Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
When one thinks of the areas targeted for healthcare delivery reform by the Patient Protection and Affordable Care Act (PPACA), Medicare, the largest area for healthcare spending by the federal government, obviously comes to mind. Notably, there are more than 400 Medicare accountable care organizations, and that figure is projected to rise in the coming years.
However, Medicaid is another significant and growing area of healthcare spending that could benefit from reform.
According to the Centers for Medicare and Medicaid Services (CMS), as of February 2015, 70.5 million people—more than one in every five Americans and 25 percent more than the number of Medicare beneficiaries—were enrolled in Medicaid or the Children’s Health Insurance Program, which represents an increase of almost 40 percent from the number enrolled at the end of 2009.
In 2013, the federal government and states together spent $438 billion on Medicaid, with $250 billion (57 percent) covered by the federal government. With 28 states and the District of Columbia expanding Medicaid coverage, in 2015 the federal government will spend $343 billion on Medicaid, an amount equal to 9 percent of total federal outlays and two-thirds of Medicare expenditures. Taking into account funding by the states, well over half a trillion dollars will be spent in total on Medicaid in 2015.
Moreover, spending on Medicaid is projected to eclipse the growth of the U.S. economy over the course of the next decade. The Congressional Budget Office projects the federal government’s spending on Medicaid will reach $576 billion in 2025, a compound annual growth rate (CAGR) of 5.3 percent over 2015 to 2025. That compares with projected a 4.3 percent CAGR for U.S. gross domestic product for the same period.
Although the coverage or access-to-care issue has been partially addressed via Medicaid expansion—with much more work to be done—how to provide high-quality care in a cost-effective manner through Medicaid constitutes the next challenge.
Guest post by Ken Perez, vice president of healthcare policy,Omnicell.
Accountable care organizations (ACOs) are primarily associated with Medicare or commercial payer-led arrangements. However, the Affordable Care Act (ACA) also authorized limited demonstrations that allow states to test Pediatric ACOs from 2012-2016. In addition, the Centers for Medicare and Medicaid Services (CMS) has provided guidance letters to several state Medicaid directors on how to implement integrated care models, which may include ACOs, in their Medicaid programs.
With this encouragement from CMS and the need to rein in Medicaid spending—which is generally increasing due to the ACA and is shared by the federal government and states—it is estimated that about half of the states are at some stage of planning Medicaid ACOs.
This emerging trend runs counter to a couple of the conventional caveats about ACOs—they won’t scale to handle large populations, and they won’t work with patients who are economically disadvantaged.
However, these caveats are being challenged by the experiences of Colorado, Utah and Oregon, respectively, as well as the plans for North Carolina’s Medicaid ACO program.
Colorado’s Accountable Care Collaborative (ACC) has been in existence since 2011 and today has more than 350,000 members, almost half of the state’s Medicaid population. The ACC has focused on connecting members with their primary care physicians, using care coordinators, and leveraging analytics extensively.
According to the report on the ACC’s most recent fiscal year, which ended in June 2013, the program generated gross savings of $44 million, returning $6 million to the state after expenses. It accomplished this in part by reducing hospital re-admissions by between 15 percent and 20 percent and decreasing the use of high-cost imaging services by 25 percent versus a comparison population prior to implementation of the program. In addition, relative to clients not enrolled in the ACC program, it slowed the growth of emergency department utilization, lowered rates of exacerbated chronic health conditions (e.g., hypertension by 5 percent and diabetes by 9 percent), and reduced hospital admissions for chronic obstructive pulmonary disease patients by 22 percent. Most importantly, Colorado has seen improved health for the ACC member population.