency department visits, compared with enrollees in a Medicaid-only plan.

However, there are also important notes of caution. Several recently released evaluations from the FAI showed mixed or modest results for cost and utilization and highlight some of the operational challenges and disruptions in care related to establishing new programs.

These varying results suggest that financial incentives do not automatically create successful, integrated care delivery. To achieve intended outcomes, policymakers should draw on the evidence from successful models serving high-cost, high-need populations and focus on ensuring enhanced primary care, improved care transitions, and interventions that address social risk, behavioral health, and medical care. Thoughtful evaluation and monitoring are also critically important.

Scaling Up

Enrollment in integrated programs remains low; the new initiatives represent a range of approaches for increasing uptake.

One strategy is to expand the role of Medicare Advantage D-SNPs in providing or coordinating Medicaid services. D-SNPs are required to contract with the Medicaid agencies in their states; some states have used this opportunity to promote better alignment between the two programs, such as by requiring D-SNPs to coordinate Medicaid and Medicare benefits. CMS encouraged states to use contracting strategies to drive alignment in a letter to state Medicaid directors in December 2018. This approach may be more appealing than the FAI because it offers added flexibility in setting plan requirements.

Another strategy is to encourage dual-eligible beneficiaries to participate in integrated models. Here, the lessons learned from low participation rates in FAI plans (29% of eligible individuals) can be instructive. Even though states could assign beneficiaries to an FAI plan, several factors proved important in beneficiaries’ decisions to stay enrolled: early engagement and clear communication with enrollees, staggered enrollment phases, and relationships with providers and community-based organizations. These factors deserve policymaker attention, as well as further research to understand what drives consumer acceptance of new care models.

Expanding the Emphasis on Value

Even outside of integration efforts, the health system’s increasing orientation toward value has changed the context in which dually eligible individuals receive services. States are turning to managed care to deliver Medicaid long-term services and supports. Medicare Advantage enrollment continues to grow, and plans now have greater flexibility to provide a broader range of services that may overlap with Medicaid benefits, such as transportation assistance and some long-term services and supports. Traditional Medicare enrollees have increasingly been included in value-based payment models like accountable care organizations and will be included in successor programs developed by the Center for Medicare and Medicaid Innovation. When designing and implementing new models of integrated care for dual eligibles, it will be important to incorporate the evolving evidence on value-based provider payment and its effect on beneficiary outcomes.

Looking Ahead

Policymakers have continued to push for improved integration of Medicare and Medicaid services, despite modest evidence of effectiveness. As they shape the next set of programs for dual-eligible enrollees, policymakers will need to temper eagerness for cost-savings with a recognition of the population’s unique needs and complexity. With the variability in care models, it is unlikely that a sole factor is responsible for improvements observed over time. Going forward, it will be important to continuously assess performance and undertake midcourse corrections, while preserving critical safety valves for this vulnerable population.


The author would like to acknowledge David Grabowski, Ph.D., Laura M. Keohane, Ph.D., M.S., Leena Sharma, M.P.P., Marc Cohen, Ph.D., and David Stevenson, Ph.D., for their input on this blog post.

Publication Details



Ann Hwang, Senior Consultant, Bailit Health Purchasing, LLC

[email protected]


Ann Hwang, “Designing the Future of Care for Dually Eligible Medicare–Medicaid Enrollees,” To the Point (blog), Commonwealth Fund, May 23, 2019.