Medicaid covers their Medicare coinsurance, deductibles and Part B premiums, as well as prescription drugs and long-term care. Costs for these dual eligibles are the fastest growing part of both the Medicare and Medicaid budgets. Financial and clinical incentives between the two systems often conflict, resulting in inefficient care and poor clinical outcomes. Often, no one has an incentive to look at an individual's needs across all systems, even as a person's needs change. Although providers tend to operate in silos, it is hard to draw a clear line between acute and long-term care services.
Benefits often overlap and substitute for each other.
People's needs do not fit neatly into these separate financing boxes. Thus, there are incentives for cost shifting back and forth between acute and long-term care providers and between the Medicare and Medicaid programs. Since Medicare, not Medicaid, controls payment for primary and acute care, states lack leverage over the physicians and hospitals whose decisions influence their long-term care costs. For instance, physicians paid under Medicare order the drugs paid under Medicaid or make clinical decisions that may lead to increased Medicaid costs down the road. Research also indicates that the need for long-term care is mostly precipitated by a series of acute and primary care events, including one or more hospital stays.