Strategies for Integrating Medicare and Medicaid: Design Features and Incentives

Abstract

In a typical third-party payer situation—representative of most U.S. health care delivery—the payer is likely to have interests that are at odds with the patient and provider. The separation and overlap between Medicare and Medicaid for individuals eligible for both programs introduces an additional level of complexity: multiple masters over plans, providers, and patients. This creates opportunities for shifting costs and administrative burdens between states and the federal government, providers and governments, and patients and everyone else. Program designers who wish to minimize unwanted consequences must find ways to structure their programs to produce financial incentives that encourage the pursuit of societal goals, including appropriately shared intergovernmental responsibilities and appropriate plan, provider, and patient behavior. Here the authors review nine federal and state initiatives that use varying strategies to integrate Medicare and Medicaid services for vulnerable populations. For each initiative, the authors examine and critique program design features in three areas: (1) eligibility determination, (2) finance and administration, and (3) service delivery. They find a few strengths and many weaknesses in design. Future efforts would be well served by carefully considering the incentive structures designed into these initiatives and working to improve them in the next generation of Medicare-Medicaid integration efforts.