Obama Administration Rolls Out New Ways to Improve, Lower Medicaid Costs

The Obama Administration announced three new initiatives to help states improve the quality of care and lower its costs for about 9 million Medicare and Medicaid enrollees.

The U.S. Department of Health and Human Services on Friday announced that there will be a demonstration program to test two new financial models designed to help states improve quality and share in the lower costs that result from better coordinating care for individuals enrolled in Medicare and Medicaid. There will also be a demonstration program to help states improve the quality of care for people in nursing homes by providing these individuals with the treatment they need without having them go to hopsitals unnecessarily. And there will be a technical resource center available to all states to help them improve care for high-need high-cost beneficiaries.

The Centers for Medicaid & Medicare Services will establish the resource center to help states in delivering coordinated health care to high-need, high-cost beneficiaries, including those with chronic conditions and/or Medicare-Medicaid enrollees.

Health Secretary Kathleen Sebelius in a statement noted that: By improving care to the most vulnerable of our citizens, we can improve the quality of their lives and prevent wasteful spending.

Sebelius stated that governors and their staff have been looking for tools to reach those goals and that she's pleased to continue the partnership with the states on that regard.

More than $300 million is spent each year by the states and the federal government to care for Americans eligible for Medicare and Medicaid, according to a statement from Health and Human Services.

In Medicaid, these individuals represented 15-percent of enrollees and 39-percent of all Medicaid expenditures. In Medicare, they represented 16-percent of enrollees and 27-percent of program expenditures, the statement noted also.

The Health and Human Services department is looking to increase the number of Medicare-Medicaid enrollees in systems that coordinate care, as this may improve the quality of care individuals get and reduce the states' and federal government's cost.

These models are designed to address a longstanding barrier to better meeting the needs of some of the most vulnerable Americans we serve, said Dr. Donald M. Berwick, administrator of CMS. Providing individuals the high-quality care they need, working closely with stakeholders, doctors, and state leaders, and ensuring beneficiary protections will be a crucial part of this demonstration.

Aligning financing between Medicare and Medicaid to support improvements in the quality and cost of care for those eligible will be done through two models. The first is where a state, CMS, and health plan enter into a three-way contract where the managed care plan receives a prospective blended payment to provide comprehensive, coordinated care. The second is where a state and CMS enter into an agreement by which the state would be eligible to benefit from savings resulting from managed fee for service initiatives designed to improve quality and reduce costs for both Medicare and Medicaid.

CMS' Center for Medicare and Medicaid Innovation will test these models to determine whether they save money while also preserving or improving the quality of care for Medicare-Medicaid enrollees, Health and Human Services stated.

States that meet standards and conditions will have the option to pursue either or both of these models.

CMS is aiming to improve the quality of care for people in nursing homes and said that nearly two-thirds of nursing facility residents are in Medicaid and most are also in Medicare.

CMS' Innovation Center will work with the CMS Medicare-Medicaid Coordination Office to establish a new demonstration for reducing preventable inpatient hospitalizations among residents of nursing facilities. They will do this by providing these individuals with the treatment they need without them go to a hospital, which can often be expensive, disruptive, disorienting, and dangerous for frail elders and people with disabilities, and cost Medicare billions of dollars each year, Health and Human Services said.

The release stated that a CMS-funded research on Medicare-Medicaid eligible nursing facility residents in 2005 found that almost 40-percent of hospital admissions were preventable, accounting for 314,000 potentially avoidable hospitalizations and $2.6 billion in Medicare expenditures.

This fall, CMS will competitively select independent organizations to partner with and implement evidence-based interventions at interested nursing facilities.