Illinois Medicaid Program Achieved Savings While Boosting Quality of Care

October 01, 2014 03:10 pm Michael Laff

Medicaid has offered an attractive venue for states and the federal government to pursue patient-centered medical home (PCMH) innovation experiments, but one state initiative that launched before PCMH certification even began offered potential lessons before it was curtailed for budget reasons, according to a recent study.

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Research by the Robert Graham Center for Policy Studies in Family Medicine and Primary Care found that increased payments for primary care physicians delivered via a blended payment model (fee-for-service, per-member per-month, and quality bonus) in Illinois were strongly associated with improved health outcomes for patients and reduction in overall health care costs.

Researchers analyzed Illinois Health Connect and Your Healthcare Plus, both contract Medicaid programs in the state that operated from 2006 to 2010. Results of the study( were published in the September/October issue of Annals of Family Medicine.

Together, the two programs increased investment in primary care and emphasized practice improvements that bear a striking resemblance to PCMH elements found in some accountable care organizations (ACOs). Illinois initiated this effort as part of a consent decree that found the state was in violation of federal law for not providing adequate access to care for its Medicaid population.

Story highlights
  • A pair of interrelated Medicaid programs in Illinois that featured enhanced payments for primary care and shared savings reported reductions in hospitalizations and ER visits among beneficiaries.
  • Physicians were able to access shared practice resources and received quality reports that highlighted the potential for shared savings.
  • Patients served by the programs also reported that quality of care improved.

Illinois Health Connect, a primary care case-management program, covered an estimated 1.7 million patients in 2010. In addition to fee-for-service payments, participating practices received a monthly fee for each patient; specifically, physicians received $2 for children, $3 for adults and $4 for the elderly and disabled. Claims for pediatric and adult care were paid within 30 and 60 days, respectively.

Physicians received quality measures from Illinois Health Connect along with estimates of the quality bonus they could earn if they demonstrated improvement. They could also access patients' claims information to determine whether patients were filling prescriptions and following up on referrals, or whether they were showing up in ERs or hospitals.

Between 2007 and 2010, Illinois Health Connect saved an estimated $237 million, and Your Healthcare Plus, a complementary disease-management program, saved $518 million. Hospitalization rates for patients in Illinois Health Connect dropped by 18 percent between 2006 and 2010, and patients in Your Healthcare Plus saw a decline in avoidable hospitalizations of nearly 10 percent during the same period.

In addition, ER visits among Illinois Health Connect beneficiaries were reduced by 5 percent, and those among patients in Your Healthcare Plus dropped by 4.6 percent. Although spending for outpatient clinical care increased -- due largely to planned payment changes -- inpatient spending declined significantly.

According to Robert Phillips Jr., M.D., M.S.P.H., lead author of the study and vice president for research and policy at the American Board of Family Medicine, the reduction in total spending was about 10 times higher than the increased spending on primary care. Savings were modest in the initial two years but then rose substantially during the next three years, consistent with the authors' conclusion that practice transformation requires at least three years before savings are realized.

The initiatives were continuing to save money when legislators dismantled the program in an effort to trim $3 billion from the state budget in one year. But with almost 90 percent of eligible physicians receiving bonus payments in 2011, Phillips said that state officials now are reconsidering that decision.

Engagement among physicians in the program was high, according to a 2012 survey of participants. Of those who responded, 82 percent said that provider profiles that included quality measures helped them make improvements to the practice. Another 75 percent said the bonus payment provided enough incentive to institute changes.

Moreover, in surveys of patients served by the programs, respondents reported that they thought the quality of care was improved.

Being able to access shared resources such as regular quality measurements and connect with a health information exchange that informed physicians if patients were admitted to the hospital proved particularly beneficial. "They could use shared resources as if they were part of an ACO without having to join one," Phillips said.

One major question remains: Can state initiatives that use public funding to enhance primary care successfully translate into the private insurance sector? Phillips thinks the effort could be undertaken with minimal risk.

"The risk on the insurer's side is small," Phillips said. "Insurance companies are only spending 5 percent on primary care, so even if they go up to 10 percent, that's a small chunk of their spending. The ACA (Patient Protection and Affordable Care Act) only allows insurance companies to make a 20 percent profit."