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Health Care Team Tackles Cost and Quality of Care for Dual-Eligible Patients

By Rebecca Adams, CQ HealthBeat Associate Editor

Deep within the bureaucracy of the Health and Human Services Department, a 20-person team is trying to find a way to save money and improve care for the 9.2 million people on both Medicare and Medicaid.

The task of the Federal Coordinated Health Care Office, created by the 2010 health overhaul law (PL 111-148, PL 111-152), is one of the most vexing and costly challenges facing the two entitlement programs. The office's work comes at a time Congress and state officials are increasingly concerned about the rising cost of Medicare's health care coverage for 45 million elderly and disabled Americans and Medicaid's 55 million poor patients—concern that is magnified for those in both programs.

These participants, known as dual eligibles, are in the sights of members of Congress and administration officials engaged in negotiations to identify federal spending cuts to reduce the deficit and clear the way for an increase in the debt ceiling. The group ranks among the sickest and most expensive to cover, and their medical costs are about five times higher than those of other Medicare patients.

President Obama's fiscal commission recommended last year that extending to dual beneficiaries the deep discounts drug makers offer Medicaid would save $49 billion through 2020. Pharmaceutical companies oppose the idea. The commission also said moving dual eligibles into Medicaid, a federal and state program, would save $12 billion through 2020. It also called for moving the beneficiaries into managed-care plans.

Some lawmakers warn that if Congress moves too fast it could undercut the administration's new office and hamper its efforts to implement initiatives and put in place administrative steps to cut costs and improve care for dual eligibles. The House Energy and Commerce Health Subcommittee is slated to get its first chance to hear from Melanie Bella, the office's director, sometime later this month. In the hearing, panel lawmakers are likely to solicit recommendations about how federal and state governments can save money serving dual eligibles.

The task will not be easy. In many states, financially strapped governors already are pushing Congress to give states more control over Medicaid spending. Any movement in that direction—and so far there has been none—could complicate the job of dealing with dual eligibles.

Health and Human Services Secretary Kathleen Sebelius has said $12 billion a year can be saved if initiatives from the new office help states save just 10 percent of their share of the costs of serving dual eligibles.

Bella's determination to restructure services for dual eligibles began a decade ago, when she headed Indiana's Medicaid program. The two programs are too fragmented and it is difficult to track patients, Bella said in an interview. Patients, for example, may have one set of benefits under Medicaid and another under Medicare, which offers medical and prescription drug coverage. The two programs' rules sometimes conflict and doctors often do not coordinate treatment and medicine.

Coordinating Care

Bella wants to leverage regulatory change and use demonstration projects to gain efficiencies and better align benefits to reduce duplication, avoid complications and cut hospitalizations. Already about 100,000 dual-eligible patients, most from six states, are being treated in pilot coordinated care programs with promising results. Bella hopes that by the end of 2012 a million patients will be in such "integrated care" programs.

More managed care for dual eligibles could be part of the answer. "We see managed care as one vehicle," Bella said. Such plans can do a better job of coordinating patients' services than fee-for-service options under which no one oversees a patients' care, she said.

A few projects are already in the works. Bella's office recently gave 15 states $1 million grants to design more-seamless benefit programs for dual eligibles. Bella is creating a resource center to showcase best practices in such states. And she's asked the public to submit suggestions by July 11 on how to structure and simplify Medicare and Medicaid drug and care benefits in six areas.

Still, Bella said managed care may not be the only answer, noting that some states lack networks able to handle the needs of dual eligibles. And, she said, she recognizes that beneficiaries are wary change will reduce the quality of health services, something, she said, can be addressed with the right safeguards.

Bella also has offered to give states more patient-specific information about how beneficiaries use Medicare. States already have similar data for Medicaid. State officials could use the Medicare data to pinpoint which beneficiaries are at risk for costly hospitalization and get them more preventive care or support.

She is also working with HHS's new Innovation Center to generate ideas for more demonstration projects, including creating accountable care organizations for the dual eligibles. "States are encouraged to come to us with their ideas. We'll work with them to make it happen and facilitate what it takes to put these systems in place."

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