Several states are taking steps to revamp their Medicaid programs to increase savings and provide better service to program recipients.
Spurred on by the Centers for Medicare and Medicaid Services and the Deficit Reduction Act of 2005, states including Idaho, Kentucky and West Virginia are looking to fundamentally change the way Medicaid services are provided and ultimately control one of the biggest of all state budget outlays.
CMS is helping to bankroll the reform effort, offering approximately $2 billion to state Medicaid agencies for program re-engineering, with another $150 million in "transformation grants" coming as a result of the deficit reduction act.
These initiatives are prodding some states to tackle one of their biggest budgetary drains - most Medicaid programs have been plagued by inefficiencies, overuse and skyrocketing costs.
Yet while these new state initiatives are a step in the right direction, they only scratch the surface of a vast problem that has been decades in the making, said Matt Salo, director of the health and human services committee of the National Governors Association.
"DRA is helping to create innovation at the state level, but compared with the big picture, these programs are merely window dressing," he said. "Nothing will change dramatically until the big issues are addressed - healthcare costs that are increasing at three times the rate of inflation, a disproportionate amount of Medicaid funds spent for long-term care and the erosion of employer-based health insurance in the private sector."
Still, Salo says, "What the states are doing is incredibly important, with a focus on prevention and getting people engaged in their own health management."
While the idea of directing Medicaid beneficiaries into a managed care-type plan isn't new - it has achieved isolated success in states like Arizona - this latest push may have a more profound impact on fundamentally changing the Medicaid program nationally, state Medicaid agency officials contend.
Though still in its initial stages, the Kentucky program, called KyHealth Choices, is slowly picking up steam, said Deborah Anderson of the state's Medicaid office of health policy.
The Kentucky approach divides the beneficiary population into four specific categories: the general population, two classifications for children and the "medically fragile."
The program raises co-pay levels for adults and sets limits on prescription drugs, but beneficiaries who sign up for disease prevention classes can get extra benefits.
"This is a complete transformation, a modernization of Medicaid," Anderson said. "When we're through, we'll offer an enhanced service and have rates based on acuity levels. We will have individuals actually participating in their own healthcare, and we'll slow the trend so that Medicaid is sustainable for generations to come."
West Virginia's initiative also focuses on wellness by getting beneficiaries to sign a contract in which they agree to make healthier decisions, keep doctor's appointments and use the emergency department only for emergencies. The pacts aren't mandatory, but those who refuse to sign will receive reduced benefits.
"It's an educational tool, a way for us to inform members that there are healthy and unhealthy practices," said Shannon Riley, executive assistant to the West Virginia Medicaid commissioner. "It makes them a partner in their own care rather than passive users of the system. This is a restructuring of healthcare, bringing the patient up from the bottom of the pyramid to a point on the triangle."
The West Virginia program will be more expensive in the short term, Riley said, but officials are convinced it will yield dividends down the road.
"We're not concerned about cost containment at this point," she said. "That will come if this program succeeds."