Medicaid Savings, Quality Compatible, Study Says

A new study of Illinois’ Medicaid programs suggests healthcare improvements and cost savings can be achieved simultaneously.

The study, in the September/October edition of the Annals of Family Medicine, found 2 Illinois Medicaid programs, Illinois Health Connect (IHC) and Your Healthcare Plus (YHP) saved $1.46 billion between 2006 and 2010 thanks to payment models that in many ways mirror the patient-centered medical home and accountable care organization models.

IHC was a primary care case management program. YHP was a disease management program. Most of YHPs members were also members of IHC. The 2 programs came about as a result of a 2004 court battle in which a judge ruled the state was violating federal law by not providing adequate access to primary care services for Medicaid patients.

The savings came largely through reduced hospital visits and better management of chronic diseases. Medicaid inpatient costs dropped by 30%, while outpatient costs increased by 25-46%. Avoidable hospitalizations dropped by 17% for YHP. Emergency department visits dropped by 5% in 2010 alone.

The programs paid physicians on a fee-for-service model, with a per-patient monthly care management payment tacked on, as well as bonuses for meeting quality thresholds.

“We don’t know how practices spent their care management fees, but the IHC team observed that clinicians generally felt that they made low Medicaid rates more palatable and that, for some physicians, they created a sense of obligation to provide services outside of normal patient visits because they were paid on a per-patient basis,” the study’s authors wrote.

IHC also included services for physicians, such as patient registries, referral and care-coordination support and quality improvement tools.

In a survey, about 75% of physicians said the bonus payment system improved the quality of their practice and about two-thirds said the supportive services on IHC’s provider portal website were useful.

Though the programs were found to be successful, they fell victim to budgetary constraints. The study notes lawmakers in Illinois partially dismantled the programs to help fill budget gaps, despite the savings the programs generated.

The authors recommend other states consider blended payment models and payment enhancements for their Medicaid programs. They also note lawmakers should take a long view.

“It may take 3 or more years to reveal the full effects of insurance and practice transformation experiments,” the authors wrote.