Helping States Improve Care and Reduce Costs

By Don Berwick, Administrator, Centers for Medicare & Medicaid Services. Cross-post from

Over the past two years, this administration has worked constantly to improve care while lowering costs. One important component of this effort has been partnering with states to stabilize Medicaid costs. A special area of focus for the department has been those beneficiaries who are eligible for both Medicare and Medicaid. They make up only 15% of Medicaid beneficiaries, but account for almost 40% of costs.

These beneficiaries are known as “dual-eligibles” because they receive coverage from both Medicare and Medicaid. For example, a “dual eligible’ may be a person who has longstanding diabetes, depression, hypertension and a history of strokes. This individual who has three chronic conditions, multiple medications, limited mobility and inadequate food intake is at risk of hospitalization and requires significant personal assistance to maintain independence. Their health care costs are high because they have substantial health needs. But their costs are also higher because these beneficiaries must navigate two different programs. This fragmentation leads to needlessly expensive, inefficient, and often duplicative care.

Under the Affordable Care Act, the Medicare-Medicaid Coordination Office was created to help solve these problems of fragmentation – to ensure that beneficiaries receive the highest quality, most coordinated care possible. Today, the Department of Health and Human Services (HHS) made three announcements that will help states improve care and reduce costs for these patients.

•Two new financial adjustment models: States can test one or both of these options changing the way we pay for care and providing stronger incentives to keep these patients healthy.
•New demonstration project: This will help nursing facilities across the country test strategies for keeping their patients out of the hospital.
•Establishing a resource center: Providing technical assistance to any state interested in improving care for their highest-cost Medicaid enrollees.

These new efforts help provide a long-term, sustainable solution to slow Medicaid spending by improving care. By providing states with the tools to help deliver care more effectively, we are able to provide better care to vulnerable populations that need it the most. Instead of cutting costs and leaving states to fend for themselves, we are instead assembling a toolbox that will let states choose the best option for themselves and the people they serve.

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