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Refocusing Responsibility For Dual Eligibles: Why Medicare Should Take The Lead

Publication Date: October 04, 2011
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At 40 percent of Medicare's and of Medicaid's costs, the 9 million dual eligibles who receive benefits from both programs, are a focus of efforts to slow growth in entitlement spending. But, given the two programs' responsibilities, policy-makers are relying far too heavily on states to find the solution. Dollars spent on dual eligibles are overwhelmingly federal; potential savings come from better management of Medicare-financed acute care services; and enhanced state, rather than federal, responsibility for overall spending increases the risk of cost-shifting to Medicare and may undermine quality of care for vulnerable beneficiaries.

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The federal government is overwhelmingly responsible for spending on dual eligibles, and improvements in Medicare-financed services—at the core of the Affordable Care Act’s (ACA’s) payment and delivery reform—are the most direct path to better care at lower costs.

  • The federal government pays the bulk of care costs for dual eligibles. Of the $319.5 billion estimated as spent on duals in 2011, 80 percent ($256.6 billion) are federal dollars, more than two-thirds of which flowed through Medicare.
  • Improvement in Medicare-financed care is the key to spending control. Prevention of unnecessary hospital use—almost fully financed by Medicare—is widely recognized as the most immediate target for both spending reductions and quality improvements in care for dual eligibles.
    • Dual eligibles experience far higher rates of “potentially preventable hospital admissions” than other Medicare beneficiaries: more than twice as high for pressure ulcers, asthma and diabetes; 52 percent higher for urinary tract infection; and over 30 percent higher for chronic obstructive pulmonary disease and bacterial pneumonia.
    • Estimates of potentially avoidable rehospitalizations of nursing home residents—which shift costs from Medicaid-financed nursing benefits to Medicare-financed hospital and skilled nursing facility (SNF) benefits—range from 18 percent to 40 percent.
  • The ACA charges Medicare with improving medical care. Better coordination of Medicare-financed care for beneficiaries at high risk of hospitalization is at the heart of payment and delivery reforms promoted by the ACA. Reporting on the experience from Medicare care coordination demonstrations, Randy Brown emphasized that significant reductions in hospital use (from 17 to 24 percent) and in Medicare costs (by 10 to 20 percent) were achieved by interventions that targeted beneficiaries at risk of preventable admissions; emphasized in-person patient-coordinator contact; collected and responded to timely information on hospital admissions and emergency room visits, established close relationships between care coordinators and primary care physicians; and actively promoted training in self-management skills.

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