Health Care Use and Spending Among Need-Based Subgroups of Medicare Beneficiaries With Full Medicaid Benefits

Medicare and Medicaid fund different benefits and services, and integration of the 2 programs is critical to better serve the 12 million people enrolled in both programs. Dual-eligible beneficiaries are, on average, sicker and frailer than other Medicare- or Medicaid-only beneficiaries because many are living with multiple chronic comorbidities and experience functional limitations, cognitive impairments, and mental health conditions. The complex care needs of dual-eligible beneficiaries account for a disproportionate share of expenditures in both Medicare and Medicaid. Lack of coordination between programs creates misaligned incentives for payers and physicians, resulting in higher costs, fragmented care, and poor health outcomes.

Although evidence is limited, integrated models are intended to help align financial incentives with overall beneficiary experience and outcomes across the care continuum. Yet, relatively few dual-eligible beneficiaries are enrolled in integrated programs, such as the Program for All-Inclusive Care for the Elderly (PACE), or Medicare-Medicaid–managed care plans including the Financial Alignment Initiative (FAI), and Dual Special Needs Plans (D-SNPs). The PACE provides fully integrated financial, health care, and administrative processes; however, PACE models are challenging to scale. Overall, D-SNPs are more widely used than PACE, with 3.8 million dual-eligible beneficiaries enrolled nationwide and varying degrees of coordination and integration between Medicare and Medicaid across states. Despite Centers for Medicare & Medicaid Services (CMS) and state efforts, only around 10% of dual-eligible beneficiaries nationally are enrolled in programs that integrate Medicare and Medicaid care models, payments, and administrative processes.

Population heterogeneity poses challenges in expanding access to, and enrollment in, integrated payment models. Beneficiaries enroll in Medicare based on age or long-term disability, and qualify for state Medicaid based on income or health care needs. Disabled adults comprise more than half of the dual-eligible population but only 15% of the general Medicare population. In addition to physical medical care, dually eligible beneficiaries often need behavioral health (BH) services, long-term services and supports (LTSS), and social supports.3 Long-term services and supports include both home and community-based services (HCBS) and facility-based care. Evaluations informing Medicare-Medicaid integration must consider average utilization and cost patterns of dual-enrollees across both programs, including among beneficiary subgroups with different health care needs.

Many studies of health outcomes use only Medicare spending and outcomes for this population, with few incorporating Medicaid data as well. The Medicare Payment Advisory Commission (MedPAC) has recently provided high-level data for the whole population, but did not examine cost and use variations across key subgroups, such as BH users or HCBS waiver participants. Other studies with linked Medicare-Medicaid claims focused on a specific type of service, subpopulation, or cost bracket. However, services with the highest spending may vary for different subgroups due to diverse care needs and differing access to services through Medicaid waiver programs.

Evaluating Medicaid spending is challenging in states with high use of Medicaid-managed care organizations (MCO). Encounter data for MCOs are less accurate compared with fee-for-service (FFS) claims data, which are used for reimbursement. In North Carolina (NC), however, more than 95% of dual-eligible beneficiaries were served by FFS Medicaid in 2019. Thus, analysis of the NC dual-eligible FFS population is more representative of the diversity of dual enrollees than in states where managed care is more prevalent. Compared with states with high managed care, evaluation of spending in NC may be more generalizable and applicable for policy recommendations due to availability of claims data on most of the Medicaid population. The NC population is also diverse in race and rurality and provides relevant context for other diverse states.

Federal and state policy makers and administrators are currently developing strategies for Medicare-Medicaid integration. To inform the design of integrated programs that will meet the diverse needs of dual enrollees, we describe the Medicare and Medicaid health care use and spending for subgroups with different health care needs in NC. The state of NC is currently implementing Medicaid transformation from FFS to Medicaid value-based care models. We examined FFS spending both overall and for need-based subgroups defined from the Medicaid program perspective to support federal and state decision-making.

Read the full article in JAMA