Medicaid directors propose savings for supercommittee

By Sam Baker - 09/14/11 01:19 PM ET

State Medicaid directors are pitching the supercommittee on a proposal to let states and the federal government share savings from better coordinating certain healthcare services.

People who receive both Medicare and Medicaid — referred to as "dual eligible" beneficiaries — are a small but extremely expensive group. There is broad support for better coordinating the two programs, and state officials want the supercommittee to look to those efforts for savings.

Matt Salo, executive director of the National Association of Medicaid Directors, said shared savings for dual-eligibles is the No. 1 priority for his members.

Some states, including New York, have made some progress independently to improve coordination for dual-eligibles. But if states could share in the savings, rather than returning them entirely to the federal government, even more Medicaid programs would embark on more ambitious reforms, Salo said.

“The potential to drive down costs for that group is just enormous,” he said.

He said his organization hasn’t raised the idea directly to the 12 members of the supercommittee but has generated healthy interest from congressional staff. Medicaid directors are pushing the shared-savings proposal as an alternative to policies that could shift more costs to the states.

State officials, including many Democrats, are especially troubled by President Obama’s proposal for cutting federal Medicaid spending. He has proposed combining various federal funding percentages into a single “blended” rate of federal support. The change would save the federal government an estimated $100 billion, but states say it would simply pass the costs to them.

“That doesn’t solve any problem any problem other than just washing the federal government’s hands of responsibility,” Salo said.

Shared savings for dual-eligibles could hit a roadblock, though, from the Congressional Budget Office (CBO). States can take some steps now to better coordinate the two programs, and the savings will mostly go to the federal government.

So in from CBO's perspective, sharing the savings with states might look like a change that would cost the federal government money. But Salo said both states and the federal government would benefit because shared savings would produce such a powerful incentive for cash-strapped Medicaid programs to improve.