Aligning Medicare and Medicaid Benefits in Tennessee

Improving medical and long-term care services for dual-eligible beneficiaries is made more challenging because Medicare and Medicaid benefits are not aligned. In 2013 the state of Tennessee, which provides Medicaid benefits through private managed care plans, announced a new approach to address this issue by modifying its contracting requirements for Medicaid insurers. The state required that all Medicaid insurers offer a Medicare Advantage Dual-eligible Special Needs Plan (D-SNP) by 2015. These Medicare managed care plans exclusively enroll dual-eligible beneficiaries. This policy change was based on the premise that enhanced opportunities for care coordination and more efficient management of health care services could arise if the same insurer provides Medicare and Medicaid benefits, even if administered through separate plans. Following the announcement of the policy change, one of Tennessee’s three Medicaid insurers began offering a D-SNP for the first time and a second insurer expanded geographic availability of its existing D-SNP. The third Medicaid insurer already provided D-SNP options statewide prior to the state announcement.

Using individual-level Medicare, Medicaid, and hospital discharge data, this study examines whether Tennessee’s policy change influenced health care service use for over 60,000 dual-eligible beneficiaries age 65 and above. We compare service use over the years 2011 to 2015 for dual-eligible beneficiaries in aligned plans (Medicaid plan and Medicare D-SNP operated by the same insurer) and traditional Medicare (Medicaid plan and traditional Medicare). Outcomes include use of inpatient care, emergency room services, Part D prescription drugs, and long-term services and supports (home-and-community-based services and institutional nursing home care).

Between January 2011 and December 2015, the percent of dual-eligible beneficiaries age 65 and above in aligned plans increased from 7% to 19%. Relative to beneficiaries in traditional Medicare, beneficiaries who joined aligned plans were more likely to be younger, male, and black. On average over the study period, aligned plan members had much lower monthly rates of nursing home use than beneficiaries who remained in traditional Medicare (2.3% versus 30.2%). In contrast, use of home and community-based services did not differ across beneficiaries in aligned plans and traditional Medicare. Among beneficiaries without any long-term services use, beneficiaries in aligned plans had fewer inpatient admissions and emergency room visits, but similar rates of Part D drug use.

One key question is whether health care use differences between aligned plan members and traditional Medicare beneficiaries reflect favorable selection into aligned plans or whether aligned plans directly influenced service use. To address this question, we will leverage the fact that Medicaid insurers varied in how quickly they began offering aligned plan options in different counties. A reduced form analysis will analyze whether the presence of an aligned plan option influenced the use of health care services for all dual-eligible beneficiaries. To examine the effects among beneficiaries who enrolled in aligned plans, we will conduct an instrumental variable analysis that addresses selection bias by instrumenting for the likelihood of beneficiaries’ participation in aligned plans based on aligned plan availability.