The 2019 Novel Coronavirus (COVID-19) is disproportionately impacting Medicare beneficiaries also eligible for Medicaid (“dual eligible”). This is partially due to a combination of socioeconomic, racial, workplace, and clinical characteristics that align with other risk factors for poor outcomes from the virus. But also, dual eligible beneficiaries typically must navigate two separate insurance programs that weren’t designed to work together. COVID-19 is exposing and exacerbating the complexity of our healthcare system, and its many cracks, inefficiencies, and archaic coverage policies have become the difference between life and death for dual eligible beneficiaries. COVID-19 underscores the need to move beyond the limits of sub-optimal fee-for-service (FFS) medicine, operating across fragmented healthcare system siloes, where:
- Providers rarely are incentivized to address the case management needed in-between services, or work together to promote transitions of care across each FFS-paid patient encounter or between payers;
- Profitable services and payers (like elective surgery and Medicare) invisibly cross-subsidize less profitable services and payers (like urgent care and Medicaid); and
- Healthcare is viewed as a clinical experience, typically without regard to the socioeconomic and environmental factors that influence 50% of a person’s health outcomes.
Dual eligible individuals are among the frailest in our nation. They are the very individuals who most need a well-functioning healthcare system to help prevent and treat illness, disease, and infection. Yet they continue to find themselves in the middle of a tangled maze of misaligned financial incentives, providers who won’t accept their coverage, and benefit carve-outs.
Fixing these problems isn’t optional; it’s imperative. The good news is that there are manageable approaches for states to consider, and several key opportunities are detailed below.
Dual eligible beneficiaries are particularly at risk for COVID-19
A large portion of the 12.2 million dual eligible people in our nation are likely to live with medical conditions that are strongly linked to adverse outcomes associated with COVID-19, including serious heart conditions, diabetes, obesity, and chronic obstructive pulmonary disease (COPD) (Figure 1, below). Dual eligible individuals also are much more likely than Medicare-only beneficiaries to have depression or other mental illness, suggesting they may be more at risk for lasting impacts of COVID-19 caused by social isolation and other stressors of the public health emergency. These chronic condition statistics hold true even among people who are “partial” dual eligible beneficiaries, who aren’t eligible for full Medicaid benefits.
In addition to chronic conditions, dual eligible beneficiaries are more likely to have long-term services and supports (LTSS) needs than the Medicare-only population (see Figure 2). For people who live at home, this typically means someone is coming into the home to provide important supports like personal care services, potentially increasing the risk for exposure to COVID-19. And those who live in a nursing facility or other institutional setting may find themselves at the center of an outbreak. For numerous reasons, including insufficient access to rapid testing and personal protective equipment, nursing home facilities and other senior congregate settings have become hot spots for COVID-19.
Dual eligible individuals also are less likely than Medicare-only to have internet access in the home, more likely to use public transportation, and have limited access to mobile devices, smart phones, and text messaging. These health and access factors put dual eligible individuals at additional risk for exposure to COVID-19.
Dual eligible individuals are bearing the brunt of the pandemic
COVID-19 continues to spread in our country and claim the lives of our neighbors, family members, and other loved ones. For all the reasons listed above, it’s taking a disproportionate toll on dual eligible beneficiaries. The Centers for Medicare & Medicaid Services (CMS) has released preliminary data on the impact of COVID-19 on the Medicare population, including case and hospitalization rates for different Medicare cohorts. Across every single cohort, dual eligible beneficiaries are considerably more likely than Medicare-only beneficiaries to be hospitalized due to COVID-19 (see Figures 3 and 4, below).
For example, age plays a significant role in an individual’s risk for severe illness from COVID-19, and dual eligible beneficiaries are more likely in every age band to be hospitalized due to COVID-19 than Medicare-only beneficiaries. The disparity is worst among those aged 65-74: dual eligible individuals in this age group are nearly 500% more likely than Medicare-only beneficiaries to be hospitalized due to COVID-19, at 1,093 and 190 hospitalizations per 100,000, respectively.
Racial disparity also has been front and center during COVID-19 given the disproportionate rates of infection and mortality among racial minorities. And this disparity is exacerbated when you include dual eligibility: Black, dual eligible beneficiaries are 878% more likely than white, Medicare-only beneficiaries to be hospitalized from COVID-19 infection, at 1,797 and 218 hospitalizations per 100,000, respectively.
