How Illinois Medicaid Reduced Costs, Improved Care
By - The healthcare industry continues to transform from fee-for-service to value-based reimbursement. However, a recent report shows that a blended payment model reduced healthcare costs and improved quality care.
Illinois Health Connect and Your Healthcare Plus were both contract Medicaid programs Illinois that operated from 2006 to 2010. According to research from the Robert Graham Center for Policy Studies in Family Medicine and Primary Care, using a combination of fee-for-service, per-member per-month, and quality bonus are strongly associated with improved health outcomes for patients and reduction in overall health care costs.
“The Illinois Medicaid IHC and YHP programs were associated with substantial savings, reductions in inpatient and emergency care, and improvements in quality measures,” the report said. “This experience is not typical of other states implementing some, but not all, of these same policies. Although specific features of the Illinois reforms may have accounted for its better outcomes, the limited evaluation design calls for caution in making causal inferences.”
Illinois Health Connect (IHC) is a primary care case-management program and covered approximately 1.7 million patients in 2010. Participating practices received a monthly fee for each patient, along with fee-for-service payments, researchers explained.
Physicians received quality measures from IHC along with estimates of the quality bonus they could earn if they demonstrated improvement. Additionally, physicians could access patients’ claims information to see if patients were filling prescriptions and following up on referrals, or if they were showing up in ERs or hospitals.
IHC saved an estimated $237 million between 2007 and 2010, the report said. Your Healthcare Plus (YHP), which is a complementary disease-management program, saved $518 million. IHC patients’ hospitalization rates dropped by 18 percent between 2006 and 2010, while YHP patients had a decline in avoidable hospitalizations of nearly 10 percent during the same period.
“The largest savings within all Medicaid programs were due to reductions in inpatient services, which fell by 22.7 percent – 30.3 percent compared to projections,” the report explained. “Costs rose in key areas for IHC such as outpatient clinic services (45.7 percent), largely as a result of planned payment changes.”
Researchers explained that there were several key takeaways they wanted other states to take note of, including that enhanced fee-for-service was associated with increased physician participation in Medicaid and improved beneficiary access. Additionally, blended payments – that include capitation and robust quality rewards – were associated with reduced inpatient and emergency department costs and utilization.
The report also explained that Medicaid contractors can support community-based practices with feedback on quality, population measures, and patient resources. It is similar to how an accountable care organization supports its member practices, researchers said.
“Cost reduction rates were still rising in the fourth year, nearly doubling each year, suggesting a long maturation period or a lag in realizing cost reductions,” the report said. “These findings are consistent with related studies, particularly in the relationship between increased primary care expenditures and reduced inpatient and emergency department costs and utilization, and with other PCMH demonstration projects.”
