Dual Eligibles: Lessons Learned & Future Implications


Dual-eligible enrollees account for a disproportionately sizeable proportion of spending in both Medicare and Medicaid programs. However, until recently, these nearly 11.5 million[i] enrollees have not been in the spotlight in discussions regarding the move toward value-based payments.

One of the biggest challenges in moving dual eligibles to value-based payments is solving the logistical and financial problems of coordinating payments from both Medicare and Medicaid. In the current environment, Medicare ACO models (MSSP, Next Generation, Pioneer ACO, etc.), in which dual-eligible beneficiaries are enrolled, are not financially responsible for the Medicaid expenses for these beneficiaries.

Upcoming Efforts to Address the Dual-Eligible Payment Challenge

Addressing the misaligned incentives and fragmented payments provided by Medicaid and Medicare has increasingly become a focus. For example, the Centers for Medicare and Medicaid Services (CMS) is currently accepting applications for the Medicare-Medicaid Accountable Care Organization (ACO) Model (MMACO), which is designed to tackle this financial coordination challenge by holding MMACOs accountable for Medicare Part A, Part B, Medicaid costs, and quality for their patients.[ii]

Providers who participate in an MMACO will be more financially responsible for their patients and thereby incentivized to provide better care to beneficiaries through care coordination. For this model to be successful and to achieve the alignment goal, it is helpful to look at successes and challenges of past initiatives.

Learning from Current Efforts: The Financial Alignment Initiative

The Affordable Care Act authorized CMS to create the Financial Alignment Initiative (FAI) to test integrated care and financing models with states. The goal was for these models to provide better services for dual eligible beneficiaries by aligning Medicare and Medicaid processes and to address the financial and coordination challenges of Medicare and Medicaid benefits. Under the FAI, CMS created two models:

1) A capitated model where health plans coordinate the full range of health care services, and

2) A managed fee-for-service model where states are eligible to benefit financially from savings resulting from improved quality and reduced costs.

Currently, there are 14 initiatives in 13 participating states. States participating in the capitated model include California, Illinois, Massachusetts, Michigan, New York, Ohio, Rhode Island, South Carolina, Texas, and Virginia. States pursuing the managed fee-for-service model include Washington and Colorado, while Minnesota is participating in an alternative model focused on coordination of administrative processes.

Five Years Later: Lessons Learned

Early findings from the FAI models offer several lessons and considerations for dual eligible financial alignment models moving forward. [iii][iv][v] The results from the initiatives are encouraging and suggest promising pathways to improving care and payment delivery for this high-cost, high-risk population. The results also expose the barriers that are to be expected when aligning Medicare and Medicaid systems and policies, including major start-up challenges such as care coordination workforce challenges, implementation of data management systems, and enrollees’ lack of understanding of benefits.

In terms of workforce challenges, both FAI models experienced issues with hiring and training care coordinators and dealing with high turnover rates. Another challenge was ensuring primary care physicians (PCPs) participation in care coordination teams. It was difficult for care coordinators to locate and contact enrollees to conduct their Health Risk Assessments (HRAs) within the required time frames and enrollees were often confused with the different care managers and how to reach their care coordinators. That said, care coordination capacity and infrastructure is currently in place in all the initiative states and enrollees reported maintaining long-standing relationships with PCPs and valued having providers and care managers who listened to them, offered choices, and included them in decision-making.

Overall, dual-eligible enrollees participating in the FAI reported improved access and benefits, positive experiences and engagement with goal setting, an increased ability to maintain relationships with PCPs, and greater satisfaction and positive impact on quality of life. Satisfaction of health care services did not appear to vary along racial or ethnic lines.

Beyond improving care coordination, another goal of the FAI is to improve cost outcomes. Although the findings show the cost of services has decreased, they do not offer in-depth analysis of cost savings and, to date, there is very little financial performance data available. Therefore, it is difficult to know exactly how well the financial incentives are working within these models. CMS plans on producing future reports assessing the quality, utilization, and cost outcomes of the initiatives.

Although challenges remain, early results suggest an enormous potential to improve health outcomes to those with the greatest need and future reports should provide information on how well these programs reduce costs. Moving forward, it is important to learn from these challenges and improve the models so the dual eligible population can continue to gain from value-based payment arrangements.

[i] Centers for Medicare & Medicaid Services. “Fact Sheet: People Enrolled in Medicare and Medicaid.” March 2017. Accessed on May 5, 2017. Available at:

[ii] Centers for Medicare & Medicaid Services. “Medicare-Medicaid Accountable Care Organization (ACO) Model.” Accessed on May 5, 2017. Available at:

[iii] RTI International. “Early Findings on Care Coordination in Capitated Medicare-Medicaid Plans under the Financial Alignment Initiative.” March 2017.

[iv] RTI International. “Beneficiary Experience: Early Findings from Focus Groups with Enrollees Participating in the Financial Alignment Initiative.” March 2017.

[v] RTI International. “Issue Brief: Special Populations Enrolled in Demonstrations under the Financial Alignment Initiative.” March 2017.