States focus on high-risk patients to drop Medicaid spending

States have mixed results when coordinating patient care and addressing the social determinants of health to manage healthcare costs for high-cost Medicaid beneficiaries, according to a new Government Accountability Office report released Thursday.

The GAO found that all the states surveyed offered care management assistance to providers to better manage physical and mental health conditions for fee-for-service beneficiaries. Most of the states also contracted with managed care organizations to care for high-cost beneficiaries for a fixed payment. Many of the states used other strategies to control expenditures for high-cost beneficiaries such as case managers, mandatory care management services for particular fee-for-service beneficiaries and home health programs.

But these efforts have had inconsistent results. While some states reported that they’d experienced a decrease in care costs and utilization for their high-expenditure beneficiaries, others said their findings were mixed or inconclusive.

States and federal officials are scrambling to find ways to reduce Medicaid spending, which is expected to cost $1 trillion by 2026. About half of that spending is attributable to just 5% of Medicaid recipients so figuring out how to reign in the cost of care for high-cost beneficiaries is critical.

“There’s no good solution because like the report says . . . it so often has to do with everything other than healthcare,” said Kate McDonald, Partner at McDermott Will & Emery.

Officials told GAO that the most significant barriers to care management stem from the inability to contact beneficiaries, social determinants of health and staff shortages in rural areas. Recipients are often challenging to get in touch with because of old contact information, transience and homelessness, or time-limited cell phone plans. A lack of basic needs like transportation, housing or food can lead to missed doctor appointments and create or exacerbate health problems. And because care management is labor-intensive, it’s often hard to find people willing and able to care for high-risk beneficiaries in rural areas.

The report shows that states differed in how they identified or predicted high-cost Medicaid beneficiaries. Most states said that they use risk scores but calculate them differently or use them in combination with contextual information like the recent diagnosis of a chronic illness. Some states also use service utilization data to identify high-expenditure beneficiaries by looking for statistical outliers. They also used diagnoses of certain chronic diseases and other group categorizations, levels of service utilization, claims expenditure thresholds and clinical judgment to determine whether a beneficiary was or was likely to become high-cost.

GAO says that the CMS can help states identify and manage care for high-expenditure Medicaid recipients in several ways. The Health Home State Plan Option and Financial Alignment Initiative are tools the CMS offers to states to help them manage care. The former aids states in designing home health programs for high-risk beneficiaries, while the latter addresses financial misalignment problems for duel-eligible beneficiaries enrolled in both Medicare and Medicaid.

The CMS also provides educational and technical support to states through its Medicaid Innovation Accelerator Program, State Data Resource Center and the Medicare-Medicaid Data Integration Initiative.

GAO hopes states use the report to gather ideas and learn about how the CMS can help them, said Carolyn Yocom, a Director on GAO’s Health Care Team.

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