Integrating Medicare and Medicaid: Policy Priorities to Improve Access and Care for Beneficiaries Under Age 65

Abstract

• Issue: Efforts to integrate the care delivery and financing systems serving dual-eligible individuals enrolled in both Medicare and Medicaid often fail to recognize and address the complex health and social needs of beneficiaries under age 65.
• Goal: To identify key considerations and policy priorities that recognize and address the unique needs of dual-eligible individuals under age 65 as state and federal policymakers look to integrate Medicare and Medicaid.
• Methods: We conducted interviews with more than 20 state and federal officials, health plan representatives, community partners, and advocates between July and September 2024.
• Key Findings: Experts identified specific policy considerations, including: 1) dual-eligible individuals under age 65 have some different needs compared to older beneficiaries; 2) they may face obstacles accessing appropriate care, yet improving care coordination alone is not the only answer; and 3) dual-eligible individuals under age 65 need better support navigating plan choices. Policy recommendations to better serve this population include: 1) improving data collection and monitoring quality metrics and other outcomes; 2) soliciting feedback from beneficiaries in this group and from stakeholders to guide integration approaches; and 3) ensuring access to traditional Medicare for beneficiaries under age 65.

Introduction

Policymakers are exploring options to integrate health care coverage for the 12.8 million beneficiaries who are dually eligible for Medicare and Medicaid. Integrated care is defined as aligning the two programs’ administrative requirements, financing, benefits, and care coordination.¹ Better integration between Medicare and Medicaid is especially important for dual-eligible beneficiaries under age 65. These individuals often have multiple chronic conditions complicated by social factors like low incomes, food insecurity, and housing instability that can exacerbate their health conditions and may result in avoidable hospitalizations or emergency department visits.² Lack of integration between Medicare and Medicaid also leads to fragmented patient care, which can compromise quality and create unnecessary costs from duplicate tests, medication errors, and other issues.³ For these reasons, dual-eligible beneficiaries under age 65 account for a disproportionately large share of all Medicare and Medicaid program spending: while they represent 7 percent of Medicare enrollment and 5 percent of Medicaid enrollment, they account for 13 percent of Medicare spending and 10 percent of Medicaid spending.⁴

Integrated managed care plans are one approach to creating more seamlessness between Medicare and Medicaid coverage. For example, legislation introduced last year — the DUALS Act of 2024 — proposed to enroll dual-eligible individuals in integrated care plans with state contracts.⁵ Additionally, the Centers for Medicare and Medicaid Services (CMS) finalized rules for 2025 that aim to increase the percentage of dual-eligible beneficiaries enrolled in integrated managed care plans.⁶ At the end of 2025, CMS also will end the Financial Alignment Initiative (FAI) demonstrations that use payment models aligning Medicare and Medicaid financing to reduce costs as well as use care coordination to improve care for dual-eligible beneficiaries. Instead of FAI models, individuals who are eligible for both Medicare and Medicaid can enroll in dual-eligible special needs managed care plans (D-SNPs), which are specialized Medicare Advantage plans run by private health plans.⁷

These integration efforts, however, typically do not recognize the heterogeneity of the 3.6 million dual-eligible individuals under age 65, who represent over one-third (36%) of the dual-eligible beneficiaries overall. This younger group includes people with physical or behavioral disabilities and people with intellectual and developmental disabilities (IDD) who can differ in important ways from older dual-eligible individuals.

To better understand these differences, we conducted interviews with more than 20 national Medicare, Medicaid, and disability experts, including state and federal officials, plan representatives, community partners, and advocates between July and September 2024. (For more details, see “How We Conducted This Study.”) From these interviews, we identified key considerations for these nonelderly, dual-eligible beneficiaries, including their diverse health and social needs, specific barriers to care, and coverage choices.

Key Considerations

Needs and Priorities

Dual-eligible individuals under age 65 are diverse, with complex and overlapping health and social needs. Unlike their older counterparts, younger dual eligibles may have different medical and disabling conditions. They are more likely to rate their health as poor, and they have a higher prevalence of functional limitations, cognitive impairments, and behavioral health conditions such as anxiety disorders, bipolar disorder, depression, and schizophrenia.⁸

Younger dual-eligible individuals are also more likely to live with children and nonrelatives and are less likely to live with a spouse than those age 65 and older.⁹ Many younger beneficiaries have lifelong disabilities and struggle to remain at home because of inadequate support due to aging parent caregivers or the lack of direct care workers.

