CHA News Article

GAO Report Finds Integration of Medicare, Medicaid Benefits May Not Lead to Expected Medicare Savings

The Government Accountability Office (GAO) has released a report showing that Medicare cost savings from integrating benefits for disabled Medicare/Medicaid dual-eligible individuals were lower than anticipated. The GAO reports that relatively few fully integrated dual-eligible (FIDE) plans demonstrated significant Medicare savings. The report also indicates that while greater integration of benefits did not lead to reduced Medicare savings, plans tailored to dual-eligible individuals demonstrated moderately better health outcomes.

The GAO examined spending, utilization and health status patterns for the segments of this population with the highest spending, as well as the extent to which integrated dual-eligible special needs plans (D-SNPs) met standards of quality and integration. The GAO then compared the 2013 costs to expected Medicare fee-for-service spending. The GAO used 2011 data – the most recent data available when it began the analysis – from the Health Care Effectiveness Data and Information Set to evaluate D-SNPs and traditional Medicare Advantage plans’ performance.

Key findings from the report include:

  • Overall spending for high-expenditure disabled dual-eligible beneficiaries — those in the top 20 percent of spending in their respective states — was driven largely by Medicaid spending, and the service use and health status often differed widely between those with high Medicare expenditures and high Medicaid expenditures. For these beneficiaries, Medicaid expenditures accounted for nearly two-thirds of overall spending.
  • States with high Medicaid spending often had lower Medicare spending but nearly always had greater overall spending for these beneficiaries. Furthermore, service use and health status often differed widely between high-Medicare expenditure and high-Medicaid expenditure disabled, dual-eligible beneficiaries. Those with high Medicare expenditures were considerably more likely than those with high Medicaid expenditures to have multiple health conditions and use inpatient services but far less likely to use long-term services and supports.
  • D-SNPs that fully integrated Medicare and Medicaid benefits often met criteria for high quality but had limited experience serving disabled dual-eligible beneficiaries or demonstrating Medicare savings. D-SNPs that the Centers for Medicare & Medicaid Services (CMS) designated as FIDE-SNPs were far more likely to meet high-quality criteria compared with other D-SNPs. However, relatively few FIDE-SNPs with high quality served disabled dual-eligible beneficiaries or reported lower costs for Medicare services than expected Medicare fee-for-service spending in the same areas. Additionally, FIDE-SNPs that demonstrated the potential for Medicare savings often operated in service areas where D-SNPs with less integration of Medicaid benefits demonstrated more potential for Medicare savings (i.e., lower relative costs for Medicare services).
  • Moderately better health outcomes for disabled dual-eligible beneficiaries in D-SNPs relative to those in traditional MA plans did not translate into lower levels of costly Medicare services (that is, inpatient stays, readmissions and emergency room visits). These results were also similar whether dual-eligible beneficiaries were at risk for high Medicare spending (those with six or more chronic health conditions), aged (those age 65 and over), or aged and enrolled in FIDE-SNPs.

According to the report, the results suggest that CMS’ expectations regarding the extent to which integration of benefits will produce savings through lower use of costly Medicare services may be optimistic. While operating specialized plans and integrating benefits could lead to improved care, GAO’s results suggest that these conditions may not reduce dual-eligible beneficiaries’ Medicare spending compared with Medicare spending in settings without integrated benefits.

The full report is attached.