And the Next Victims of Cost Cutting: Dual Eligibles

Choices and Consequences Resulting from Decisions to Limit Costs and Care for Dual Eligibles - Impacting Their Lives, Their Health, Their Families, Their Neighbors, and Their Providers

Is there a pattern to the last three decades of US health policy - policy that places a priority upon cost cutting rather than care delivery?

Is this pattern to cut spending on areas that you can get away with such as cutting spending on those least able to defend themselves - mentally ill, oldest, sickest, most dependent, least able? What do you think? With cost cutting involving Dual Eligibles, this pattern may be seen more clearly.

Americans with Medicaid and Medicare both are Dual Eligibles. They have the dual coverage of both plans. This has always been confusing as the federal plan for the elderly is not the same as the different state plans for Medicaid. When the combination of Medicare and Medicaid exists, those covered are among the poorest, oldest, least physically capable, and least mentally capable. They have some of the highest cost of care because of who they are. Because they have high cost of care, the government has targeted this group for cost cutting (or management or innovation or value based or any of a a number of terms that translate to cost cutting in the current policy period). 

Why does our government continue to target the most vulnerable – those least able to defend themselves?

It's about the almighty dollar!

Squeezing more billions a year from some allows those billions to be spent on others or saved by others. Some see people in need of care. Others see hundreds of billions in potential cost savings.

About 9 - 10 million Americans have both Medicare coverage and Medicaid coverage. The cost of such patients is over $35,000 per person per year. This is more than 4 times the national average. Clearly many if not most of these patients are in the top 1% most expensive, a group that averages over $48,000 per year spent on the most expensive 1%.

Why So Expensive?

Numerous characteristics of dual eligible patients conspire for much higher costs. To become Medicare requires older age or disability and Dual Eligibles are more likely to have both. To become Medicaid requires poverty and lack of resources often due to diseases that add to complexity such as mental health problems. The list of additional complexity adding to cost involves combinations of numerous conditions involving specialists, substantial testing, disabilities, mental health problems, dementia, multiple expensive medications, long term care, and hospitalization.

About 37% of the health expenditures over an entire lifetime involves ages 65 – 84 with another 12% for age 85 and up. As the American population doubles age 65 and up and as Americans live longer and acquire more diseases and disabling conditions, these costs are going to increase.

Dependent populations also require more social and community resources. As these resources are cut back, dependent populations seek such resources from health care providers. There is an interdependence of numerous social, societal, and health services. As the human infrastructure fabric of our nation unravels, there are consequences - including consequences in health care services, costs, and complexities.

Previous Cost Control Attempts - Disastrous for All

A Kaiser review in 2012 indicated that significant cost savings appeared unlikely for Dual Eligibles based on the evidence from previous attempts. The summary did outline the characteristics of a very few interventions that had potential, but this level of integration and cooperation is quite difficult under the current chaotic designs for health care delivery. Where demand is already far beyond the ability of local providers, more micromanagement plus more cost cutting is not likely to help. 

Earlier cost cutters often sat in administrative offices looking at spreadsheets of health care costs. Some choose the major costs to cut. Others choose rapidly rising costs. Few appear to have attempted to understand their cost cutting or the consequences. Some have chosen to cut hospital costs - cost cutting that has impacted hospitals, patients, families, and primary care in adverse ways (30,000 primary care trained physicians lost to become hospitalists). Others have chosen to cut physician costs. Still others have focused on cutting the rapid rise in prescription drugs. By use of spreadsheets and assumptions, one can estimate the cost savings. Those most skilled in spreadsheet calculations and assumptions are far from the actual delivery of care and are even farther away from the most vulnerable patients. Some of the adverse consequences take decades to realize - as with hospital cost cutting and impacts upon primary care delivery.

Cost cutters have made some huge errors, particularly with regard to the care of the most vulnerable. Across the nation it became popular to cut prescriptions for Medicaid from 7 to 3 a month. On paper, this saves costs for those shuffling numbers in the health care cost spreadsheets. Unfortunately this is a really bad idea when patients need more than 3 prescriptions a month. Numerous consequences were seen in patients with multiple comorbid conditions. A study in New Hampshire indicated 22 times greater health care cost as compared to what was saved for patients when patients had complex needs as seen in patients with mental health conditions. Also these were not all of the increased costs as this was just the health domain alone for the individual patient. The study did not include the damage or costs done to other individuals, or legal costs such as sheriff transportation, jail, or court. In my patients I have seen barriers such as pre approval result in costly hospitalizations - $10,000 to $40,000. The exceptions to pre approvals have taken years to develop but each exception has typically been the result of adverse consequences to patients and higher costs such as hospitalization. How many pre approvals or co-pays does it take to cover these huge costs? 

