HHS Unveils New Tools to Lower Medicaid Costs for States

The US Department of Health and Human Services (HHS) announced several new initiatives to help states save money and better coordinate care for Americans enrolled in both Medicare and Medicaid.

Led by the new Federal Coordinated Health Care Office, the initiatives include better access to medicare data and better coordination of health care between Medicare and Medicaid.

“Medicaid costs are largely driven by the complex medical needs of low-income seniors and people with disabilities who are eligible for both Medicare and Medicaid.  We know that by working together, we can provide better, more coordinated care while lowering health care costs and saving money for states,” said Centers for Medicare & Medicaid Services (CMS) Administrator Donald M. Berwick, M.D.  “Medicare and Medicaid spends $300 billion each year to care for people enrolled in both programs. Better coordinated care for this vulnerable population could yield savings and improve care and coverage in Medicaid.”


According to HHS, 60% of Medicare-Medicaid enrollees, “dual eligibles,” have multiple chronic conditions and 43-percent have at least one mental or cognitive impairment.

While only 15-percent of Medicaid enrollees are also Medicare beneficiaries, Medicare-Medicaid enrollees represented 39-percent of Medicaid spending in 2007.  Medicaid spent about $120 billion on this group – about twice as much as Medicaid spent on the 29 million children it covered.  The Medicaid spending per Medicare-Medicaid enrollee was $15,459 in 2007, over six times higher than the comparable cost of a non-disabled adult Medicaid-only enrollee ($2,541).

The Medicare-Medicaid Coordination Office today launched the Alignment Initiative, an effort to more effectively integrate benefits under the two programs.  Currently, low-income seniors and people with disabilities must navigate two separate programs: Medicare for coverage of basic acute health care services and drugs, and Medicaid for coverage of supplemental benefits such as long-term care supports and services.  Medicaid also provides help with Medicare premiums and cost-sharing for those who need additional assistance.


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