Dual Eligibles

1. Dual Eligibles Linda Elam, Ph.D., M.P.H. Principal Policy Analyst Kaiser Commission on Medicaid and the Uninsured KaiserEDU.org Tutorial March, 2006

2. Who Are Dual Eligibles?

3. Figure 1 Background • Qualify for both Medicare and Medicaid programs; ~7.5 million total • Medicare - federal health insurance program for seniors and some younger individuals with permanent disabilities • Medicaid – federal-state health insurance program for low-income populations

4. Figure 2 Characteristics of Dual Eligible Medicare Beneficiaries, 2002 SOURCE: Centers for Medicare and Medicaid Services, Medicare Current Beneficiary Survey (MCBS) 2002 Access to Care File.

5. Figure 3 Medicaid Provides Different Levels of Assistance to Low-income Medicare Beneficiaries • Different eligibility pathways and benefit levels • Most receive full Medicaid benefits in addition to assistance with Medicare costs • Subject to income and asset limits Assistance with Medicare Premiums 1.3 million Full Medicaid Benefits 6.2 million 7.5 Million Total

6. Figure 4 Eligibility Pathways & Benefits for Mandatory Populations

7. Figure 5 Eligibility Pathways & Benefits for Optional Populations

8. Figure 6 Medicaid Pays for 65% of Elderly Nursing Home Residents at Some Point in Their Stay • Medicaid benefits are subject to stringent asset and income limits • Congress recently tightened asset rules Primary payer at admission No Medicaid Spend-down Medicaid Payment Status Among Elderly Long Term Care Residents (90+ days) SOURCE: KCMU analysis of 1999 National Nursing Home Survey.

9. Financing

10. Figure 7 Financing Care for Dual Eligibles, 2000 Total = $131 Billion SOURCE: KCMU estimates based on analysis of MCBS Cost and Use, 2000

11. Figure 8 Medicare Coverage • Covers most physician and hospital care, including doctor visits, inpatient stays, and ancillary services • Covers home health and post-acute care • Has significant premium and cost-sharing obligations

12. Figure 9 Medicare Expenditures for Dual Eligibles, 2002 Type of Service: Hospice and other services Skilled Nursing Facility and Home Health Medical Providers, Supplies and Outpatient Hospital Dual Eligibles 29% Other Medicare Beneficiaries 71% Inpatient Hospital Total Medicare Spending = $224.5 Billion Total Medicare Spending on Duals = $64.3 Billion Note: Other services includes Rx drugs, dental, long-term care facility stays.SOURCE: KFF analysis of the MCBS 2002 Cost and Use File.

13. Figure 10 Medicaid Fills the Significant Gaps in Medicare’s Coverage for Dual Eligibles • Medicaid pays the Medicare Part B premium ($88.50/month) and cost sharing charged for many Medicare services • Medicaid covers benefits not covered by Medicare • Long term care, including nursing homes • Dental • Vision

14. Figure 11 Medicaid Expenditures for Dual Eligibles, 2003 Medicare Premiums 5% Prescribed Drugs 14% Acute Care 15% Duals 40% Other Beneficiaries 60% Long-Term Care 66% Total Medicaid Spending = $262.2 billion Total Medicaid Spending on Duals = $105.4 billion SOURCE: Urban Institute estimates for KCMU based on analysis of MSIS and Financial Management reports (CMS Form 64).

15. Figure 12 Dual Eligibles as a Percent of Medicare and Medicaid Enrollment and Spending, 2002 Dual Eligibles as Percent of Medicare: Dual Eligibles as Percent of Medicaid: Total Enrollment = 41.8 Million Total Spending= $224.5 Billion Total Enrollment= 51 Million Total Spending = $232.8 Billion SOURCE: Medicare data are from KFF analysis of Medicare Current Beneficiary Survey 2002 Cost and Use File. Medicaid data are from KCMU estimates based on CMS data and Urban Institute estimates based on an analysis of 2000 MSIS data applied to CMS-64 FY2002 data.

16. Dual Eligibles and the Medicare Drug Benefit

17. Figure 13 Dual Eligibles’ Drug Coverage Changed Significantly and Abruptly with Medicare Part D • Dual eligibles are highly reliant upon prescription drugs • “Full duals” received drug coverage through Medicaid • On January 1, 2006, dual eligibles’ drug coverage was switched from Medicaid to privately-run Medicare Part D drug plans • Full dual eligibles were randomly assigned to plans, and subsequently enrolled in those plans if they did not make a different selection • Full duals may switch plans at any time • Amount of low-income subsidy may limit options • Full dual eligibles are subsidized for premiums but may face new cost sharing, such as copayments

18. Figure 14 The Transition to Part DHas Been Rocky for Many • Even with auto-enrollment process, some duals were missed • Plans did not always follow transitional protocols required by CMS • Some duals were overcharged for drugs • Over half of states responded by providing emergency assistance • People with cognitive impairments have been particularly vulnerable

19. Figure 15 Challenges After Enrollment • Once enrolled, dual eligibles need time to understand their new coverage • Learning how Medicare drug plans work in ways that may be different from Medicaid • Adjusting to new formularies and co-payments • Securing exceptions if they need non-formulary drugs • Care for dual eligibles may become more fragmented as Medicaid, Medicare, and Part D plans must coordinate • Monitoring the effects of Part D on dual eligibles is critically important

20. Figure 16 Conclusions • Dual eligibles’ high rates of chronic illness, including mental disorders, makes management of their cases complicated and expensive. • In addition to their poor health status, dual eligible beneficiaries have very low incomes. • Dual eligibles require extensive health care services and many are reliant on prescription drugs. • Medicare Part D transition has been difficult and requires ongoing monitoring. • The tension between the federal and state governments over fiscal responsibility for dual eligibles is likely to grow as the population ages and costs increase.