Much of the story about rising health costs and spending has to do with relatively small groups of people with expensive health needs. For example, the Centers for Medicare and Medicaid Services (CMS) estimates Medicare beneficiaries with two or more chronic conditions accounted for 93 percent of Medicare spending in 2011, about $276 billion. Many beneficiaries with chronic conditions are eligible for both Medicaid and Medicare. Taken as a group, the nation’s now more than 10 million dual eligibles themselves account for roughly 40 percent of state Medicaid spending and over 30 percent of federal Medicare spending – over $350 billion in 2013.

Medicare and Medicaid Spending on Dual Eligibles:

Even among dual eligibles, certain sub-populations have outsized impacts on health costs. For a breakdown, see this recent report from the Medicaid and CHIP Payment and Access Commission (MACPAC). MACPAC is a counterpart to the Medicare Payment Advisory Commission (MedPAC), and is charged with advising Congress on the federal Medicaid policies.

MACPAC’s 2013 report to Congress looks at average Medicare and Medicaid health spending for four subgroups of all-year, full-benefit dual eligibles. Full-benefit dual eligibles represent three quarters of the dual eligible population and receive full benefits from both Medicare and Medicaid.

The MACPAC report breaks down full-benefit dual eligibles into four categories based on what type of long-term services and supports (LTSS) they received.  The categories are:

1. Dual eligibles who received Medicaid financing for nursing home care or other institutional long-term services and supports.

2. Those who received services under Medicaid Home and Community-Based Services (HCBS) waivers, which provide a wide range of home-based, non-medical services and supports. This group does not include anyone who received Medicaid institutional care.

3. People who received home and community-based services but not through an HCBS waiver under s. 1915 of the Social Security Act. People in this group include those receiving Medicaid home care benefits under the Medicaid State Plan, such as home health or personal care services, but not those receiving any Medicaid nursing home care.

4. Dual eligibles who did not use any Medicaid long-term care services, including no nursing home or home and community-based services.

Institutionalized Dual Eligibles the Most Expensive:

MACPAC’s analysis of Medicare and Medicaid spending across the various subgroups of dual eligibles reveals interesting data.  Because CMS fails to make more timely readily available, the report uses 2007 data.  Naturally, the number of dual eligibles and their health costs have grown since then. Here are some of the findings:

  • Institutional service users on average cost Medicare and Medicaid $69,505 per person in 2007.
  • Institutional service users cost 40 percent more than the next-most expensive group and four times more than dual eligibles who did not use long-term services and supports.
  • HCBS waiver users cost the second-most on average ($49,457), followed by non-waiver HCBS users ($35,164), and non-LTSS users ($14,835).
  • For institutional and HCBS-waiver users, the two most expensive groups, Medicaid paid about two thirds of the cost with Medicare paying the rest.
  • Medicare paid 56 percent of health spending on non-waiver HCBS users and 81 percent of spending on non-LTSS users.

MACPAC’s excellent analysis has a number of helpful graphs that break down the numbers in different ways. See the full report here.

Learn More About Dual Eligible Spending:

Dual eligibles have become a hot topic in health policy circles in large part because of their huge effect on federal and state health spending, their highly complex clinical characteristics, and the need to integrate financing and care delivery across Medicaid and Medicare.  The Sellers Dorsey team is busy working with health plans and other organizations to integrate care for dual eligibles.

To learn more, browse the dual eligibles section of the Piper Report.