Today, the Department of Healthand Human Services (HHS) announced three new initiatives tohelp states improve the quality and lower the cost of care for thenine million Americans who are eligible for both Medicare andMedicaid (dual eligibles).

The initiatives include:

• A demonstration program to test two newfinancial models designed to help states improve quality and sharein the lower costs that result from better coordinating care forindividuals enrolled in Medicare and Medicaid.
• A demonstration program to help statesimprove the quality of care for people in nursing homes byproviding these individuals with the treatment they need withouthaving to go to a hospital.
• A technical resource center to help allstates improve care for high-need, high-cost beneficiaries.

More than $300 billion is spent each year to care for dualeligibles. In Medicaid, these individuals represented 15 percent ofenrollees and 39 percent of all Medicaid expenditures. In Medicare,they represented 16 percent of enrollees and 27 percent of programexpenditures.

HHS is working to increase the number of dual enrollees insystems that coordinate care. Coordinated care may improve thequality of care individuals receive and reduce costs for bothstates and the federal government.

In order to better coordinate care, CMS issued new guidance on ademonstration designed to align financing between Medicare andMedicaid through two models. These models include:

• A state, CMS, and health plan enterinto a three-way contract where the managed care plan receives aprospective blended payment to provide comprehensive, coordinatedcare.
• A state and CMS enter into an agreementby which the state would be eligible to benefit from savingsresulting from managed fee for service initiatives designed toimprove quality and reduce costs for both Medicare and Medicaid.

The CMS Center for Medicare and Medicaid Innovation will testthese models to determine whether they save money while alsopreserving or enhancing the quality of care for dual enrollees.

All states that meet standards and conditions will have theoption to pursue either or both of these models. CMS has provideddetailed information to state Medicaid directors interested inparticipating in the demonstration.

CMS also announced a new initiative to help states improve thequality of care for people in nursing homes. Nearly two-thirds ofnursing facility residents are in Medicaid, and most are also inMedicare. The CMS Innovation Center in collaboration with the CMSMedicare-Medicaid Coordination Office will establish a newdemonstration focused on reducing preventable inpatienthospitalizations among residents of nursing facilities by providingthese individuals with the treatment they need without having tounnecessarily go to a hospital. Hospitalizations are oftenexpensive and dangerous for frail elders and people withdisabilities, and cost Medicare billions of dollars each year.Research from 2005 by CMS on dual eligible nursing facilityresidents found that almost 40 percent of hospital admissions werepreventable, accounting for 314,000 potentially avoidablehospitalizations and $2.6 billion in Medicare expenditures.

Starting this fall, CMS will competitively select independentorganizations to partner with and implement evidence-basedinterventions at interested nursing facilities. These interventionscould include using nurse practitioners in nursing facilities,supporting transitions between hospitals and nursing facilities,and implementing best practices to prevent falls, pressure ulcers,urinary tract infections, or other events that lead to poor healthoutcomes and expensive hospitalizations. Additionally, thisinitiative supports the administration’s Partnership for Patientsgoal of reducing hospital readmission rates by 20 percent by theend of 2013.

The final initiative involves establishing a resource center tohelp states in delivering coordinated health care to high-need,high-cost beneficiaries, including those with chronic conditionsand/or Medicare-Medicaid enrollees. This resource center willprovide technical assistance to states at all levels of readinessto better serve beneficiaries, improve quality and reducecosts.

These three new programs coincide with previous initiatives,launched earlier this year, which share Medicare data with states to support care coordinationand collect input on ways to improve alignment across Medicare andMedicaid.