Centers for Medicare and Medicaid Services' Strategies for Dual Eligible Care Coordination

Providing care to patients eligible for both Medicare and Medicaid - "dual eligibles" - has proven problematic. Not only does their care tend to be more costly, it is often difficult to efficiently traverse the two programs, leading to disjointed care. However, the Center for Medicare and Medicaid Services has created two innovative strategies to improve the coordination of care and financing for dual eligible patients.

Patients that are eligible for both Medicare and Medicaid – “dual eligibles” – have long presented a conundrum to federal and state governments.  While there are numerous factors that qualify individuals for both Medicare and Medicaid, most dual eligible patients qualify due to a combination of either being elderly, having lower income, or being disabled. And since they eligible for two separate health insurance programs, the care provided to dual eligibles can be fragmented and uncoordinated across different settings. Over time, this wasteful spending becomes costly.

Dual eligible patients tend to be very sick. Approximately half of duals have three or more chronic conditions and nearly sixty percent have cognitive limitations.[1] Their care, therefore, can be considerably expensive. Although they only account for approximately fifteen percent of Medicare and Medicaid enrollees, they account for nearly 35 percent of spending across both programs.[2] Specifically, dual eligible patients account for nearly four in ten Medicaid dollars spent and over one in four Medicare dollars spent.[3] Fortunately, the Center for Medicare and Medicaid Services (CMS) is moving forward with innovations to assuage the financial strain duals present to both federal and state budgets.

CMS announced the State Demonstrations to Integrate Care for Dual Eligible Individuals in December 2010. Beginning in April 2011, numerous states submitted proposals for patient-centered programs “that coordinate primary, acute, behavioral and long-term supports and services for Medicare-Medicaid enrollees.”[4] Each state went through a public comment process that engaged beneficiaries and stakeholders to create the design contract according to CMS standards. Fifteen states – California, Colorado, Connecticut, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Vermont, Washington, and Wisconsin – were selected and will be awarded up to $1 million each to develop the new delivery models that will coordinate both care and financing. Once completed, each state’s final proposal will go under federal review before the program is implemented.

Similar to the State Demonstrations, CMS announced the Financial Alignment Initiative that also aims to coordinate care for dual eligibles. The Initiative is designed to “better align the financing of these two programs and integrate primary, acute, behavioral health and long term services and supports for their Medicare-Medicaid enrollees.”[5] The program will integrate care via two models: a capitated model and a managed fee-for-service (FFS) model. The capitated model will pay managed care organizations prospective blended capitated rates to provide care to duals. In this case, prospective blended capitated payments are mixture of a per member per month rate and a shared savings plan between the state and CMS. State proposals under the capitated model must demonstrate upfront savings to both CMS and the state before the demonstration moves forward.[6] The managed FFS model will allow the state and CMS to create an agreement in which the state “would be eligible to benefit from savings resulting from initiatives designed to improve quality and reduce costs for both Medicare and Medicaid.”[7] CMS has received 26 proposals and will eventually select states to begin their demonstrations in January 2013.

Ultimately, the State Demonstrations and Financial Alignment Initiative should create higher quality and lower cost care for a generally sick and costly population. They will provide the means for better coordinated and integrated care across settings. Additionally, the programs should help to reduce redundant, duplicative testing and other services that lead to unnecessary spending.

[1] Altman, Drew. “Duals: The National Health Reform Experiment We Should Be Talking More About.” Kaiser Family Foundation (June 2012). (available at

[2] Ibid.                                                                          

[3] United States Department of Health and Human Services. “Medicaid Cost-Savings Opportunities.” February 2011. (available at

[6] Musumeci, MaryBeth. “An Update on CMS’s Capitated Financial Alignment Demonstration Model for Medicare-Medicaid Enrollees.” Kaiser Family Foundation (April 2012). (available at

[7] Ibid.