Approximately 8.8 million Medicare beneficiaries—poor enough to qualify for Medicaid— have their acute care services financed by Medicare. Medicaid pays the cost-sharing associated with their Medicare benefits and, if they need long-term care, it is Medicaid that pays for their services. Although together the two programs provide a broad set of benefits, except for some state demonstration programs, neither program bears responsibility for coordinating services within or across programs.
Coordination of acute and long-term care services for dual eligibles has the potential to promote both more efficient use of resources and better quality care. Some existing models use a single delivery system to provide the full range of Medicare and Medicare-covered services, in return for payment from both programs.
For example, in Wisconsin, The Family Care Partnership Program is a voluntary program, available in some regions of the state for dual eligibles who have a nursing home level of long-term care need. Participants receive integrated care from a health plan that has contracts with both Medicaid and Medicare. The plan receives monthly per-person payments from Medicaid and Medicare for each participant to pay for all services its enrollees receive.
Payment based on capitation—rather than fee-for-service—can encourage efficiency and enable a delivery system to use savings from reduced hospitalizations or other acute-care services to offset costs of coordination and long-term care. However, capitation can also reward an organization that delivers too little service—delivering less but not better care and simply reaping greater profits. Use of capitation rates on the assumption that the result will be greater efficiency can risk harming the very disabled patients coordination is aiming to help.
Even for a sophisticated organization, payment based on fixed budgets, which depend on the actually delivery of services—of whatever mix—may be preferable to payment of capitation payments, which are made whether or not services are delivered. Finally, quality monitoring and beneficiary choice can help assure that delivery systems are actually delivering better value and not simply lower costs.
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