Dual eligible individuals face potentially deadly gaps in care, coverage, and access to safe care
In addition to having complex medical and social needs, dual eligible individuals often are forced to navigate a highly fragmented healthcare system. The Medicare and Medicaid programs were not designed with the intent to work together: each has distinct eligibility, benefits, funding streams, payment levels, marketing requirements, enrollment approaches, and on and on. Even when we aren’t in the middle of a pandemic, the lack of alignment between Medicare and Medicaid creates a confusing and tangled web of product options that can result in poor health outcomes. There are at least 43 combinations of Medicare-Medicaid coverage nationwide that dual beneficiaries can choose from, depending on a state’s Medicaid program design (e.g., what’s carved in or out), the Medicare “product” a dual chooses, and the plans and providers operating in each program.
This fragmentation, coupled with long-standing coverage policies, is worsening the impact of COVID-19 on dual eligible beneficiaries. For example:
- Redundant face-to-face requirements in both programs cause multiple (uncoordinated) in-person touch points. Most states have allowed virtual care to replace in-person monitoring services during COVID-19 to limit exposure to the virus, but many dual eligible individuals lack access to internet and video-enabled devices, and those with cell phones are often unwilling to use their limited cell phone minutes on healthcare services. And even if a dual eligible beneficiary has sufficient access to appropriate technology, Medicaid and Medicare coverage of telehealth varies, and vendors may have difficulty creating integrated platforms.
- When a dual eligible individual visits the doctor or is admitted to the hospital, Medicare typically picks up the tab. Medicaid may have no line of sight into these acute medical experiences, which makes it difficult to transition the individual back into his/her home where Medicaid provides coverage of LTSS when it’s needed.
- Institutional LTSS are a mandatory benefit in the Medicaid program, but home and community based LTSS are optional. Additionally, Medicaid covers room and board when an individual resides in an institution, but not in the community. These policies create a coverage bias toward institutionalization for dual eligible individuals who need LTSS. Institutional care is important and essential for individuals unable to reside in the community, but this longstanding coverage bias, payment policy, and lack of alignment in financial incentives between Medicare and Medicaid means these individuals may find themselves in an institution despite being able (and willing) to live at home. And because facilities have been a hot spot for COVID-19 outbreaks, these policies may be placing more dual eligible beneficiaries at risk.
There’s a solution, and it’s not as difficult as states might think
The ideal program design for Medicare-Medicaid integration is a comprehensive set of benefits under one integrated funding stream, administered by a single organization relying on an integrated and coordinated provider network, resulting in a simplified “customer” experience and improved health outcomes. Several states have made considerable progress toward this sort of integration through approaches like aligning Medicaid and Medicare managed care contractors, testing integration through the Medicare-Medicaid Plan (MMP) program, pursuing flexibilities through Financial Alignment Initiative, and including the PACE program as a Medicaid state plan option. But the ideal doesn’t (and won’t) happen overnight, and states shouldn’t let perfect get in the way of good. There are numerous tools at states’ disposal to promote Medicare-Medicaid integration.
- Understand the Medicare Advantage environment in the state and how you might work with Medicare Advantage plans enrolling dual eligible individuals. As of 2018, 29% of full and 48% of partial dual eligible individuals were enrolled in some type of Medicare Advantage product. Many states have yet to implement a full-blown Medicare Advantage strategy, but there are incremental steps states can take to promote integration. For example, in Alabama, the Medicaid agency pays Medicare Advantage plans a monthly premium to cover Medicare cost-sharing for dual eligible enrollees (which the state would otherwise be responsible for). Because of the administrative simplification this allows, the state cites average per capita savings to the Medicaid program of $8 per member per month, estimating this approach allowed them to avoid $4.88 million in costs in 2019.
- Implement a D-SNP program if you don’t already have one, and leverage it if you do. Dual eligible special needs plans (D-SNP) are a type of Medicare Advantage product limited to the dual eligible population. In 2020, 44 states and territories allow D-SNPs to operate in their state. To offer a D-SNP, an organization must have a D-SNP contract with the state in which it is operating (sometimes referred to as the MIPPA or State Medicaid Agency Contract (SMAC)). States have considerable latitude over the terms and requirements in this contract. Establishing a D-SNP program is fairly easy for a state if there are Medicare Advantage plans willing to offer the product, and states can enhance the program over time to become a more active purchaser of Medicare services for their dual eligible population.
