Medicaid Cost-Containment

Executive Summary

Given the current economic climate, there are a number of proposals by states to reduce Medicaid coverage, services or payment to providers and to increase cost-sharing by beneficiaries for services. Yet, many states have not adequately considered alternative measures that can be adopted to reduce costs in the program without harming Medicaid beneficiaries. This paper identifies actions that, when taken correctly, can save states money without impacting eligibility, services or imposing harmful copayments.

Given the current economic climate, there are a number of proposals by states to reduce Medicaid coverage, services or payment to providers and to increase costsharing by beneficiaries for services. Yet, many states have not adequately considered alternative measures that can be adopted to reduce costs in the program without harming Medicaid beneficiaries. This paper identifies actions that, when taken correctly, can save states money without impacting eligibility, services or imposing harmful copayments.
To maintain brevity, limited descriptive comments can be found after each item on the list. If applicable, the initials of one or more states that implemented or considered the measure are included. Most of the items on the list only require administrative action to implement, and will not require a waiver or demonstration.
Cost-Containment Measures
Hospital care:
Medicaid accounts for 17% of all hospital spending.1
  • Cost-saving measures for inpatient hospital services: 2
    • Require second opinions for specified procedures. (CO, IL, IN, NJ, OR).
    • Pre-surgical days limited to 1 unless medically justified. (DC, IL). In VA, any number of pre-surgical days before elective surgery must be medically justified.
    • Weekend admissions:
      • Weekend admissions must be medically justified. (DC, VA).
      • Non-emergency weekend admissions must have procedures same or next day. (PA).
      • Weekend admissions limited to hospitals providing full services every day. (WI).
    • Length of stay less than 24 hours considered outpatient except for newborns. (IN).
    • All Medicare benefits/days are exhausted before Medicaid billed. (ME).
    • Allow for 3 administrative leave days to facilitate transfer to less restrictive setting. (NC).
    • Check for double-billing, e.g., by hospital-based physicians and by pharmacies and hospitals for drugs at the time of discharge. (NY).
    • Perform diagnostic tests on outpatient basis prior to inpatient admission (except by prior authorization).
  • PA?s Medicaid managed care program saved money by using ?observation day? rates for low-acuity patients during short hospital stays (less than 2 days) rather than the higher rate normally used for inpatient care.3
  • Reduce readmission rates: 16% of people with disabilities covered by Medicaid (excluding dual eligibles) were readmitted to the hospital within 30 days of discharge. Half of those readmitted had not seen a doctor since discharge. Using a nurse discharge advocate to arrange follow-up appointments and conduct patient education or make follow-up calls has yielded reductions in readmission rates. One CO project reduced its 30-day readmission rate by 30%.4
Disease and Care Management Programs:
Five percent of Medicaid enrollees account for over half (54%) of Medicaid spending.5 Many of these enrollees are elderly or disabled.6 The goal of disease management and care management programs is to assure appropriate care, improve quality and ensure ?Medicaid funds are being used wisely in the care of individuals with specific conditions.?7

Over both Fiscal Years (FY) 2010 and 2011, at least 23 states were implementing or had implemented new policies/programs for disease management/care coordination.8
  • CO formed a public-private stakeholder group, representing varied health care perspectives to work on the following initiatives:
    • Avoiding hospital readmissions by encouraging providers to focus on managing patients? care in a collaborative, sustainable way.9
    • Reducing unnecessary acute and emergency care visits (in particular for those with chronic conditions) by encouraging comprehensive and coordinated care to help patients manage longterm conditions and recovery.10
    • Offering the Program of All-Inclusive Care for the Elderly (PACE), which is a capitated benefit that features a comprehensive service delivery system and integrated Medicare and Medicaid financing. (?08).
  • Partnering with public hospitals to improve diabetes care and reduce inpatient Emergency Room (ER) utilization and to develop cost-effective care strategies for obesity. (LA, ?05).11
  • Implement a ?total health management? program to provide care management for mental health and all chronic illnesses. Every care management intervention addresses mental health, substance abuse and weight management. (WY, ?05).12
  • Patient centered medical home: In NC this has led to a 40% decrease in hospital admission rates, 16% lower ER use, and 93% receipt of appropriate maintenance medications. (Models in NC, OK, OR).
  • Care management with both patient and provider components, e.g., call center, educational materials specific to a disease, self-management education and skill-building, in-home monitoring devices, support for patient health risk assessments and plans of care. (Proposed in AK, ?11).
  • Establish a ?lock-in? program for beneficiaries identified for over-utilizing services at a frequency or amount that is not medically necessary, as determined in accordance with utilization guidelines established by the state. The beneficiary is ?locked-in? to a primary care provider (PCP), pharmacy, controlled substance provider (if different from PCP) and hospital for all non-emergency care. These restrictions may be set as long as the conditions of 42 C.F.R. 431.54(e) are met.
  • Programs in WA:
    • Care management programs for patients with chronic conditions
    • Lock-in program for certain patients who abused drug, hospital or emergency department services
    • A narcotic review program focusing on very high use cases
    • An extensive second opinion program and mental health consultation services targeting high use of mental health services by youths and high use of mental health drugs
    • Improve care coordination to reduce premature births: In NY, one model of coordinated prenatal care reduced the chances of a mother giving birth to a low-birth weight infant by 43% in an intervention group as compared with a group of women receiving care under standard practices.14
    • Promoting better care management for children and adults with asthma: In NY, focused on patient self-management and tailored case management and reduced asthma-related ER visits by 78%.15
 

———————————————————————–
Text has been truncated. For full publication text, download document.

Related Content

For almost 50 years, the National Health Law Program has fought to expand access to quality health care to low-income individuals and underserved communities. Today we are pleased to launch a newly designed website for our future work to make health care a reality for all people. Please take time to peruse our new site, and sign up for our email updates to learn about us, watch the work we do, and become engaged.

Continue to site