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Financial Alignment Models for Dual Eligibles: An Update

The nearly nine million dual eligibles who receive both Medicare and Medicaid benefits are a high cost, high need population, accounting for a disproportionate share of expenditures relative to their enrollment in both programs. In April 2011, the Centers for Medicare and Medicaid Services (CMS) announced the award of design contracts to 15 states to develop service delivery and payment models to integrate care for dual eligibles. CMS and the participating states have recognized that a key component of better coordinating care for Medicare-Medicaid enrollees will be testing new payment and financing models to align the incentives between Medicare and Medicaid to support care improvements and lower costs. In July 2011, CMS released a State Medicaid Director letter containing preliminary guidance on opportunities to align Medicare and Medicaid financing for dual eligibles. On October 11, 2011, CMS announced that 37 states and the District of Columbia, including the 15 states previously selected for integrated care design contracts, have submitted letters of intent expressing possible interest in pursuing one or both of the new financial alignment models.

This policy brief provides an update on financial alignment models for dual eligibles based on the new information in CMS’s July 2011 State Medicaid Director letter and the responding states’ letters of intent. It describes CMS’s two proposed models and the planning and design process and presents key points from the states’ initial expressions of potential interest in testing these models.

Issue Brief (.pdf)