Nursing home residents are among the most vulnerable individuals in the health care system, requiring continuous and complex care. Transitions between hospital care and nursing homes are frequent, with studies showing that as many as 35-67% of hospitalizations among nursing home residents may be preventable. 

Nursing home residents who are dually eligible for Medicare and Medicaid are especially likely to receive fragmented care because they navigate two distinct and often uncoordinated insurance programs. Medicaid covers most long-term care, while Medicare provides acute medical care, including hospital stays. This division of responsibility often leads to suboptimal care coordination, inefficiencies, and poor health outcomes. Recognizing these problems, policymakers are testing specialized managed care plans that offer financial incentives for coordinating care across Medicare and Medicaid, including for nursing home residents.

In a recent study, LDI Senior Fellow Eric T. Roberts, LDI Executive Director Rachel M. Werner, and colleagues conducted a first-of-its-kind examination of trends in the enrollment of dual-eligible nursing home residents into specialized managed care plans. They found that while more individuals are choosing such plans, overall enrollment remains low. The study also examined variations in enrollment in these plans across geographic areas and nursing homes.

Managed Care Plan Types and Incentives

Policymakers have introduced several specialized managed care plans to address the challenges of fragmented care for dual-eligible individuals by creating financial incentives to integrate Medicare and Medicaid services. These plans include Medicare-Medicaid Plans (MMPs), Fully Integrated Dual-Eligible Special Needs Plans (FIDE SNPs), and Institutional Special Needs Plans (I-SNPs). The first two are integrated care plans that only serve dual-eligible people in the community or in nursing homes. They have contracts with state Medicaid programs and bear risk for both Medicare and Medicaid spending, giving them an incentive to coordinate medical and long-term care.

The third type, I-SNPs, serves only Medicare beneficiaries needing nursing home-level care, most of whom are dually eligible. I-SNPs put insurers and nursing homes at risk for residents’ medical spending. Because Medicaid covers long-term nursing home costs while Medicare funds most medical care, I-SNPs may offer a unique way for nursing homes to use these funding sources together to coordinate care. I-SNPs have an incentive to promote more effective care delivery, such as enhancing on-site medical services and reducing unnecessary hospitalizations. However, unlike MMPs and FIDE SNPs, I-SNPs do not have contracts with Medicaid programs.

Although much remains unknown about whether these different managed care plan types improve care coordination for dual-eligible beneficiaries, understanding current enrollment trends is an important first step.

Trends in Enrollment Across Managed Care Plans

The study analyzed enrollment trends in MMPs, FIDE SNPs, and I-SNPs using Medicare and Medicaid data linked to dual-eligible nursing home residents from 2013 to 2020. The researchers calculated the monthly share of dual-eligible nursing home residents enrolled in these plans and analyzed geographic distribution and nursing home characteristics associated with higher enrollment. They also compared enrollment in these managed care plans to traditional fee-for-service Medicare and non-coordinated Medicare Advantage plans.

The results revealed that enrollment in MMPs, FIDE SNPs, and I-SNPs grew significantly from 6.5% in 2013 to about 17% in 2020. Nursing homes with residents enrolled in these plans were generally larger facilities and located in metropolitan areas with higher Medicare Advantage penetration. However, the study found few significant differences in resident demographics or health status across nursing homes with varying levels of residents in managed care. Enrollment was also concentrated geographically, with 76% of enrollments occurring in only 16% of the counties.

Notably, I-SNPs drove most of the enrollment growth across these managed care plan types, with participation increasing from about 5% of residents in 2013 to almost 12% in 2020.

Movement to Integrated Care Will Require Future Focus on Quality

The majority of dual-eligible nursing home residents remain in fee-for-service Medicare, which does not provide financial incentives to coordinate care with Medicaid. As enrollment in managed care plans continues to grow among dually eligible individuals, it is crucial for policymakers to understand the factors affecting enrollment in plans with financial incentives to integrate care and evaluate the quality of care being delivered.

Several legislative efforts, including the proposed Delivering Unified Access to Lifesaving Services (DUALS) Act of 2024, aim to further integrate care for dual-eligible beneficiaries. While the DUALS Act does not specifically mandate alignment for I-SNPs with Medicaid, it supports the broader goal of unifying financial incentives and care delivery across Medicare and Medicaid. This would enable a single plan to manage the full spectrum of care, streamlining services for dual-eligible nursing home residents.

Integrated care models have the potential to deliver higher-quality care at lower costs by aligning financial incentives. However, as enrollment in these options increases, researchers and policymakers will need to ensure that they meet their goal of reducing fragmentation in the dual-eligible system and incentivizing comprehensive, coordinated care to improve outcomes for this vulnerable population.

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The study, “Dual-Eligible Nursing Home Residents: Enrollment Growth in Managed Care Plans That Coordinate Care, 2013-20,” was published on September 3, 2024 in Health Affairs. Authors include Eric T. Roberts, Xinwei Chen, Eliza Macneal, and Rachel M. Werner.

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