Texas has received federal approval to test an innovative idea that combines health services for people with both Medicaid and Medicare coverage into one plan, making it easier to get care and potentially saving money for the state and federal government.
Almost 400,000 people in Texas qualify for Medicare based on their age or because they have a disability and for Medicaid because of their income. These individuals, called dual eligibles, currently must navigate both the Medicare and Medicaid systems for their health care. Medicare pays first, and Medicaid covers co-pays and services not covered by Medicare.
“Combining a person’s Medicaid and Medicare services into one plan makes sense for the consumer and for the taxpayer,” said Chris Traylor, chief deputy commissioner of the Texas Health and Human Services Commission. “We’ll be able to improve the coordination of care, helping people get the right care in the right setting, and we can save money for both the state and federal governments.”
Texas is planning to pilot the new program in six of the state’s most populous counties and expects to cover 168,000 dual eligibles. People in the pilot areas over the age of 21 who get Medicare and full Medicaid benefits can enroll in the new combined plans. The pilot is scheduled to begin March 1, 2015.
In addition to improving the coordination of care, the pilot is expected to save money by reducing the need for in-patient hospital care and institutional care. That’s because combining acute and long-term care services into one managed care plan increases the managed care company’s incentive to support policies and services that reduce the need for hospitalization and other expensive services.
In today’s fragmented system, a state agency or Medicaid health plan that spends money to help reduce hospital stays among dual eligible clients wouldn’t see any of the savings from that effort because Medicare pays for the hospital stay. Likewise, Medicare wouldn’t benefit from federal efforts to expand medical services to help people stay in their homes longer and reduce the need for expensive long-term care services, which are covered by the state Medicaid program.
The pilot is based on a managed care arrangement where the state and federal government contract with a health plan to provide the full array of Medicare and Medicaid services to the consumer. The state and federal governments will each pay a portion of the monthly premiums the health plan gets to provide the services and will share in the savings achieved by the integrated model.
The state will begin sending information on the new program to people eligible for the services in January.