Managed Care and Dually Eligible Beneficiaries: Challenges in Coordination

By Walsh, Edith G.; Clark, William D. | Health Care Financing Review, Fall 2002 | Go to article overview
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Managed Care and Dually Eligible Beneficiaries: Challenges in Coordination

Walsh, Edith G., Clark, William D., Health Care Financing Review


While CMS and individual States consider managed care an important vehicle for improving health care delivery and controlling expenditures, health plans contracting with Medicare or with individual State Medicaid Programs face many challenges. These challenges are particularly complex when health plans enroll beneficiaries who are covered by both Medicare and Medicaid, known as dually eligible beneficiaries. The central goals of this article are to: (1) describe the existing variation in Medicare and Medicaid managed care combinations in which dually eligible beneficiaries are enrolled; (2) identify problems that health plans, beneficiaries, and providers encounter when dually eligible beneficiaries are enrolled in health plans; and (3) discuss the implications of these findings. Prior to addressing these goals we provide background information on Medicare/Medicaid dual eligibility and managed care options available for these beneficiaries.


About 17 percent of Medicare beneficiaries in 1999 were also enrolled in Medicaid, representing about 6.2 million dually eligible beneficiaries (CMS analysis of Medicare Current Beneficiary Survey data). These dually eligible beneficiaries accounted for about $50 billion in Medicare expenditures (24 percent of the total for all Medicare beneficiaries) and $63 billion in Medicaid expenditures (35 percent of the Medicaid total). These beneficiaries receive assistance from their State Medicaid Programs with Medicare premium payments and their Medicare copays and deductibles. If their income and assets are low enough, dually eligible beneficiaries may also receive Medicaid benefits from their States, such as community and facility long-term care (LTC), acute care, behavioral health, pharmacy benefits and medical transportation. This group is sometimes referred to as "full benefit" dually eligible beneficiaries. The categories of dual eligibility and their respective benefits can be found at dualelig/.

Despite the additional resources available to dually eligible beneficiaries, serving these beneficiaries can be particularly challenging for both health plans and medical care providers. In comparison to other Medicare beneficiaries, dually eligible beneficiaries are known to have poorer health status, higher health care costs, less education, be more culturally diverse, and have an increased likelihood of using LTC. In 2000, 55 percent of dually eligible beneficiaries reported fair or poor health status compared with 26 percent among the nondually eligible Medicare population. Sixty-three percent of dually eligible beneficiaries had less than a high school education in comparison to 29 percent of non-dually eligible beneficiaries. Twenty two percent of dually eligible beneficiaries lived in LTC facilities compared with only 3 percent of non-dually eligible beneficiaries. Higher percentages of dually eligible beneficiaries have diabetes, pulmonary disease, stroke, and Alzheimer's disease than non-dually eligible Medicare beneficiaries. Dually eligible beneficiaries also are disproportionately older, female, and from minority populations (Shatto, 2002).

Indeed, because Medicaid status (also known as welfare status) serves as a proxy for poor health in the demographic risk-adjustment models that are the basis of M+C capitation payments, M+C organizations receive substantially higher capitation payments for each dually eligible enrollee. As a result of their poor health status and increased likelihood of using a range of services, dually eligible beneficiaries are a group for which care and benefit coordination are simultaneously important and complex.

Managed Care: History and Objectives

Policymakers have long promoted managed care as holding promise for care delivery through a model that could offer a high degree of coordination and integration across the spectrum of covered acute, chronic, and LTC services.

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Managed Care and Dually Eligible Beneficiaries: Challenges in Coordination


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