Dual Eligibility: A Use Case for Disproportionate Spending

Across the health economy, there are countless instances where spending on a population cohort is disproportionate to enrollment. One example is the dual eligible population of individuals covered by both Medicare and Medicaid. While there are healthy beneficiaries in this population, this cohort is typically more medically complex and inclusive of individuals with multiple chronic conditions, physical disabilities, mental illness, and cognitive impairments. Dual insurance coverage brings dueling regulatory frameworks in the form of federal (Medicare) and state (Medicaid) programs, resulting in labyrinthine administrative complexities in addition to the complicated care coordination required for this population.

A new data book released earlier this month by the Medicare Payment Advisory Commission (MedPAC) and the Medicaid and CHIP Payment and Access Commission (MACPAC) provides demographic, fiscal, and healthcare utilization data on beneficiaries who are eligible for both Medicare and Medicaid coverage. While there are a multitude of eligibility pathways for full or partial dual-eligible status, Medicare is the primary payer for acute and post-acute services, while Medicaid provides cost-sharing assistance and coverage of services not included under Medicare. As highlighted in the report, “policymakers have expressed particular interest in dual-eligible beneficiaries because of the relatively large expenditures by both Medicare and Medicaid for this relatively small group of individuals.”

In calendar year (CY) 2019, 12.2M dual-eligible beneficiaries accounted for 19% of Medicare enrollment and 14% of Medicaid enrollment. Yet, this cohort representing less than 4% of the U.S. population accounted for 34% ($276B) and 30% ($165B) of Medicare and Medicaid program spending, respectively (Figure 1). The disproportionate relationship between enrollment and spending levels reinforces financial and health outcome concerns from policymakers (i.e., high spending is associated with high volume of healthcare services).

Dual Eligible

Effecting meaningful change to bend the cost curve and improve care coordination of dual-eligible beneficiaries requires a more nuanced understanding of health status (e.g., presence of one vs. multiple chronic conditions). When segmented by age – under age 65 and over age 65 – we see clear distinctions between the health status of these dual eligible populations. For example, individuals under 65 have a higher share of behavioral health conditions than the 65+ age cohort (Figure 2). While it is imperative for individuals in the under 65 age segment to have access to behavioral health treatments, it is equally important to ensure coordinated preventive care to manage the prevalence of co-morbid conditions in the 65+ age cohort (e.g., hypertension, heart failure, diabetes and ischemic heart disease). Given the different payment structures, coverage levels, and regulatory bodies (i.e., CMS vs. state agency), administrative burden associated with coordinating the care of these chronic conditions frequently leads to delays and/or gaps in care, with a predictable result in suboptimal downstream outcomes.

The joint MedPAC and MACPAC report highlights the complexity associated with caring for and coordinating treatments for dual-eligible beneficiaries. Given the program differences across states and the differing share of dual-eligible beneficiaries in each state (e.g., 1% of Utah’s population vs. 7% of Maine’s population), policies and strategies for serving this population should not have a “one size fits all” approach. While complex populations like dual eligible will always require some degree of disproportionate spending on this population, aggregate spending can only be reduced through tailored approaches for populations in different geographic areas and managing different disease states.

Thanks to Katie Patton for her research support.

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