Because of their low incomes and poor health compared to dual eligibles age 65 and older,¹⁰ younger dual eligibles need help addressing social drivers of health (also known as social determinants of health), such as transportation and food insecurity. They may benefit from programs such as the Supplemental Nutrition Assistance Program (SNAP), Medicare Savings Program (MSP), and Low Income Home Energy Assistance Program (LIHEAP). Nearly one-quarter (24%) of nonelderly dual-eligible individuals live in rural areas, compared to 19 percent of dual eligibles age 65 and older, potentially making their access to health plans, providers, and services more challenging.¹¹

Individuals under age 65 value independence but face challenges meeting day-to-day needs. Although interviewees noted that “disability doesn’t necessarily equal poor health,” younger beneficiaries require access to a broad range of services and supports to function in the community. Medicare helps to pay for many medical care services, such as hospitalizations, physician visits, and other services, but may not cover the services and supports these individuals need to maintain their independence.¹²

Advocates and disability experts stressed an individual’s right to remain in the community. Coverage that reflects person-centered care, which is guided by an individual’s goals, preferences, and values, can help provide for their day-to-day needs.¹³ Employment accommodations, coverage of adaptive equipment like durable medical equipment, technology,¹⁴ and personal care services covered by Medicaid help support independent living.

Access to Care

Individuals have difficulty finding providers who understand disability issues and are attentive to their concerns. Younger populations with disabilities have less access to ambulatory care and make fewer annual clinician visits for primary and specialty care. They also use the emergency department more frequently than their peers without disabilities.¹⁵

Primary care providers may not fully appreciate the challenges that people with disabilities face in navigating the health system. Individuals with rare and complicated conditions often struggle to find specialists who can meet their needs. They also may have difficulty communicating with staff and following treatment plans due to physical or functional limitations.

Some advocates and experts expressed concerns that private Medicare Advantage plans, including D-SNPs, may not be able to build networks that include the range of providers needed by dual-eligible individuals under age 65. Individuals who enroll in plans with provider networks that are too narrow may lose their established, long-term relationships with out-of-network providers. Although telehealth can address some access issues like lack of transportation and limited appointment availability, it requires that beneficiaries have technological and internet capabilities.

Dual-eligible individuals need services and care models administered through state Medicaid programs that extend beyond medical care. Medicaid typically provides a range of home and community-based services, such as personal care and home-delivered meals.¹⁶ These services also include mental health and substance use disorder treatment services designed to meet the needs of individuals with a range of disabilities. Dual eligibles under age 65 have higher rates of behavioral health conditions like anxiety disorders, bipolar disorder, depression, schizophrenia, and other psychotic disorders than dual eligibles age 65 and older.¹⁷ Robust community-based behavioral health services, including peer support that can help prevent hospitalizations and institutionalization, are “carved out” of managed care plans in many state Medicaid programs. Although these carve-outs may create care coordination challenges, they may be needed to fill gaps in D-SNPs’ service offerings.

Care Coordination

Care coordination can be helpful but needs to be tailored to meet individual needs. Interviewees stressed that a knowledgeable care coordinator is essential to enable younger dual eligibles to live in the community. These professionals should have expertise in the independent living philosophy, knowledge of both Medicare and Medicaid benefits, and training to address the full range of needed services, including benefits targeting social drivers of health. The care coordinator also needs to be part of an interdisciplinary care team to connect providers affiliated with the health plan with various community programs and agencies. States could use integrated health plan contracts to set qualifications for care coordinators or require the use of a Medicaid care coordination program provided by a local, community-based organization.

While tailoring care to the specific needs of beneficiaries is essential, some experts cautioned that Medicare Advantage plans’ utilization management algorithms do not recognize the unique needs of people with disabilities. Advocates indicated that delays and denials of health plan service authorizations are common. Some believe that an individual with disabilities would best be served by a single care coordinator with independence from the health plan.

Care coordination alone cannot solve integration challenges. In the U.S. health system, some care for medical conditions, mental health, and substance use disorders may be siloed and disjointed, posing a significant challenge for integration. Another “fundamental choke point” to integration is the lack of common computer and software systems that can share data at the provider level. Also problematic are benefits that overlap between Medicare and Medicaid for all dual-eligible individuals but particularly for younger beneficiaries with complex and co-occurring medical and behavioral health challenges.

For example, when benefits overlap (such as with durable medical equipment, medical supply products, and home health), Medicare is the first payer, although Medicaid may provide a broader benefit. The coordination of benefits to determine who pays for services can be cumbersome and result in delayed care. For example, this process can delay wheelchair access and repairs for individuals with disabilities enrolled in either Medicare Advantage plans or in traditional Medicare. Streamlined benefit coordination combined with more effective care coordination could help address this issue.

Navigation and Coverage Choices

Individuals face myriad health plan choices that are difficult to navigate. Although dual eligibles living in nonrural states have a choice of many health plans,¹⁸ the vast majority (92%) were not enrolled in integrated models in 2020. There are a number of reasons for this, including limited availability of integrated plans, competing state priorities, and lack of beneficiary understanding and outreach.¹⁹ For 2025, the average number of choices per county is 34 non-SNP Medicare Advantage plans with prescription drug coverage and 65 Medicare Advantage plans with SNPs.²⁰ The number of D-SNPs continues to grow, with 909 D-SNPs available nationally in 2025, up from 851 D-SNPs in 2024.²¹ Navigating coverage choices is challenging, although the Medicare Plan Finder now allows individuals to search for D-SNPs as of 2025.²²

More information on integrated plans’ benefits and quality is needed for better clarity and informed decision-making. Experts indicated that the current Medicare Advantage Stars rating system does not reflect plans’ quality of coverage of behavioral health, long-term services and supports, and other services needed by this population.

