Most health and human services organizations serving consumers with complex needs are providing care to individuals who are dually eligible for Medicare and Medicaid. However, the fact that these individuals are dual eligible isn’t always obvious—and often not addressed in strategy. In the decade ahead, deliberate strategies to serve this population will be critical.
Why? First, the dual eligible population is growing, slowly but steadily. In March 2017, there were 10.6 million dual eligible individuals. This is an increase of about 28% since 2009, when there were 8.3 million dual eligible individuals. Between 2009 and 2017, the dual eligible population increased at a rate of 1% to 4% each year. Over this time, dual eligibles have consistently represented about 18% of the Medicare population and have decreased slightly as a share of the Medicaid population—from 16% to 14%. This is likely a result of Medicaid expansion, which added a new population to Medicaid.
Second, the spending on the dual eligible population is increasing. We found that spending in 2017 will likely rise to $479 billion across Medicare and Medicaid (includes fee-for-service (FFS) and managed care spending)—approximately 14.5% of the total U.S. health care spend of $3.3 trillion. Medicare accounts for 60% of dual eligible spending and Medicaid accounts for 40% of spending in 2017.
It is important to note that between 2007 and 2017, dual eligible spending increased a total of 91%, at an average of 7% per year. During the same period, U.S. health care spending increased 45% at an average of 4% per year. And, dual eligible spending has increased as a percentage of both Medicare and Medicaid spending. In 2007, dual eligibles accounted for 35.4% of Medicare spending and 29.8% of Medicaid spending. In 2017, dual eligibles account for 40.9% of Medicare spending and 37% of Medicaid spending.
Third, the characteristics of the dual eligible population have remained largely the same—a population with disabilities characterized by complex physical and behavioral health disorders. For example, 12.6% of full benefit dual eligibles enrolled in Medicare FFS have schizophrenia or other psychotic disorders, compared to 1.8% of the Medicare-only population and 7.68% of the Medicaid population with a disability. But, the proportion of the U.S. population with complex support needs is on the increase—due to aging, multiple chronic health conditions, and the increasing prevalence of autism and dementia.
Finally, more dual eligibles get their services via health plans. I wrote about this a couple of weeks ago in Is The Dual Eligible Market A Priority? Your Opportunity Depends On The State. We found that as of last year, an estimated 33% of all dual eligibles were enrolled in Medicare managed care, and 40% of full-benefit dual eligibles were enrolled in Medicaid managed care. This is an increase from 2011, when 22% of the dual eligible Medicare population was enrolled in some type of managed care, and 24% of dual eligibles were enrolled in Medicaid managed care.
This data underscores the need to better serve and deliver care to the dual eligible population. The federal government in partnership with states has tried to address care delivery and high costs through dual demonstrations that blend Medicaid and Medicare funding. However, the success of these demonstrations is mixed and they are plagued by low enrollment (see Enrollment Rates For Dual Eligible Demonstrations At 30% Nationwide—Lower Than Expected, 3% Of Dual Eligibles Enrolled In Financial Alignment Demonstration As Of June 2016, and MyCare Ohio Duals Demo Average Claim Cost PMPM Drops 6.8%).
By contrast, Washington’s dual demonstration that uses health homes to coordinate care for dual eligibles has been successful, and New York has taken the approach of using health homes for the intellectual and developmental (I/DD) demonstration after its dual demonstration for the I/DD population failed to take off (see First Year Of Washington State Managed FFS Duals Demonstration Shows 6% In Medicare Savings and New York Medicaid To Launch Health Homes For People With Developmental Disabilities). And a pilot for coordinating care for dual eligibles in Medicare Advantage Dual Eligible Special Needs Plans is showing promising results (see A Tale Of Two Community-Based Program Models).
What does this mean for the strategy of specialty provider organizations? On one hand, the demand for services for populations with complex needs is on the rise. It’s a matter of population demographics and public health trends. That is the opportunity. But, how these service needs get met is the challenge. The more this consumer population is enrolled in health plans or ACOs, the more specialty provider organizations will face competition from alternative service delivery models.
What are these alternative models—what is high on my list as competition to traditional FFS service system models? First is backward integration by health plans and ACOs, that could assume care coordination and care management roles for the population or create staff model service centers for the population. Second are disruptive service models (often funded by private equity firms) like home-based primary care and consumer-centric specialty service systems. Third is “tech substitution” for some services—and the development of hybrid service system models.
Specialty provider organizations need a strategy that develops service solutions with a better value proposition than these emerging competitors. For a national market landscape update of spending on the dual eligible population, check out our new market intelligence report, 2018 Spending Trends For The Medicaid-Medicare Dual Eligible Population. This report explores trends in dual eligible enrollment, trends in dual eligible spending in Medicare and Medicaid, spending by financing delivery system, and spending for inpatient, home health, and community mental health services.
And, to build your dual eligible strategy in each local market, our team at OPEN MINDS has just released a 50-state profile series of the dual eligible market in every state. The profiles include the total number of full benefit dual eligibles and enrollment by delivery system; an explanation of each financing and delivery system that serves dual eligible; the largest Medicare health plans serving dual eligibles; and details on new initiatives, and future plans involving the dual eligible population. To look at these, check out:
- California Medicaid/Medicare Dual Eligible System: An OPEN MINDS State Profile
- Florida Medicaid/Medicare Dual Eligible System: An OPEN MINDS State Profile
- Illinois Medicaid/Medicare Dual Eligible System: An OPEN MINDS State Profile
- New York Medicaid/Medicare Dual Eligible System: An OPEN MINDS State Profile
- Texas Medicaid/Medicare Dual Eligible System: An OPEN MINDS State Profile
And, for a strategy development deep dive Elite OPEN MINDS Circle members can join OPEN MINDS Chief Operating Officer, Stacy DiStefano, and OPEN MINDS Executive Account Lead Annie Medina for their web briefing, Do Something Different, “Differently” – A Specialist Provider Organization Guide To Building A New Strategy For Service Line Sustainability, on October 10 at 1:00 p.m. (EST).