Refocusing Responsibility For Dual Eligibles: Why Medicare Should Take The Lead October 2011 Judy Feder, Lisa Clemans-Cope, Teresa Coughlin, John Holahan, Timothy Waidmann Summary At 40 percent of Medicare’s and of Medicaid’s costs, 1 the 9 million dual eligibles, 2 who receive benefits from both programs, are a focus of efforts to slow growth in entitlement spending. But, given the two programs’ responsibilities, policy-makers are relying far too heavily on states to find the solution. Dollars spent on dual eligibles are overwhelmingly federal; potential savings come from better management of Medicare-financed acute care services; and enhanced state, rather than federal, responsibility for overall spending increases the risk of cost-shifting to Medicare and may undermine quality of care for vulnerable beneficiaries. Why Dual Eligibles are Primarily a Medicare Responsibility The federal government is overwhelmingly responsible for spending on dual eligibles, and improvements in Medicare-financed services—at the core of the Affordable Care Act’s (ACA’s) payment and delivery reform—are the most direct path to better care at lower costs. • Te federal government pays the bulk of care costs for dual eligibles. Of the $319.5 billion estimated as spent on duals in 2011, 80 percent ($256.6 billion) are federal dollars, more than two-thirds of which flowed through Medicare. 3 • Improvement in Medicare-fnanced care is the key to spending control. Prevention of unnecessary hospital use—almost fully financed by Medicare—is widely recognized as the most immediate target for both spending reductions and quality improvements in care for dual eligibles. » Dual eligibles experience far higher rates of “potentially preventable hospital admissions” than other Medicare beneficiaries: more than twice as high for pressure ulcers, asthma and diabetes; 52 percent higher for urinary tract infection; and over 30 percent higher for chronic obstructive pulmonary disease and bacterial pneumonia. 4 » Estimates of potentially avoidable rehospitalizations of nursing home residents—which shift costs from Medicaid-financed nursing benefits to Medicare-financed hospital and skilled nursing facility (SNF) benefits—range from 18 percent to 40 percent. 5 • Te ACA charges Medicare with improving medical care. Better coordination of Medicare-financed care for beneficiaries at high risk of hospitalization is at the heart Federal Spending State Spending $300 $250 $200 $150 $100 $50 $0 Estimated Federal and State Spending on Care for Dual Eligible Beneficiaries, 2011 Billions Medicare, $175.7 Medicaid, $80.9 Medicaid, $62.7 brought to you by CORE View metadata, citation and similar papers at core.ac.uk provided by IssueLab