Nearly 9 million poor and sick Americans are “dually eligible” for both Medicare, the federal health care program for seniors and disabled individuals, and Medicaid, the joint federal health system for low-income people.  They use a lot of health services and their care is often fragmented.

Melanie Bella’s new job is to help fix that.

Bella once ran the Indiana Medicaid program and most recently worked at the Center for Health Care Strategies, a nonprofit focusing on quality care for people with complex conditions. There, she worked on improving care for vulnerable populations with complex health needs. In September, she was named the first director of the Federal Coordinated Health Care Office (CHCO), known as the “office of the duals.” Established under the new health care law, the office will work closely with the Center for Medicare and Medicaid Innovation to streamline care for people who are eligible for both programs. The office will address some of the cost-shifting and inconsistencies that can contribute to fragmentation of care, particularly as patients move back and forth from hospital, home, rehab and long-term care – with some services and settings under Medicare’s purview and some under Medicaid’s. A major focus will be to improve the federal-state relationship.

According to the SCAN Foundation, a California nonprofit organization dedicated to improving seniors’ health care options, Medicare spends five times more on dual eligibles than on individuals only on Medicare. Although dual eligibles make up fewer than one in five Medicaid beneficiaries, they account for nearly half of all Medicaid spending.

Joanne Kenen interviewed Bella for Kaiser Health News. Here is an edited and condensed account.

Q: Can you explain your goals – how you see the problem?

A: It’s really two main themes. Improve the beneficiaries’ experience and make it easier for them to understand and navigate the system, so they can expect to get good care. And address ways in which the system is highly uncoordinated, the need to improve the relationship between the federal government and the states. These programs were never designed with the idea of people getting both (Medicare and Medicaid). They were not designed to work together, and we are seeing that. There are different systems for enrollment, grievances, financing, misaligned incentives, cost shifting. All these things can result in poor care, poor outcomes.

Q: Where do you start?

A: We’re cataloguing. What order are we going to go in and make the fixes? We want to be transparent, and get feedback. We’re a small office, but the list is long.

Q: Can you give an example of how a patient experiences some of this lack of coordination?

A: Think about the different coverage and benefit standards, just with home care. For Medicare, you have to meet the definition of being homebound to get home care. Not for Medicaid. This creates problems. Someone who hasn’t met the Medicare homebound definition, (but has qualified for services through Medicaid) and then something happens (often after hospitalization), and he or she meets the (Medicare) definition. Then Medicare has to provide the home care, so you switch them over. And there’s a different formulary and there’s a new payer, new rules, there are all sorts of problems.

Q: You have had experience at the state level – as Indiana’s Medicaid director, and you directed a leadership training institute for Medicaid directors. What does that tell you about improving federal-state coordination for this population, and will it differ in “red” and “blue” states?

A: We are open for business to help states move beneficiaries into more seamless systems. We don’t prescribe a one size fits all approach. We want beneficiaries to receive certain types of things but there may be different systems – an accountable care organization, PACE (Program of All-inclusive Care for the Elderly, a SNP (special needs plan).

The states have common sets of need. They need help integrating and analyzing data. They need actuarial help. They need help in putting together best practices, what works, what hasn’t worked. There is a core set of needs they all have, regardless of the political underpinnings. I think that all the states – most of the states – are interested in access to data, and all states would like to have an ability to share in savings.

Q: There is talk of having states assume full financial and programmatic responsibility for managing dual eligibles’ care. How is that different than block grants?

A: We’ve had many, many demos in Massachusetts, Minnesota and Wisconsin of blended funding and it’s not a block grant. The funding – from Medicare and Medicaid – went to the health plan, that’s where it was blended [not in state government.]. It was integrated at the plan level, with the ability to have flexibility, to provide the types of services that keep people at home or in the community, rather than in the institution. One entity gets the funding – but they have accountability along with the flexibility.

Q: We tend to think of dual eligibles as elderly people with chronic disease but about a third – 3.4 million in 2008 – were younger people with disabilities. How do they fit in?

A: That’s a priority population for us — particularly the under 65 with serious mental illness. Who are they? We know at a high level but we want to drill down. Under 65, the presence or absence of mental illness is a game changer. We have a group of folks whose needs are long-term-care driven, some in institutions and some in the community. They need home care, personal care attendants, respite care. They need better care management at home, prevention of costly institutionalizations down the road. It’s very different than the older folks who have physical morbidities.