Now the cuts made by government or by insurance intermediaries are more subtle such as pre approvals of prescriptions or admissions or care. This also has hidden costs, but mainly for the providers, patients, and family members - more regulation, more complexity for patient and family and provider. The designs may work to cut costs of insurance or government, but these impact individuals, families, and higher cost of delivery for providers who must implement more regulations with no increase or a decrease in revenue.

Examples are common such as physicians spending 30 minutes or more with patients to negotiate a care plan only to have that care plan fall apart as the drug listed as preferred requires pre approval and the pharmacy refuses the other part of the negotiated care plan. The lost trust in all involved alone is more cost than can be estimated.

Why would clinicians remain involved with Medicaid or other patients 
with such restrictions on care and numerous complexities that inhibit care?

The Congressional Budget Office Analysis of Cost of Disease Management has already made a determination that the additional costs of care or cost management for the highest cost patients were enough to negate the savings that were made. Not surprisingly the new and rapidly growing industry of cost management raised a huge protest. I have made the argument that care and cost management has helped to deplete workforce. Disease or cost or other management simply shifts the health spending from those who provide the care to those who cost more for care administration. Wake up America, administrative cost increases have been a major reason for cost overruns for decades.  This is a reason why health care delivery capacity can go down while health care spending is increasing.

Wake up designers. Many of the conditions of the most complex and most costly patients already face deficits in addressing their care and their situations are quite complex in ways that resist cost cutting (care cutting).

Why do our foundations tend to minimize the cost cutting aspects that result from innovation or care management? Are designers so enthralled with their designs that they do not see the distortions? Does every innovation have to result in cost cutting to become an accepted innovation? Will designers ever understand that populations with the worst health outcomes also have the worst social determinants and are found in locations with the least health spending, health care workforce, and social resources.  

When cuts are made in care, there are consequences inside and outside of health care and many of the consequences are not even considered such as lost productivity and other consequences to family members who must take over care provision, patients and families must access more of scarce community resources, etc.

Nightmares are seen in those eligible only some of a year - in and out. Switching back and forth is too confusing for those expert in health coverage and payment - and impossible for patients and providers.

More complex means more costly.

Why Are Dual Eligibles So Complex?

Complexity includes the highest rates of comorbid conditions such as cardiovascular, endocrine, renal, and joint condition. Long term care, medicines, hospitalizations, multiple types of clinicians, and other services and equipment are involved. Medicare-Medicaid Enrollee Report

Three or more comorbid conditions are found in 59% of Dual Eligibles over 65, 32% with Medicare only, 40% of Dual Eligibles less than 65, and 18% of Medicaid only.

Dual eligibles over 65 have 3.5 times the Alzheimers rate and 2 to 3 times the rates of other serious, limiting, and costly medical conditions as compared to Medicare alone patients over 65.

Are the situations being faced by Dual Eligibles the same as we will face 
when we get older and sicker and more limited and have Alzheimers?

Mental health issues such as depression, schizophrenia, anxiety, and bipolar disorder are more common for those under 65 that are dual eligible as compared to just Medicaid coverage.

As previously discussed - Diabetes, mental health, obesity, smoking, inactivity, older age, Medicare, Medicaid, and complex situations are more common where our nation has less resources.

What Happens to Dual Eligible Providers or Practices Where Concentrations of Dual Eligibles Exist?

Designers continue to fail to understand the consequences of their adverse designs that fail. These designs delay or deny needed care - we know of consequences already to
  • Veterans
  • Elderly/Medicare
  • Poor/Medicaid
  • Disabled
  • Less organized/distant/different/rural/indigenous
We can already infer damage to providers on the front lines where care is needed because of lowest pay for Medicare and Medicaid as seen across rural and lower income urban areas. Smaller and rural practices are also less able to defend themselves against cuts in insurance payments, delays in payment or denials of payment, removals from insurance company "preferred" or "required" listings, or higher costs from suppliers or insurers. Those most vulnerable also cannot afford to have specialized personnel to deal with care management. Nurses, important for care, are having to deal with insurance companies - a distraction from care delivered to patients in most need of care.

Time and again the funding foundation of care where needed has been shaken and more damage is done by requirements for more practice costs in non-delivery areas due to regulation, screening, pre approvals of care, and other areas that benefit the insurance companies but not patients or providers.


Government will continue with misguided attempts to cost control – attempts that fit the agendas of those that would like to manage and make money off of management rather than a priority focus on delivering care to patients. Added substantial costs of administration at the federal and state and local level are why we have health care crises.

The amount saved by such care management or cost management will be the same as the cost of the cost management - for no overall benefit in health care cost reduction. In other words, instead of delivering more care and spending more where economic impact is needed, there will be less care delivered and less spending where economic impact is needed.

More centralized administrative costs will help divide the nation into fewer advantaged and more disadvantaged.

