The Centers for Medicare and Medicaid Services (CMS) released information on July 8 on financial models available for state efforts to integrate care for Medicare-Medicaid “dual eligibles.” There are over nine million such persons in the United States. They represent 15 percent of Medicaid recipients but 39 percent of Medicaid expenditures (mainly long term care costs not covered by Medicare) due to advanced age, disabilities, and complex medical conditions. Building upon the Program of All Inclusive Care for the Elderly (PACE), Medicare Advantage Special Needs Plans, and other Medicare-Medicaid integration initiatives, CMS says that it is ready to test a new capitation model using a three-way contract among states, CMS, and health plans to offer integrated Medicare-Medicaid benefits to “duals”. Plans will receive a blended capitation rate for the full continuum of benefits provided under both programs after being selected through a competitive, joint procurement by states and CMS. CMS also says that it is ready to test a “managed fee-for-service” model under which states will coordinate care for “duals” across both programs in exchange for incentive payments from CMS related to quality measures and Medicare savings net of increased federal Medicaid costs. CMS is offering a draft memorandum of understanding for states to consider and is urging interested states to submit non-binding letters of intent by October 1, 2011.