For example, a state can require its D-SNP contractors to share Medicare data with the state, such as encounters that help identify whether dual eligible individuals with LTSS needs have a high rate of acute episodes. States can also require D-SNPs to ensure their Medicare Model of Care includes Medicaid components, such as LTSS and behavioral health coordination, or engage in a D-SNP’s Medicare benefit design to maximize D-SNP enrollment or support the state’s Medicaid goals. A state can require its D-SNP contractors to produce a single member ID card and aligned member materials for enrollees the organization serves for both Medicaid and Medicare. And some states have gone so far as to capitate Medicaid services directly into the D-SNP contract (without a separate Medicaid contract), resulting in exclusively aligned enrollment in the D-SNP, along with a glidepath to a mandatory managed LTSS program in the future.
States also can pursue Financial Alignment Authority to enhance their D-SNP program, to test enhanced integration and alignment approaches they otherwise wouldn’t be able to accomplish. CMS hasn’t approved any of these flexibilities since the linked guidance above was released. But if I were running a state program, I might be thinking about this authority for opportunities like integrated value-based arrangements, programs that allow for LTSS before an individual has an institutional level of care need, and shared Medicare savings. This is unprecedented authority that would allow the strengths of both the MMP and DSNP in a single program – strongly funded alignment that dual eligible beneficiaries want to enroll in.
- Maximize the use of home and community based LTSS. With the exception of nursing facility services, Medicaid LTSS benefits are optional – states don’t have to offer them, and many states use 1915(c) waiver authority to maintain waiting lists for LTSS benefits provided in the home or community. This creates a bias toward institutional, nursing facility services. Because these benefits are optional, states might be inclined to remove or reduce them in response to budget pressures created by COVID-19, for example. However, benefits like food supports, personal care services, technology devices, and self-direction keep individuals in the home and out of more expensive care settings. Without sufficient access to home and community based LTSS, individuals will quickly be forced out of their homes and into institutional settings.
A reduction in community based LTSS also impacts transitions of care for dual eligible beneficiaries shifting out of an acute episode like a hospital stay. This is a result of primacy of payer policies and coordination of benefits rules – as noted above, Medicare picks up the tab for the hospital, but Medicaid covers the LTSS needed for transition. If an individual with functional needs lacks adequate in-home or community supports, she may find herself back in the hospital with a readmission or sent to a nursing facility for long-term care. Not only is this bad for the individual, but it’s also bad for state spending: many studies have found that HCBS programs can slow the growth of LTSS expenditures and offer lower per-person coverage than institutional care.
States can use other program levers as well, including sensible enrollment policies such as Medicaid auto-assignment based on D-SNP enrollment or Medicare default enrollment, becoming a Part A buy-in state to maximize Medicare enrollment and reduce state financial penalties, aligning care plans and administrative timelines between the programs to prevent redundancy, and consolidating Medicaid benefits into a single program for dual eligible individuals. And states with managed LTSS programs can lean heavily on their contractors to align services and experiences for dual eligible individuals.
Serving dual eligible individuals– an imperative and an opportunity for states
We’re still in the middle of a horrible pandemic, cases and deaths continue to rise, and states are facing increasing budget deficits as unemployment and Medicaid enrollment goes up while tax revenue declines. With all these pressures, it may be difficult for states to focus on Medicaid program redesign right now.
But in the face of budget constraints, the redesign and integration of Medicare and Medicaid programs is exactly what state Medicaid agencies and departments of health and human services should be contemplating. Not only is integration good for dual eligible individuals by improving their experiences and outcomes, it also helps drive state and federal costs down over time.
COVID-19 has exposed the gaps and siloes in our healthcare system, and it threatens the health and lives of some our frailest neighbors. Driven by a mix of practical, economic, and moral imperatives, now is the perfect time for states to improve program design for their most vulnerable beneficiaries.
This insight was developed with support from Arnold Ventures.
 ATI Advisory analysis for Figures 1 and 2 is based on 2017 Medicare Current Beneficiary Survey (MCBS). Unless otherwise noted, data are limited to Medicare beneficiaries residing in the community.
 Partial dual eligible beneficiaries are Medicare beneficiaries who receive financial support from their state’s Medicaid program to pay for certain Medicare out-of-pocket costs. These individuals are not otherwise eligible for Medicaid services.
 ATI Advisory analysis for Figures 3 and 4 was based on CMS.gov data through 8/15/2020. Available online at https://www.cms.gov/research-statistics-data-systems/preliminary-medicare-covid-19-data-snapshot.
 Savings estimates are from direct communication with the Alabama Medicaid Agency.
 Medicaid Home Health Services also are a mandatory benefit, but these typically are medical in nature.