Arizona’s decision to eliminate coverage for some heart, liver, lung, pancreas and bone marrow transplants has received a lot of attention because of its immediate life-and-death implications: potentially denying organs to 100 adults currently on the transplant list.
And it’s not just conservative states turning to these types of drastic measures. Under immense fiscal pressure, states across the country are cutting Medicaid benefits and reducing already-low Medicaid provider reimbursement rates. These cuts harm access to needed care for America’s most vulnerable citizens.
There Is a Better Approach CMS recently released guidance on a new state option created by the Affordable Care Act that could lower Medicaid costs and bring in additional federal dollars while improving patient care. Beginning in January 2011, states can qualify for two years of enhanced federal funding to set up health homes for Medicaid beneficiaries with chronic physical or mental illnesses.
Unlike benefit restrictions, the health homes initiative tackles a root cause of unnecessary Medicaid spending: our fragmented health care delivery system. We know about five percent of Medicaid beneficiaries account for nearly 60 percent of Medicaid spending. Who is this small section of the population? It’s people with complex health care needs whose care is too often split between multiple providers who are not paid to communicate with one another. This lack of coordination leads to avoidable ER visits, hospital readmissions, and duplicated tests and procedures. To reduce these unnecessary costs, the new health homes option simply reimburses providers for coordinating the care of high-risk enrollees.
The evidence is clear: states can lower health care costs through health home initiatives. In North Carolina, a Medicaid medical home program saved the state between $154 and $170 million in 2006 alone. Illinois saved $220 million in the first two years that its Medicaid medical home program was fully implemented.
Given the severity of state budget crises, the health homes option on its own may not create enough savings to get states out of the red. But it’s just one of many options to reduce Medicaid spending while improving patient care. As long as options like this are on the table, there is no excuse for denying access to needed services for vulnerable Americans.
— Katherine Howitt, Policy Analyst