Health care spending will decrease at the local level to support providers delivering health care for dual eligible, those on Medicare alone, and those on Medicaid alone.

Because Dual Eligible populations are among the most likely to be found where economic impact is most needed, this is a significant redirection of economic impact from where needed to where economic impact is most concentrated. 

The overall impact will be continued deficits of care and workforce where care and workforce are most needed.

Eventually these distortions of spending away from populations in need of health care, economic, education, and other recoveries will be understood as a reason for populations continuing to do poorly generation after generation. Social determinants and other separations can be made worse by societal designs such as seen in health care spending.

Numerous cost cutting ventures will continue to limit access

...for Veterans, rural, underserved, vulnerable, Medicare, Medicaid, and other populations associated with the most care limitations already

Wake up, designers. Providers are fed up with micromanagement and meddling.

The worst thing that you can do to providers who care, is to limit their ability to care. 

Also if you want to turn care providers into administrators, pay more for those who administrate and less for those who care. Substantial portions of nurses and nurse practitioners already do various staff, administration, and management positions. These are often some of the most experienced - another design that places limitations upon health care in the United States.

And as we understand more about the rapid increase in administrative costs without increases in the ability to care, the more we will be disgusted with the care designs.

Kaiser summarized characteristics of the programs and interventions that might work to address this most high cost group:

There are no easy choices as America ages and as health care costs and complexities increase. 

The kind of care that would address costs, quality, and access is highly desirable, but achieving such health care delivery would require 
  1. entirely different workforce 
  2. entirely different designs for training
  3. entirely different payment designs with little or no cost cutting emphasis
  4. entirely different relationships between providers and community resources
  5. mobilization of people within the community to attend to health and social support
  6. coordinators within practices and out in the community directing interactions
 - especially where half of Americans and half of the most vulnerable populations are found.

Damn the Torpedoes, Full Speed Ahead Is Not Good for Health

Despite the critical situations facing the most vulnerable small practices and the most vulnerable locations for care and the most vulnerable patient populations, our designers appear set to continue "Damn the torpedoes, full speed ahead." The consequences to the most vulnerable are illustrated in Dual Eligibles, Small and Rural Hospitals, and small and rural practices -  Damn the reality of small practices, full speed ahead.

Go After the Advantaged, Not the Disadvantaged

If designers really wanted to save 12 billion a year, they could have already done this for 6 years with Medicare Advantage. Studies show they paid 70 billion too much because the designers failed to design the payment formula accurately. They did so because they were influenced too much by those they were supposed to regulate and because they did not understand the patients and their conditions and situations. If they cannot design such a formula for those less complex, how are they going to do so for those most complex in more dimensions than they understand? See Coding for Cash, Center for Public Integrity and CMS report

Paying Too Much for Advantage and Too Little for Disadvantaged 
Is Discrimination by Design.

Back to Deming 

Over and over again the words of Deming prove prophetic. Most important is understanding the numerous permutations of the process - in this case the process of delivering care to the most vulnerable. If attempts are made to save costs by a direct approach (address the end before addressing the means), numerous consequences will result. If the focus is specific to process improvement as guided most consistently by quality focus, the cost may initially be higher but over the long term there is potential for improvement in cost and quality.

The way of cost cutting care management most commonly shifts the spending from those who deliver the care to those who manage or administrate. By undercutting support for the care, the very process by which care is delivered can be adversely impacted.

Businesses can make poor decisions to cut corners, shave costs, pay workers less, or terminate hundreds or thousands of employees in the name of higher profits. These businesses are making decisions on products that people can buy or choose not to buy. Health care is quite different. People need health care. Governments and others responsible for health care that act with a business profiteering mentality can make matters worse - worse for yet another segment of the American people with impacts upon their family and associates, those who attempt to care for them, and those that they care for.

A Kaiser Review Best Bets for Reducing Costs on Duals

Congressional Budget Office Analysis of Cost of Disease Management

Medicare-Medicaid Enrollee Report

How Medicare Advantage Plans Code for Cash 

Global Fails Local But Local Focus Succeeds Globally

Family Medicine Needs a New Beginning

Hotspotting Has Many Spots To Consider

Retail Clinic Recoil

Global Fails Local But Local Focus Succeeds Globally

What Veterans Need Is Family Practice

Domino Decline By Design

Declines in Health Care Delivery Despite Increases in Health Spending

Perverse Health Payment Dividing US

How To Resolve Health Access for 40 States Behind By Design

Health Care Delivery Is No Laughing Matter - Political Cartoons are Nice, but...

Primary care can be recovered and should be recovered by SMART designs.

Dr. Bowman is the North American Co-Editor of Rural and Remote Health. He was the founding chair of the Rural Medical Educators Group of the National Rural Health Association and the long term chair of the STFM Group on Rural Health.


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