Getting a Handle on Medicaid Costs
By James Lutz, CSG Health Policy Intern
Medicaid hot spots—the few patients that produce the majority of costs for the program—are a growing concern for states.
Consider this: 1 percent of patients account for 25 percent of Medicaid expenditures; 5 percent of patients account for 54 percent of expenditures, Candace DeMatteis, policy director of the Partnership to Fight Chronic Disease, said during the June Medicaid Policy Academy sponsored by The Council of State Governments.
“Look at the numbers,” said New Mexico Rep. Jim Hall. “There is a huge disparity between patients that require occasional care and patients that require ongoing, intensive care.”
Medicaid is a vast and complex system. Nearly 60 million people are enrolled in the joint state-federal program. With such a complex program come ever-growing costs. It is the costliest program for some states, and among the top three costliest programs in others. The program costs states between one-fifth and one-quarter of their budgets.
But states face other challenges with the program, one of which is coordinating care for patients dually eligible for Medicaid and Medicare.
The Centers for Medicare and Medicaid Services is evaluating state proposals to integrate care for dual eligible patients, who account for $4 of every $10 spent on Medicaid, according to Tim Engelhardt, director of Demonstrations, Modeling and Analytics, Federally Coordinated Health Care Office at the Centers for Medicare and Medicaid Services.
Beginning in late 2012, a select set of states will offer different models of coordinated care and coordinated financing for dual eligibles. These demonstrations will seek to produce better outcomes across the various health care settings dual eligible patients traverse.
This coordination will be especially important as states consider expanding state Medicaid programs under the Affordable Care Act.
“If the state of Arkansas expands Medicaid, we will create a bunch of new dual eligibles,” said Arkansas Sen. Bill Sample.
Managed care continues to cover more and more Medicaid patients. More than 70 percent of Medicaid enrollees are in managed care. Thomas Johnson, president and CEO of Medicaid Health Plans of America, discussed the importance of reducing avoidable hospitalizations in managed care plans.
He gave as an example New York’s effort to phase out fee-for-service reimbursement in Medicaid over the next three years.
“There is a huge opportunity to move to a managed care model from a fee-for-service model,” said Hall.
Health homes are a new, burgeoning concept in reforming the care delivery system. Oklahoma Medicaid Director Garth Splinter discussed SoonerCare’s Patient-Centerd Medical Homes and their ability to provide quality care while reducing per member per month spending. Oklahoma has piloted SoonerExcel, a health home initiative aimed at improving access to care and focusing on preventive care.
Iowa has a similar program. Its model is aimed at reducing nonemergent use of emergency rooms, reducing avoidable in-patient hospital admissions while also helping to improve access to care, coordinate care and engage patients in their own care, according to Iowa Medicaid Director Jennifer Vermeer.
Cindy Mann, director of the Centers for Medicare and Medicaid Services, also mentioned the significance of transitioning from institution-based long-term care to community-based care and its ability to help reduce Medicaid spending. In addition to being less expensive than nursing home care, families generally want this type of care to take place in the community or home.
Mental health care also has been an issue of growing importance in Medicaid.
South Carolina Rep. Joe Jefferson was surprised to learn that one in six individuals has a mental health problem.
Chuck Ingoglia, vice president of Public Policy of the National Council for Community Behavioral Healthcare, discussed how mental health care is among the most cost-effective care in Medicaid. Mental health care is cost-effective because it typically reduces costly in-patient hospital admissions.
Ingoglia also addressed the importance of not only ensuring care coordination for mental health patients, but also coordinating their mental care with their physical care. Managing mental health care and physical health care simultaneously can create better health outcomes in addition to reducing costs.
The discussion is one Rep. Joni Jenkins will take back for use in Kentucky.
“I, personally, feel a new energy in addressing Kentucky's challenges in providing physical and mental health care to our most vulnerable population,” she said.