Medicare, Medicaid Spending Similar Among Dual Eligible Beneficiaries

May 16, 2023 - Need-based subgroups of dual eligible beneficiaries utilized both Medicare- and Medicaid-funded services, identifying the need for an integration program that includes benefits from both payers, a study published in JAMA Health Forum found.

Dual eligible beneficiaries typically have multiple chronic comorbidities, cognitive impairments, and mental health conditions, leading them to require more complex care than beneficiaries in only Medicare or Medicaid. A lack of coordination between the two programs creates misaligned incentives for payers and physicians, leading to higher costs, fragmented care, and poor health outcomes.

Some dual eligible beneficiaries are enrolled in integrated programs, like the Program for All-Inclusive Care for the Elderly (PACE), Medicare-Medicaid managed care plans including the Financial Alignment Initiative (FAI), or Dual Special Needs Plans (D-SNPs). However, only 10 percent of dual eligible beneficiaries are enrolled in programs that integrate Medicare and Medicaid care models, payments, and administrative processes.

Researchers used Medicare and North Carolina Medicaid claims data from 2014 to 2017 to assess healthcare use and spending among different need-based subgroups of dual eligible beneficiaries.

The first subgroup was the community well subgroup, consisting of beneficiaries who did not meet the criteria for the other subgroups but could include high-need individuals with care access barriers. The other subgroups were home and community-based services (HCBS) users, a subgroup with beneficiaries with 100 or more consecutive days in a skilled nursing facility, and high-intensity behavioral health service users.

The study sample included 333,240 North Carolina Medicaid beneficiaries with full Medicaid benefits who were also enrolled in Medicare during the study period. Most of the sample (64.1 percent) were in the community well subgroup, 15.2 percent were in the behavioral health subgroup, 15 percent were in the HCBS subgroup, and 7.5 percent were in the nursing home subgroup.

Medicare is the primary payer for dual eligible beneficiaries, while Medicaid covers beneficiary copays and non-Medicare covered days. Therefore, researchers observed fewer acute care events in Medicaid than in Medicare, including emergency department visits, hospital admissions, and inpatient days. The difference in acute events was higher among those in the nursing home subgroup.

Similarly, more home health visits and hospice days were observed in Medicare than in Medicaid claims. However, more behavioral health service visits were observed in Medicaid than in Medicare claims.

Overall, the combined total spending for Medicare and Medicaid was $26,874 per person-year. Spending was generally evenly distributed between Medicare ($14,175) and Medicaid ($12,698). Outpatient facility care ($7,138) and professional/carrier claims ($6,214) contributed the most to the combined spending. Medicaid funded a greater portion of outpatient facility spending than Medicare, the study found ($4,199 versus $2,939).

Post-acute and long-term care spending accounted for $4,731 in Medicaid and $1,341 in Medicare, while inpatient services contributed $5,231 in Medicare spending and $86 in Medicaid spending.

Combined spending per person-year was the lowest among the community well subgroup at $19,734. This cohort also had the lowest share of spending contributed by Medicaid at 38.5 percent of $7,605.

Meanwhile, the nursing home subgroup had the highest combined spending of $68,359 and the highest share of spending by Medicaid at 70.1 percent, mainly due to spending on post-acute and long-term care ($43,686). Combined spending for the HCBS subgroup was $40,069 per person-year, with Medicaid accounting for 47.7 percent or $19,107.

“We found substantial use of both Medicare- and Medicaid-funded services across all need-based subgroups, demonstrating the need for both Medicare and Medicaid claims to build an accurate picture of dual-eligible beneficiaries’ needs to support care coordination, program evaluation, and policy administration,” researchers wrote.

Policymakers should consider expanding PACE to new regions, which could allow more eligible individuals to enroll and receive integrated care and increase opportunities for partnerships between non-PACE and PACE organizations serving dual eligible beneficiaries.

Additionally, given the overlap between need-based groups, a single program offering a broad range of services, including long-term services and supports and behavioral health services, could help minimize care barriers for dual eligible beneficiaries.