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Integrated Care Organizations: Medicare Financing for Care at Home
Karen Davis, PhD; Amber Willink, PhD; and Cathy Schoen, MS
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Integrated Care Organizations: Medicare Financing for Care at Home

Karen Davis, PhD; Amber Willink, PhD; and Cathy Schoen, MS
This paper presents a policy proposal to integrate care for Medicare beneficiaries through creation of integrated care organizations and a Medicare home care benefit.
Several important caveats should be noted. First, the numbers of Medicare beneficiaries will grow over time, including those with physical and/or cognitive limitations, subsequently increasing the cost of care over time. Some Medicaid beneficiaries may opt for coverage under Medicare rather than Medicaid given serious restrictions on eligibility and home- and community-based benefits in many states. Further, there may be adverse risk selection with beneficiaries at greater risk of requiring LTSS being more likely to participate than those with lower risk. Low-income individuals with lower cost sharing are also more likely to participate than high-income beneficiaries who are required to pay 50% of the cost of services. However, the fact that there is a severe penalty for failing to enroll at the time of Medicare eligibility, and the substantial financing provided by payroll taxes are likely to be significant deterrents to forgoing the benefit, as has been the experience with Part B of Medicare.


ACOs will increasingly grapple with the need for LTSS among their aging patients. Financing home- and community-based services under Medicare and expanding ACOs to be accountable for LTSS would provide the incentive and means to coordinate care, support family care partners, and better meet beneficiary preferences for independent living and care at home. It would also reduce beneficiary reliance on Medicaid’s safety net coverage of institutional care. This policy proposal is worthy of serious consideration as the nation grapples with the need for Medicare redesign to meet the needs of an aging population. It could serve as an important first step toward more far-reaching Medicare benefit redesign proposals to improve the affordability of services. Unlike Medicare’s original focus on inpatient hospital care, it recognizes that many services can be provided in noninstitutional settings, including the home, and realigns benefits to provide care in a way that meets beneficiary preferences. 

Author Affiliations: Johns Hopkins Bloomberg School of Public Health (KD, AW), Baltimore, MD; New York Academy of Medicine (CS), New York, NY. 
Source of Funding: The Commonwealth Fund.
Author Disclosures: Dr Davis is on the Board of nonprofit Geisinger Health (without compensation). The remaining authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article. 
Authorship Information: Concept and design (KD, CS); acquisition of data (AW); analysis and interpretation of data (KD, CS, AW); drafting of the manuscript (KD); critical revision of the manuscript for important intellectual content (KD, CS, AW); statistical analysis (AW); obtaining funding (KD); administrative, technical, or logistic support (KD, AW); and supervision (KD). 
Address Correspondence to: Karen Davis, PhD, 624 N. Broadway, Room 693, Baltimore, MD 21205. E-mail

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