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Financial Alignment Initiative for Medicare-Medicaid Patients Holds Potential for Improved Outcomes

Friday, August 18, 2017

Washington, D.C.– A new report released by the Bipartisan Policy Center highlights the opportunities and challenges of a federal demonstration program that seeks to better integrate care and payment structures for patients who receive both Medicare and Medicaid services.

BPC’s report, Update on Demonstrations for Dual-Eligible Medicare-Medicaid Beneficiaries, provides a status update on the Financial Alignment Initiative. The Financial Alignment Initiative was launched in 2011 by the Centers for Medicare and Medicaid Services (CMS) in partnership with states and insurance plans to test how to better manage and coordinate Medicare and Medicaid services. Currently, many individuals dually-eligible for Medicare and Medicaid navigate a fragmented fee-for-service system with complex administrative barriers between the two federal programs.

Currently, many individuals dually-eligible for Medicare and Medicaid navigate a fragmented fee-for-service system with complex administrative barriers between the two federal programs.

To date, nearly 500,000 dually-eligible beneficiaries have received care through the initiative in 13 states. While early evaluations of the program nationwide are inconclusive, states such as Minnesota and Massachusetts are showing improved patient outcomes, such as reduced emergency room visits and hospital admissions for dual-eligible enrollees. Building on the successes of the program in Virginia, the state submitted a Medicaid waiver request last year to transition the demonstration into a specialized managed long-term service and supports (LTSS) program that would fully integrate physical health, behavioral health, and LTSS for dual-eligible beneficiaries in the state.

According to the report, structural changes in the demonstration, such as better alignment of program administration and the ability to invest in upfront infrastructure changes in the early years, could result in longer-term savings, improved quality of care, and greater availability of services in the home, rather than costlier institutional care.

“These programs show great potential for improving quality and value of care for these chronically-ill patients and should be continued and expanded over time,” said Katherine Hayes, BPC’s director of health policy. “Building on the lessons learned from states implementing these programs provides valuable information on ways to better integrate Medicare and Medicaid services in a way that leads to improving quality and access to services and lowering costs for this vulnerable population.”

Read the full report

KEYWORDS: CENTERS FOR MEDICARE AND MEDICAID SERVICES, MEDICAID, MEDICARE