Dual eligible demonstrations huge undertaking, but may show promise

Coordinating care for beneficiaries who are eligible for both Medicare and Medicaid (dual eligibles) can be challenging and demand a significant amount of state resources. Reports released by CMS that evaluated the implementation of its Financial Alignment Initiative demonstrations in various states and in Washington’s health home managed fee-for-service model revealed the unexpected challenges states faced in attempting to improve care coordination across the two complex and distinct health care programs. However, the reports also indicate that Washington’s demonstration shows initial promise in significantly reducing Medicare costs.

Multi-state Demonstrations

CMS contracted with RTI International to review the first six months of implementation of dual eligible demonstrations in California, Illinois, Massachusetts, Minnesota, Ohio, Virginia, and Washington. The demonstrations arose from CMS’ Financial Alignment Initiative, which was created to test integrated care and financing models for dual eligibles. The goals of the demonstrations were to develop person-centered care delivery models that would integrate medical, behavioral health, and long-term services and supports (LTSS) for dual eligibles and address the current challenges associated with care coordination between Medicare and Medicaid.

The review examined integrated delivery systems, enrollment, care coordination models, beneficiary safeguards, and stakeholder involvement in each of the demonstrations. Although the models and features of the demonstrations varied across the states, the review found notable similarities.

For states that adopted the capitated model, three-way contracts have been negotiated between CMS, states, and Medicare-Medicaid plans (MMPs) that create delivery models, provider networks, access and quality standards, beneficiary protections, requirements for data submissions, and payment arrangements. In order to implement the demonstrations, state officials had to entirely redesign eligibility, enrollment, and data systems so that they could effectively interface with Medicare.


The review found that fewer beneficiaries enrolled during the first six months than were previously anticipated, which may have been caused by the difficulties states experienced in locating beneficiaries and persuading them of the benefits of the service model.

Other findings

States also made significant investments in training care coordinators, providers, and MMPs about dual eligibles’ special needs. States used CMS funds to establish or enhance assistance and ombuds programs to support beneficiaries so as to facilitate informed and impartial decision making and to resolve problems. Stakeholders were found to be actively engaged in ensuring the transparency of the demonstration and to be responsive to beneficiary needs.

Resource commitments

States found that the upfront time and resource commitment that was needed to implement the demonstrations “far exceeded” their estimates, with officials reporting that they were unaware of many of the Medicare requirements. As a result, reconciling the differences between Medicare and Medicaid operations took up a significant amount of resources. At the time of publication, it is unclear whether the resource commitments will lessen as the demonstrations progress.

Washington Model

RTI also reviewed the first six quarters of Washington’s managed fee-for-service model, which uses Medicaid health homes, which were established under Section 2703 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) in an attempt to integrate care for high-cost, high-risk full-benefit Medicare-Medicaid beneficiaries. Medicaid health homes are the lead local entities in the demonstration that are responsible for care coordination and bridge care across the health care delivery systems.

Care coordinators

Beneficiaries are assigned a health home coordinator who will assist in coordinating their services. A coordinator works with beneficiaries to develop Health Action Plans (HAPs) and has access to information about the enrollee’s utilization of Medicare and Medicaid-financed services through the Predictive Risk Intelligence System (PRISM). The HAP will be used to prioritize health action goals and will set forth action needed to accomplish those goals and identify where intervention and supports are needed.


The state hired a sufficient number of health care coordinators so that it was able to offer the health home demonstration to beneficiaries in all of its 37 counties. Enrollment in the demonstration increased every quarter, with over 50 percent of eligible beneficiaries enrolled by the end of 2014.

Cost impact

Initial findings suggest that the demonstration has been successful in reducing costs. The review found substantial reductions in monthly, per-member Medicare costs that exceeded the largest monthly payments that were made for health home services. The report notes that further adjustments will be required to account for changes in Medicaid costs, but that the health home intervention has successfully lowered costs.

Quality of care

It is not yet known whether the quality of care was able to be maintained or improved while the cost savings were achieved by the Washington demonstration. However, none of the findings suggest that the demonstration is having a detrimental effect on beneficiaries or on costs. While further research will provide more information about the demonstration’s impact on utilization and quality of care, Medicare Utilization Data did show some decreases or leveling off of rates of inpatient hospitalization admissions in general and physician office visits. Other measures showed either no trend change during the demonstration period. The report notes, however, that the trends could be attributable to the fact that new demonstration entrants may have fewer health care and LTSS needs than earlier program entrants.

Continued Evaluation

RTI will continue to monitor and evaluate all of the demonstrations by collecting information on a quarterly basis and producing annual reports for each demonstration performance years, which will be posted on CMS’ website. RTI will also examine the experiences of beneficiaries, their families, and caregivers to determine whether the demonstrations meet their goals of developing person-centered delivery models. Additionally, a quantitative evaluation of quality of care, utilization, access to care, and cost will also be conducted as soon as the data is available.