Washington, DC, March 24, 2026 (GLOBE NEWSWIRE) -- ATI Advisory, with actuarial analysis conducted by Milliman, has designed the Medicare Advancing Home and Community Care (MAHCC) model — a proof-of-concept demonstrating that Medicare can finance targeted home- and community-based services (HCBS) for beneficiaries with significant functional needs while reducing or not increasing Medicare spending.
The work was funded as part of California’s Master Plan for Aging (MPA) Long-Term Services and Supports (LTSS) Financing and Affordability Initiative that includes data, research, and policy options to consider for older adults and people with disabilities who fall in California’s ‘Overlooked Middle’ – those who are above the Medicaid (Medi-Cal) limit but cannot afford to self-fund their current or future LTSS needs. As part of this initiative, ATI led policy technical support and design and Medicare claims analysis with ongoing input and guidance from the California Departments of Aging and Health Care Services, and Milliman provided independent actuarial analysis.
As outlined in the report, the MAHCC model responds to “a critical gap in HCBS for individuals in the ‘Overlooked Middle,’” many of whom experience functional decline and difficulty with activities of daily living (ADLs) but lack structured, sustainable support options. Without intervention, these beneficiaries face increased risk of hospitalization, institutionalization, financial strain, and caregiver burnout.
“This work shows what is possible when we bring together health care and home and community-based services in a thoughtful way,” said Susan DeMarois, director of the California Department of Aging. “The findings point to a path where Medicare can better support the daily needs of older adults; helping them stay healthy and independent, live at home, and move through each stage of life with dignity and choice.”
Data-Driven Model Design
ATI Advisory led the policy design and Medicare claims analysis, drawing on 100 percent of Traditional Medicare claims for Californians continuously enrolled in Parts A and B Traditional Medicare and not enrolled in Medicaid.
The analysis identified a population with disproportionately high Medicare spending driven largely by acute and post-acute care utilization:
- Individuals living with moderate-to-severe frailty had about five times as much Medicare Parts A and B spending than the average across all Medicare beneficiaries – incurring $57,000 annually.
- Individuals with moderate-to-severe frailty incurred nearly half of all acute and post-acute Medicare spending.
These findings reinforce a central conclusion of the report: “Unmet functional needs represent an opportunity for intervention which could result in improved health outcomes and Medicare savings.”
MAHCC Model Framework
In response to key research questions — including whether Medicare can serve as a financing platform for HCBS and whether such an intervention could maintain or reduce overall Medicare spending — ATI developed the MAHCC model to operate within Traditional Medicare.
The model combines:
- Frailty screening, including use of a Claims-Based Frailty Index (CFI)
- Required service navigation to connect beneficiaries with HCBS and other available supports
- A flexible HCBS benefit capped at $2,500 annually
- An option to participate in the evidence-based Community Aging in Place–Advancing Better Living for Elders (CAPABLE) program
The $2,500 annual cap was modeled to “assure that overall model costs do not exceed the projected savings from the provision of the model’s intervention,” while remaining sufficient to drive impact. The fixed amount could be modified via a model test. Covered services include medically tailored meals, non-emergency medical transportation, adult day programs, caregiver supports and respite, and personal care services supporting ADLs and instrumental activities of daily living (IADLs).
Actuarial Findings
Milliman, a premier global actuarial and consulting firm, conducted independent actuarial modeling across a range of scenarios to assess whether the MAHCC intervention could generate net Medicare savings over a 10-year period.
Under the baseline assumptions, Milliman’s actuarial modeling projected approximately $528 million in net Medicare savings over a 10-year period due to MAHCC enrollment among the targeted population in California.
Conclusion
While the analysis relied on California-specific data, the report notes that “the concept has broad applicability across states and could advance without requiring additional Congressional action.” The framework offers policymakers, providers, and payers a structured pathway to test limited, evidence-based HCBS benefits within Medicare. ATI expert Tyler Cromer emphasized, “We know there is substantial need within the Medicare population for in-home services; however, sustainable pathways to finance these supports and connect them to healthcare spending and savings remain limited. This work highlights one promising approach to bridging that gap.”
The report concludes: “The MAHCC model shows that Medicare can play a pivotal role in supporting the Overlooked Middle who are experiencing functional decline with targeted, cost-effective HCBS.”
About ATI Advisory
ATI Advisory is a healthcare research and advisory services firm dedicated to system reform that improves health outcomes and makes care better for everyone. ATI guides public and private leaders in solving the most complex problems in healthcare through objective research, deep expertise, and bringing ideas to action.
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