Double Trouble Not Double the Fun with Medicare and Medicaid

There are 9.7 million people that use both Medicare and Medicaid for their health care expenses, according to a June 27 article in The Wall Street Journal. Even though this group represents only 16 percent of all enrollees in Medicare and just 15 percent in Medicaid, it accounts for 27 percent and 39 percent of each program’s annual expenditure, respectively. The cause?  None other than inefficient bureaucracy.

The two government-run programs were “never designed to work together,” according to the overseer of dual-eligibility at the Centers for Medicare and Medicaid Services (CMS), Melanie Bella. This incongruence causes expensive inefficiencies of bureaucratic squabbling and of perverse incentives for beneficiaries and those who manage their care. For example, one enrollee spent an extra six months in a rehabilitation center after his admitting diagnosis had been assuaged because Medicare and Medicare engaged in a lengthy fight over which one would pay for home health services. Meanwhile, the rehab center billed the state Medicaid program $20,000 for the additional stay when home health services during that time would have only cost $11,000. Although the state Medicaid program only paid $16,000 of the bill (a chronic problem of our government-run health care programs that result in higher prices for the privately insured), a loss of at least $5,000 of taxpayer money could have been prevented if Medicare and Medicaid had not been passing the buck between themselves for six months.

The exposé also touched on an issue with which I am very familiar as an EMT: the perverse incentives that encourage nursing homes to send their dual-enrollee residents to the hospital for no apparent reason other than to inflate their own budgets. When a hospital discharges a Medicare patient to a skilled care facility, it reimburses the home at an average rate of $422/day for 100 days; after that time, the dual-enrollee’s Medicaid plan takes over payment at an average rate of $172/day. Accordingly, nursing homes have an incentive to send their “dual eligibles” back to the hospital for any reason that the staff can invent so that the enrollee can simply be discharged again and the home can collect a higher daily payment. Unfortunately, engaging in these transfers that essentially degrade a patient into a sack of money to be passed back and forth is a staple of every ambulance and ER shift — however; it is the taxpayer who ultimately suffers.

Illustrating the extent of all this bureaucratic nonsense, a report commissioned by CMS found that 40 percent of all dual-enrollee hospitalizations in 2005 were avoidable, meaning that the admitting condition could have either been prevented or handled through a lower level of care. In total, the waste amounted to $3.1 billion.