While they haven’t attracted the amount of press, or federal dollars, as the Medicaid expansion or state health insurance exchanges, the dual-eligible demonstration projects under the Affordable Care Act (ACA) also hung in the balance while the law's constitutionality remained uncertain. So with the Supreme Court’s decision to uphold the federal health care reform law—and a pending deadline in September—states that have gotten a head start on the projects know that a year-plus of planning will not go to waste.

At the beginning of 2011, the U.S. Department of Health and Human Services (HHS) awarded $1 million planning grants to 15 states. The money was intended to help states develop ideas on how they can better manage dual-eligibles: the poor elderly who qualify for both Medicare and Medicaid. The goal is to both provide better care by improving coordination between Medicare (which is federal-run) and Medicaid (which is state-run) and, by doing so, cut costs.

How big is the dual-eligible issue? According to federal estimates, dual-eligibles comprise 15 percent of Medicaid enrollment, but account for 39 percent of its spending. They also make up a disproportionate amount of Medicare spending. The problem is that, because the programs are run separately by the federal government and the states, there isn’t always communication between the two, even though they’re together covering one individual.

Broadly speaking, Medicare covers acute incidents (such as a trip to the emergency room) while Medicaid covers long-term care (such as nursing home residency). But, in action, the lines aren’t so clearly drawn. Reports have circled for years about the offices bickering over which would pay for which services for an individual. The Wall Street Journal last year recounted the story of a quadriplegic who was forced to stay in a rehabilitation facility for six months while the two programs argued over which would be responsible for covering his home-based care.

“It’s a national shame that we are subjecting the poorest and sickest among us to this fragmented care,” said Matt Salo, executive director of the National Association of Medicaid Directors, at a Health Affairs conference last month.

The ACA aimed to address the dual-eligible problem through two offices created by the law: the Federal Coordinated Health Care Office (colloquially called the Duals office) and the Center for Medicare and Medicaid Innovation, which would together oversee the state demonstrations. The Duals office authorized the 15 $1 million planning grants, and a total of 26 states have stated their intention to undertake demonstration projects. Strategies for improvement include moving dual-eligibles into managed-care systems or focusing on specific populations (such as nursing home residents) who commonly have issues in coordinating care.

States that want to begin their demonstrations in 2013 must finalized their plans by Sept. 20, according to an April presentation by the Medicare Payment Advisory Commision (MedPac). About half are expected to do so; the remainder will launch their demonstrations in 2014. To prepare for that deadline, MedPac projected that states would have to submit their initial proposals and seek public comment in the spring, then meet with health-care providers in June to get their input.

The initial constitutional challenge to the ACA was filed the day after President Barack Obama signed it into law—which means almost most all duals demonstration planning so far took place under the air of uncertainty that ended on June 28, when the Court issued its decision to, in effect, uphold the entire law.

While overturning the ACA would have invalidated the Duals offices and their funding, the dual-eligible issue would still have needed to be addressed, as spending for Medicaid and Medicare is projected to crescendo in the coming decades. The only option, state officials say, was to push forward despite the lack of assurance about the law's fate. 

“The issue isn't going to go away. It's only going to increase in terms of the pressure it puts on the health-care system,” says Patti Killingsworth, assistant commissioner at TennCare, Tennessee’s Medicaid office, who oversees long-term care services and her state’s demonstration project. “So, what we said in our planning process is: we are going to find a way to improve the coordination of care for dual-eligibles regardless of the authority that we use.”

Given the amount of work that states had done over the last year, some would likely have pushed on with their plans regardless of the Court’s ruling. But knowing that they’ll have the full resources outlined in the ACA is reassuring, state officials say. For starters, the Duals office is expected to facilitate data sharing across the two programs, a key component to improvement that has been missing in the past.

“We were committed to serving this population regardless. What this enables us to do is to do it better and smarter,” says Denise Levis at Community Care of North Carolina, which is overseeing that state’s demonstration project. “Everyone’s agreed that things need to change. But we were a little anxious, so it was a relief.”