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. The hospital discharge planner is often the most influential person in the placement and services recommended for people who need long-term care. As described above, states that want to develop more efficient service delivery systems run into barriers driven by the Medicare system.
Many reforms proposed in either system simply shift costs from one side to the other.
Therefore, some states and providers believe that financing incentives must be aligned between Medicare and Medicaid and that delivery of acute and long-term care services should be more closely coordinated or integrated. Federal cooperation from Medicare is needed to address these issues. The federal government must approve waivers of existing rules in both Medicare and Medicaid. However, the federal government has generally been reluctant to allow states any control over Medicare, fearing that they will try to shift Medicaid costs to Medicare. The goals of these models are to provide more seamless care delivery for the consumer, align financial incentives to support clinical care delivered across acute and long term care needs, reduce administrative duplication and complexity, reduce or control cost growth, and create a single point of accountability for costs and outcomes.