People Dually Eligible for Medicare and Medicaid: Changes to Enrollment Options Seek to Integrate Benefits, Improve Care

State and federal policymakers are reshaping how individuals eligible for both Medicare and Medicaid interact with their health plans and receive services. Integrating the Medicare and Medicaid programs for those eligible for both is central to the efforts; while one innovative demonstration project is ending, another option is being reshaped, and a third effort is gaining traction.

This Spotlight examines three of the current options: Financial Alignment Initiatives (FAI), Medicare Advantage plans called Dual Eligible Special Needs Plans (D-SNPs), and Programs of All-Inclusive Care for the Elderly (PACE). It provides information on each of the programs and explores the implications for policy changes underway, including the end of FAI in 2025. It also lays out opportunities for states to better serve dually eligible individuals through integration aimed at both cost efficiencies and improved health care access.

Dually eligible individuals are a diverse, mostly older population with an array of health needs

Providing coordinated health care coverage for dually eligible individuals is a long-standing challenge for policymakers. More than 13.9 million people are enrolled in both Medicare and their state Medicaid program. Most of them—over 12.2 million—are age 50 or older. The dually eligible population is diverse with many often costly health needs. The two programs that provide their benefits were not designed to work together, often making it challenging and inefficient for enrollees to get the services they need. When individuals are accessing benefits from two programs, they must navigate two sets of benefits, provider networks, rules for getting a benefit, and appeals processes if a benefit is denied. Often, enrollees have little or no assistance with these challenges.

Improvement through capitated payments and care coordination

A variety of options currently exist for dually eligible individuals to get their benefits from Medicare and Medicaid. To achieve better outcomes, policymakers are encouraging the development of health programs that improve care and achieve cost efficiencies by making Medicare and Medicaid work more seamlessly for enrollees. This alignment includes opportunities to enroll in privately run integrated health care plans that provide all, or many, of enrollees’ Medicare and Medicaid benefits. Many of these integrated plans also include care coordination to help enrollees better navigate their needs and meet their goals.

PACE, FAI, and D-SNPs each aim to integrate Medicare and Medicaid. Availability depends on a state’s choice to participate, with some states offering multiple options and others offering only one. FAI, which, as a demonstration, was never permanent, is phasing out and will end in 2025. Current federal and state efforts are focused on expanding PACE and encouraging enrollment in D-SNPs.

While independent evaluations are generally positive for PACE program outcomes, results are mixed for D-SNPs and FAI demonstrations.

Major policy transitions and opportunities on the horizon

Several policy changes are underway that could reshape how dually eligible individuals interact with their health care plans and how they receive care. Starting January 1, 2025, and on a monthly basis, dually eligible individuals will have the option to enroll in an integrated D-SNP, switch to a different integrated D-SNP, or switch back to Original Medicare. Additionally, more states are offering PACE, increasing options for dually eligible individuals.

As states consider policies to improve care for their dually eligible residents, an important part of their strategy will be ensuring accountability from participating health plans for continuous quality improvement. States will need to sustain efforts to evaluate plan performance and make responsive programmatic updates as needed.

As the federal government and states continue to implement changes affecting dually eligible individuals, they should also continue to solicit robust stakeholder engagement, in particular on proposed program changes. Hearing perspectives from the community, especially from dually eligible individuals, can provide policymakers crucial information and insights into what is working and why. Stakeholder engagement is already part of state transition plans as FAI demonstrations end.

Conclusion

The current policy changes underway present an opportunity to improve integration and streamline how dually eligible enrollees access their benefits. However, continued work will be needed to ensure that plans meet the needs of dually eligible enrollees and that program funds are well spent.