Dual-Eligiblity in Medicare and Medicaid

HHS is to establish a Federal Coordinated Health Care Office within the Centers for Medicare and Medicaid Services (CMS). The purpose is to bring together officers and employees of the Medicare and Medicaid programs at CMS to more effectively integrate benefits under the Medicare and Medicaid programs, and to improve the coordination between Federal and state government for individuals eligible for benefits under both programs.


The goals of the Federal Coordinated Health Care Office are to provide dual-eligible individuals full access to benefits entitled under the Medicare/Medicaid programs. The office will simplify the processes for dual-eligible individuals to access items and services; improve quality of health care and long-term services; help with understanding of coverage; eliminate regulatory conflicts between the rules of Medicare and Medicaid; improve care continuity; eliminate cost-shifting between the programs and health care providers; and improve quality of performance of service and supplier providers.

The responsibilities of the office will be to provide states with specialized plans for special needs individuals; for physicians and other entities and individuals to develop programs to align benefits under Medicare/Medicaid for dual-eligible individuals; to support state efforts to coordinate and align acute care and long-term care services; to provide support for coordination and contracting and oversight by the states and CMS with regard to integration of Medicare/Medicaid; and to consult and coordinate with the Medicare Payment Advisory Commission concerning policies relating to benefits for dual-eligible individuals.

Market Basket Updates

The CMS uses the market basket update to adjust hospital payments for inflation. The market basket updates will be adjusted in the near future by a new "productivity adjustment rate," replacing the current method using the Consumer Price Index. The productivity adjustment defined as a 10-year moving average of changes in annual economy-wide productivity gains as will be projected by HHS.

In the meantime, some reductions in market basket updates will be applied to facilities including acute care hospitals, long-term care hospitals, inpatient rehabilitation facilities, and outpatient hospitals. The reduction will be .25% in Fiscal Year 2010, eventually reaching .75% in Fiscal Year 2017 through Fiscal Year 2019.

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