Report recommends outcome-based MaineCare overhaul to save money

Posted Dec. 07, 2012, at 5:41 p.m.

AUGUSTA, Maine — A nine-member task force charged with finding $5.25 million in short-term savings in the state’s Medicaid program this year has fallen short of its savings target. But the group is recommending a long-range approach that it thinks can yield future savings by emphasizing payments to health-care providers for positive outcomes rather than procedures.

The emphasis on positive outcomes is contained in the draft report of the state’s MaineCare Redesign Task Force, which started meeting in August to consider short- and long-term changes to the state’s Medicaid program. Maine’s Medicaid program has frequently exceeded its budget and is currently facing a $100 million budget gap for the fiscal year that ends June 30, 2013.

The public will have a chance to weigh in on the task force’s draft report Tuesday at a hearing scheduled for 1 p.m. in Room 228 of the State House.

In its 71-page report, the MaineCare Redesign Task Force recommends a range of short-term savings initiatives that the panel estimates can save the state $1.35 million during the current budget year. The task force estimates its money-saving initiatives will save the state $11.28 million in the 2013-14 budget year and $22.59 million the year after that.

Every dollar saved at the state level translates into additional savings for the federal government, which picks up about 63 percent of Maine’s Medicaid costs.

It was a difficult task to develop recommendations that would result in immediate savings, said Ryan Low, a task force member and a former state finance commissioner. Any significant change to the Medicaid program requires some level of approval — either from the state Legislature, from the federal government or both — and oftentimes changes to state rules.

“We’re halfway through fiscal year ’13,” Low said. “If you build in any kind of approval time period, now you’re talking about April. That meant trying to find $5 million worth of savings in one quarter, essentially. I just don’t think it was realistic.”

Some of the short-term savings recommendations include cutting off or reducing Medicaid reimbursements for certain costly and often unnecessary procedures — like elective C-sections and some radiology services.

The panel’s report also suggests adding to the list of hospital-acquired conditions for which Medicaid won’t cover treatment, and cutting back on Medicaid reimbursements to hospitals when patients are readmitted for the same conditions shortly after their release.

“What we heard very clearly from the task force was they didn’t want to take short-term action that would preclude longer-term structural redesign of the program,” said Stefanie Nadeau, MaineCare Services director at the state Department of Health and Human Services.

To that end, the task force stayed away from recommending blanket reductions in the rates at which Medicaid reimburses hospitals and other health care providers for treatment. And the group recommended reversing a change the state made in recent months to eliminate coverage for prescription anti-smoking medications.

“We think adding back in smoking cessation products, even though it’s a small cost, has been shown to save money,” said Jack Comart, litigation director for Maine Equal Justice Partners and a task force member representing Medicaid recipients.

The task force also recommended, at an annual cost of $3.15 million, paying for dental benefits for patients who use the emergency room to treat dental problems. That’s among a number of recommendations in the report designed to reduce expensive emergency room visits.

One short-term savings recommendation in the task force’s report would end Medicaid reimbursement to nursing homes and other residential facilities for hospital leave days — days when patients aren’t in the facility because they’re receiving hospital care. The report estimates a $160,000 savings for that change this fiscal year, but it’s a change that probably will end up costing more in the long run, Comart said.

Reimbursement for leave days can effectively reserve a patient’s bed while the patient is away, Comart said. Without it, a nursing home might have to fill the bed immediately with another patient, leaving the original patient in the more-expensive hospital.

“You don’t need to be there,” he said. “You don’t need that level of care, but you have no place to go.”

Nadeau, the MaineCare Services director, said that costly dilemma is a likely “unintended consequence” of stopping leave day reimbursements.

“Somehow, we’ve got to strike a balance,” she said. “That is absolutely something that the department is grappling with and that the task force is grappling with.”

The document makes repeated mention of the fact that 5 percent of Medicaid patients account for 54 percent of Medicaid costs. The most expensive patients — who often have developmental disabilities that require constant care in specialized facilities — cost the state’s Medicaid program, on average, $68,562 annually, compared to $937 annually for the bottom 80 percent of Medicaid patients.

Nadeau said the key reforms recommended in the MaineCare redesign report target the most expensive Medicaid patient populations. Those reforms include shifting to an approach that reimburses health care providers for positive outcomes among patients, rather than reimbursing them for the number of procedures they administer. The state’s Medicaid program has piloted the approach with some patients over the past few years, Nadeau said.

The task force’s report recommends that the state use a contractor to implement this new approach and that state officials write particular savings targets into the contract as a way to ensure the state saves money.

“This report says we’re not going to do some of those short-term things that are sort of kicking the can down the road,” Comart said. “We chose not to do those things that have some appeal for the very short term, but for anyone who understands the health care system, they wouldn’t save any money in the long term.”

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