BETHESDA, MD – A recent study in Health Affairs examines for the first time the effects that differences in healthcare service volume and price, rather than simply spending and use, have on state and regional Medicaid spending.
The study undertaken by Todd P. Gilmer and Richard G. Kronick reveals that variations in Medicaid spending across the country are influenced more by the volume of services offered to patients than by the prices of those services.
Gilmer and Kronick examined the Medicaid cash assistance claims data for the 2001-2005 period for acute care services, including inpatient hospital services, outpatient services, and prescription drugs, to aggregate state-by-state service volume and price figures. Gilmer told Healthcare Finance News that, based on data from this analysis, he concluded that "volume seemed to be more important than price in overall cost."
In many regions, states ranking lower than average in inpatient services provided and higher than average in outpatient services provided offset higher outpatient prices and pharmaceutical fills, achieving lower overall costs than the national Medicaid average. States with higher numbers of outpatient visits also frequently saw lower hospital admissions rates, leading Gilmer to deduce that "providing more outpatient care can help improve quality and even reduce costs" in state Medicaid systems.
While the South Central region (Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Oklahoma, Tennessee, and Texas) saw the least expensive regional care in the country due to low prices and volume of services, New England saw the highest quality results for the lowest cost. The New England region's higher volume of prescription fills and higher prices for outpatient visits were offset by fewer hospital stays and lower pharmaceutical prices.
Medicaid program characteristics and market supply factors also influenced the variations in states' costs. Higher numbers of hospital beds, specialists and higher average daily hospital payments via Medicaid reimbursements were associated with higher hospital admissions rates. Higher numbers of primary care physicians, outpatient visits, and higher outpatient visit payments via Medicaid were linked with reduced hospital admissions.
According to Gilmer, this suggests a "relationship" between "the robustness of a primary care system" and the quality and cost of Medicaid care.
Ultimately, Gilmer said, the results of this study offer state Medicaid directors valuable benchmarking information and may aid "quality improvement and cost control." With data generated about service mix, access and price, he hopes this study will help "inform federal policies around supporting primary care" and provide useful information for "a variety of stakeholders."
Although Gilmer anticipates that the study's findings will "take a while to disseminate," he and his co-author have thus far received "overall positive" responses from Medicaid officials.