The Budget Battle and the Dual Eligibles

$315 billion?

While it digests the details behind the Prez's $320 billion health care budget-cutting proposal, the Disease Management Care Blog toured an unfamiliar corner the health care universe called the "dual eligibles" a.k.a. "duals."

Two good up-to-the-minute summaries are here and here.  For a program that is so poorly run and an Administration that is so willing to spend money, the DMCB is surprised the duals haven't garnered more attention.

According to the Kaiser Family Foundation, there are 8.9 million disabled young persons (40%) or low income elderly (60%) who are "dually" enrolled in both Medicare and Medicaid.  Under this system, Medicare is the primary payer, while Medicaid is "secondary." Depending on the beneficiary's income level, Medicaid can be limited to paying for the duals' Medicare Part B premiums, cost sharing deductibles and co-pays (about a third of the duals), or it can cover other services that are not otherwise covered by Medicare (two thirds of the duals).  Two examples of services that are picked up by Medicaid is long-term care in a skilled nursing facility and home-based services. 

Duals had combined Medicare and Medicaid spending of almost $200 billion in 2005 and it's projected to go to a whopping $315 billion in 2011.  While this population on average accounts for only 15% of a state's Medicaid beneficiaries, these patients account for almost 40% of a state's Medicaid budget, mostly for long term care services.

The DMCB learned that these patients are the canaries in the health care coal mine.  They are vulnerable, the sickest of the sick, low income, have multiple conditions and are notorious users of hospitals, emergency rooms and nursing homes.  While some benefit from being in managed care style "special needs plans," 80% of the duals are stuck in a patchwork of overlapping state and federal fee-for-service programs, financing and rules that result in haphazard and poorly organized care.  What's more, since Medicare is the primary payer, any efforts by states to reduce the health care costs of their duals go to the fed's bottom line. 

That's why the Affordable Care Act established a "Duals Office" that is providing grants to states to develop proposals based on either 1) capitated payments to plans that achieve savings for both Medicare and Medicaid or 2) state-run 'managed fee for service" options like "ACOs" or "health homes" that allow states to gainshare in any savings.  The Office will also be monitoring consumer protections, such as preserving choice, maintaining an adequate provider network and ensuring that some of the savings are directed toward care management, coordination and community-based services.  It's too early to tell if they've had any meaningful successes.

In looking at President Obama's latest proposal, the DMCB can't quite discern what the budget cuts will do to the duals.  Cost shifting to the states won't help, but in the long run, the DMCB believes the states are better positioned - despite some bumps in the road - to rely on well-run special needs plans to serve this population with expanded population health and care management programs.

Stay tuned!