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These new requirements are intended to fulfill the original intent in MMA:  improve upon uncoordinated Medicare and Medicaid benefits for dual eligibles.

Considerations for Reform

For the reasons outlined above, there could be a great deal of benefit to both the Medicare and Medicaid programs if services for dual eligibles could be more effectively coordinated. However, there are a number of significant challenges on both the state and federal sides.

On the state side, to the extent that coordination of care is considered to be synonymous with full risk managed care, there could be significant stakeholder pushback associated with any changes related to dual eligibles.  Further Medi-Cal must develop a rate methodology that accurately reflects the costs of health benefits provided by a health plan to dual eligibles.

On the federal side, CMS has not gone out of its way to make it easy for states to effectively manage the care of dual eligibles. The agency has historically not allowed the Medicaid program to interfere with the exercise of freedom of choice of providers in the Medicare program. The only instances where true management can occur is where dual eligibles are enrolled in SNPs that receive a capitation payment for both Medicare and Medicaid services for the same individual. However, since Medicare services boundaries do not follow state lines, it is difficult to effectuate this degree of coordination on a statewide basis.

From a waiver perspective, the other drawback is that any savings generated by better management in one program will in many cases accrue to the other program. In the past, CMS and the Office of Management and Budget have unequivocally resisted efforts by states to claim credit in Medicaid for savings that occur in Medicare or other programs.

Lastly, how national health care reform is financed may change the nature of funding for dual eligibles. Many states have long held that the federal government should have all responsibility for dual eligibles.  According to the National Governor’s Association, health reform may shift costs of dual eligibles to Medicare in trade for states expanding coverage under Medicaid for everyone under 100 percent of the FPL.  

Current Status of California

Twenty-one percent of California seniors are on Medi-Cal, and most of those are dual eligibles.  Within Medi-Cal, seniors account for 13 percent of all beneficiaries but 27 percent of all Medi-Cal spending.12  Most seniors are enrolled in fee-for-service, unless they live in a county with Medi-Cal managed care and have voluntarily chosen to enroll or unless they live in a county with a county organized health system.13  Medi-Cal payments represent 48 percent of all nursing home revenues in California, or nearly $2.8 billion.14

12 California HealthCare Foundation, “Medi-Cal Facts and Figures: A Look at California’s Medicaid Program,” May 2007.  Available at http://www.chcf.org/topics/medi-cal/index.cfm?itemID=21659&subtopic=CL367&subsection=medical101.

13 Ibid.

14 Ibid.

Health Management Associates/Harbage ConsultingPage 25

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