CMS Announces New Opportunities to Test Innovative Integrated Care Models for Dually Eligible Individuals

Letter to State Medicaid Directors invites states to partner with CMS to improve outcomes for those dually eligible for Medicare and Medicaid

Today, the Centers for Medicare & Medicaid Services (CMS) sent a letter to State Medicaid Directors inviting states to partner with CMS to test innovative approaches to better serve those who are dually eligible for Medicare and Medicaid. Many of the 12 million dually eligible beneficiaries have complex healthcare issues, including multiple chronic conditions, and often have socioeconomic risk factors that can lead to poor outcomes. CMS and states spend over $300 billion per year. on the care of dually eligible individuals, yet still do not achieve acceptable health outcomes. Today’s letter opens new ways to address those complex needs, align incentives, encourage marketplace innovation through the private sector, lower costs, and reduce administrative burdens for dually eligible individuals and the providers who serve them.

“Less than 10% of dually eligible individuals are enrolled in any form of care that integrates Medicare and Medicaid services, and instead have to navigate disconnected delivery and payment systems. This lack of coordination can lead to fragmented care for individuals, misaligned incentives for payers and providers, and administrative inefficiencies and programmatic burdens for all,” said Administrator Seema Verma. “We must do better, and CMS is taking action.”

As one of CMS’ Strategic Priorities for 2019, we are redoubling efforts to better serve older adults and people with disabilities dually eligible for Medicaid and Medicare. Our goal is to bring shared accountability for creating a more seamless experience for beneficiaries and providers across the two programs, while ensuring that the program’s incentives are aligned and pointed toward lower cost and better outcomes.

Approaches discussed in the State Medicaid Directors letter include:

  • The Capitated Financial Alignment Model. Through a joint contract with CMS, states and health plans, this model option creates a way to provide the full array of Medicare and Medicaid services for enrollees for a set capitated dollar amount.
  • Managed Fee-for-Service Model. This model is a partnership between CMS and the participating state and allows states to share in Medicare savings from innovations where services are covered on a fee-for-service (FFS) basis.
  • State-Specific Models. CMS is open to partnering with states on testing new state-developed models to better serve dually eligible individuals and invite states to come to us with ideas, concept papers, and/or proposals.


Today’s letter complements a State Medicaid Director Letter CMS released in December 2018 that highlighted ten opportunities to improve care for dually eligible individuals, including using Medicare data to inform care coordination and program integrity initiatives, and reducing administrative burden for dually eligible individuals and the providers who serve them. The opportunities in today’s letter, together with the Primary Cares Initiative present an array of options for transforming care delivery.

The State Medicaid Director letter is available through at:

A letter from Administrator Verma to state Governors is available here:

A blog by Administrator Verma, titled "Better Care For People Dually Eligible For Medicare And Medicaid," is available in Health Affairs here:

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