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Potential Solutions to High Costs in Medicaid Explored

By Rebecca Adams, CQ HealthBeat Associate Editor

May 31, 2012 – It's common knowledge among Medicaid experts that about 5 percent of beneficiaries use more than half of the program's spending each year. Those costs might be reduced by tracking high-cost patients better, delaying the use of long-term care, avoiding problems when a patient moves to a different facility, and providing for such other basic needs as housing, according to a white paper recently released by the Partnership to Fight Chronic Disease.

The chairman of the group, former Emory University professor Kenneth Thorpe, presented the paper at a congressional briefing with several other panelists. Thorpe, an advisor to President Clinton, noted that 83 cents of every dollar spent in Medicaid goes to treat chronic diseases, including diabetes, asthma, and hypertension. The white paper describes several initiatives around the nation that seem to have lowered medical costs without harming beneficiaries.

In Indiana, for instance, the state's "Right Choices" program, run by a WellPoint affiliated health plan, identifies which beneficiaries have gone to the emergency room more than once for non-emergency care or used a large number of drugs that different physicians prescribed. Those Medicaid beneficiaries are assigned to one primary care doctor, one pharmacy and one hospital. They also are overseen by care coordinators who try to help them avoid overusing medical services. The paper said that after the first six months of the program, emergency department use fell by 72 percent and the use of controlled substance decreased by 38 percent. The program saved more than $200,000 overall over the first six months, a reduction of 48 percent.

Another problem that the paper highlighted occurs when patients are transferred from a hospital to a nursing home or between other settings. The white paper found that a program in 39 states known as the Care Transition Model has reduced expensive rehospitalizations. The program provides a health coach for patients with complex care needs and their families. The coach reminds them to take medicine as prescribed, get follow-up care, and respond quickly if certain problems emerge. The cost savings for 350 chronically ill adults may be as much as $300,000, according to the paper.

Helping Medicaid patients delay the use of long-term care also can save a significant amount of funding if done appropriately, the paper found. One example is the GRACE program, an integrated care model that sends a nurse practitioner and a social worker to the homes of low-income seniors. The nurse practitioner and social worker come up with an individualized plan that they track. The plan typically includes 12 care protocols that guide patients on medication management, depression, mobility issues, vision concerns, and other common conditions. In a randomized control trial of 951 low-income seniors, GRACE participants experienced fewer emergency room visits, hospitalizations, and readmissions. The program did not cost more in the first year and saved about $1,500 per enrolled patient in the second year, the paper said.

And the paper found that sometimes spending money on nonmedical issues, such as housing, can prevent big medical bills later. The Chicago Housing for Health Partnership has provided housing and case management services to homeless adults with chronic illness. An 18-month study showed that after gaining housing and help in managing their care, patients had 29 percent fewer hospitalizations and 24 percent fewer emergency visits.

"Policymakers need to focus on the true cost driver within the health care system – chronic disease – and support long-term programs that help prevent and manage these conditions," Thorpe said.

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