Individuals need an independent source of information. Younger beneficiaries, who often navigate plan enrollment choices on their own or with the help of a family caregiver, may be swayed by health plan marketing campaigns. When considering enrollment in a D-SNP, low-income beneficiaries may be influenced by supplemental benefits like utility assistance, groceries, and transportation. Some will stay in original Medicare so they can continue to choose providers who have the expertise to address their complex health needs. Others may be steered by brokers to enroll in a plan that may not meet their specific provider needs.

Enrollment guidance needs to be clear, accessible, and targeted to those with disabilities. State Health Insurance Assistance Program counselors, who are available to help with beneficiary enrollment choices, may require additional training on integrated plans and the most suitable options for younger dual-eligible beneficiaries.

Policy and Research Priorities

As efforts to integrate Medicare and Medicaid move forward, our research has identified the following priorities to improve care and coverage for nonelderly dual-eligible individuals:

Integration efforts should include a focus on the unique health and social needs of this population as well as their caregivers. This focus could help policymakers identify gaps in services and supports and promote integration strategies such as coordination and person-centered care to improve access to care. While the focus of integrating benefits and financing of Medicare and Medicaid has been on reducing costs, some dual-eligible coverage arrangements may not yield the anticipated cost savings and may in fact raise Medicare spending.²³

Increase data collection and analysis by age and disability. Improving integration between Medicare and Medicaid requires comprehensive data on individuals’ experiences linked across delivery systems and over time. More coordinated data collection could help identify challenges like discrimination and poor access due to beneficiaries’ location or inability to find providers that accept Medicare and Medicaid. CMS also could collect and share D-SNP quality data at the plan level, and not just at the contract level, to help dual-eligible individuals under age 65 select a plan that meets their needs.

More comprehensive analysis is also needed, as research studies of Medicare enrollees often exclude younger beneficiaries.²⁴ High-level statistics are available from the Medicare and CHIP Payment and Access Commission and other organizations, but deeper analysis of health needs, utilization, and spending by the three main subgroups of beneficiaries under age 65 (those with IDD, physical, or behavioral conditions) is not generally available.

Build the evidence base on what works for dual-eligible individuals under age 65. Results from the Financial Alignment Initiative demonstrations could help policymakers develop better integrated approaches for this high-needs population, although only Massachusetts focused exclusively on the under-65 population. To date, findings from the FAI evaluations generally have been mixed²⁵ and suggest the need to proceed cautiously with integration efforts that seek greater enrollment in managed care plans exclusively. While the Medicare program achieved cost savings under Washington State’s FAI managed fee-for-service demonstration,²⁶ capitated model demonstrations that included a fixed payment to providers had little impact on Medicare spending.²⁷

CMS could convene an expert advisory panel to review the evidence and refine integrated health plan payment rates, provider incentives, and other aspects. The panel also could address ways to expand the availability of integrated plans in rural areas, which may be challenging due to insufficient numbers of beneficiaries and providers.²⁸ Experts could also develop and implement quality metrics that better reflect the health and social needs of the under-65 population.

Engage dual-eligible individuals under age 65 and other stakeholders. A robust consumer engagement process that is independent of the health plan and provides compensation for member participation could help plans meet beneficiaries’ priorities. New D-SNP enrollee advisory committees (EACs)²⁹ in each state may help to facilitate feedback from beneficiaries under age 65 on aspects like coordination, networks, utilization management, and health equity across Medicare and Medicaid.

Federal support to help states provide resources and share potential Medicare savings is also important to advance integration. With limited staff capacity,³⁰ state agencies may be unable to step up monitoring of health plans or develop integration strategies. In addition, greater support is needed for community representatives to help nonelderly dual-eligible individuals and caregivers navigate coverage choices and resolve benefits and coverage issues with their plans.

Ensure access to traditional Medicare. Dual-eligible individuals under age 65, particularly those with rare conditions and special health care needs, may want the freedom to choose providers who understand them. As D-SNPs grow, it will be important for CMS and states to monitor whether plan networks include specialty providers with expertise to care for younger beneficiaries with intellectual and developmental disabilities, behavioral health conditions, and other complex health and social needs.

To better serve dually eligible individuals enrolled in traditional Medicare, policymakers could explore other payment mechanisms through the physician fee schedule or provider-led accountable care organizations.³¹ They also could develop other innovative models, including those that test integrated Medicare and Medicaid benefits and financing, to expand benefits and improve quality for younger beneficiaries in Medicare Advantage plans and traditional Medicare.

Conclusion

Federal and state policies to integrate Medicare and Medicaid could benefit from better recognition of the complex health and social needs of dual-eligible beneficiaries under age 65. Ensuring meaningful beneficiary and stakeholder involvement and monitoring the results from integrated plans will help policymakers design and offer better options, including the option to enroll in traditional Medicare, for this underserved population. Integrated care efforts should proceed with caution, owing to the high costs and high needs of the under-65 dual-eligible population.