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Federal Officials Approve Texas Dual Eligible Demonstration Plan

By Rebecca Adams, CQ HealthBeat Associate Editor

May 27, 2014 -- Texas became the 12th state to win federal approval for a demonstration program to shift low-income elderly or disabled people into managed care.

The demonstration will start on March 1 and continue until Dec. 31, 2018.

The pilot program affects people who qualify for both Medicare and Medicaid. Instead of getting their care through both programs, with Medicare paying first and Medicaid picking up costs such as co-pays and extra services, the patients will be covered by one health plan.

The demonstrations, first announced in 2011, are designed to test whether federal and state officials can save money by better coordinating the care of the so-called dual eligibles.

About 168,000 Texans will be affected by the change, according to the Texas Health and Human Services Commission. That's more than 40 percent of the almost 400,000 people in the state who receive both Medicare and Medicaid.

Federal and state officials hope to save a significant amount of money by using managed care. From March 1 until Dec. 31, 2015, the government expects to save 1.25 percent of the amount it would have otherwise spent on those services over the same period. In 2016, federal and state officials expect to save 2.75 percent. The savings are expected to grow to 3.75 percent of the baseline costs in 2017 and to 5.5 percent in 2018.

"Combining a person's Medicaid and Medicare services into one plan makes sense for the consumer and for the taxpayer," said Chris Traylor, chief deputy commissioner of the Texas Health and Human Services Commission, in a statement. "We'll be able to improve the coordination of care, helping people get the right care in the right setting, and we can save money for both the state and federal governments."

Texas plans to pilot the program in six of the state's most populated counties.

After the demonstrations were announced in 2011, 26 states applied to participate, although a few later dropped out.

The demonstrations are an area where the Obama administration and states are working in a nonpartisan way to test ways that they hope will improve care and save money. A number of states that are led by governors critical of the rest of the administration's health care agenda have asked to be part of the Centers for Medicare and Medicaid Services(CMS) demonstrations.

So far, CMS has approved Texas and 11 other states for three-year projects that either shift patients into managed care plans or coordinate patients' care through managed fee-for-service. Washington state is running both a managed care and managed fee-for-service project. Michigan's approval in April was the most recent demonstration approved before Texas.

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