United Hospital Fund Report Rethinks Service Delivery for Some of the Highest-Cost Medicaid Patients

Report Concludes Policy Changes on Health Care Financing and Reimbursement Are Needed to Improve Outcomes, Reduce Spending

Release Date: 04.09.2009
Contact: rdeluna@uhfnyc.org
Contact Phone: 212-494-0733

A new report from the Medicaid Institute™ at United Hospital Fund, "Rethinking Service Delivery for High-Cost Medicaid Patients," lays out the formidable challenges to improving care for certain high-cost Medicaid beneficiaries, focusing on those with multiple and substantial needs who rely disproportionately on costly hospital inpatient services. The report also considers policy affecting health care finances and reimbursement, noting that changes would be needed to pursue Medicaid savings.

The report provides an overview of the United Hospital Fund's Medicaid High-Cost Care Initiative, which was launched in 2005 to stimulate new practices and policies to improve care for and reduce Medicaid spending on these high-cost Medicaid beneficiaries. To put the challenge in context, the 4.5 million Medicaid beneficiaries in New York who did not use long-term care services in FFY 2004 collectively accounted for $16 billion in Medicaid spending; the top 1 percent, numbering about 45,000, accounted for 20 percent of that spending, or $3 billion, at a per capita average of $71,000. While these patients use a broad array of services, hospital inpatient care-- which is always expensive -- figures prominently.

The initiative involved analytic work (identifying patients, assessing patterns of service use, developing strategic options), program collaboration (awarding targeted grants to health care providers, which then conducted surveys and developed pilot interventions), and policy work (examining Medicaid reimbursement, considering what policy changes are needed).

The targeted populations of patients faced consistent health challenges, most with one or more chronic health conditions. About half had both a mental illness and a substance abuse condition. The majority was unemployed, and one-fourth to one-third had precarious housing arrangements. Among the high-cost patients, the most frequently reported usual source of care was the emergency department.

"The health care needs of these beneficiaries are complex, and their problems are not quickly or easily resolved," said Jim Tallon, president of the Fund. "But we were able to show, in a small sampling, that it is possible to reduce inpatient stays and improve patterns of care, with the potential to save the Medicaid program a lot of money in the long run, as well as dramatically improving the lives of these patients. What it takes is an unprecedented level of coordination between health care services and social supports, which will require new approaches to service delivery and changes in reimbursement policy."

The Fund's Medicaid High-Cost Care Initiative ran from 2005 to 2008. The Fund and The New York Community Trust awarded nearly $1 million in grant support to seven participating organizations: Bellevue Hospital Center, Woodhull Medical and Mental Health Center -- which are both New York City Health and Hospitals Corporation (HHC) facilities-- Montefiore Medical Center, NewYork-Presbyterian Hospital, Bronx-Lebanon Hospital Center, Maimonides Medical Center, and Visiting Nurse Service of New York. The report outlines the different approaches taken by several, as well as potential policy ramifications and other lessons learned.

Among the successes, patients in the Bellevue pilot test recorded dramatic reductions in emergency department visits (67 percent) and inpatient admissions (45 percent). (Bellevue will soon have the opportunity to test its approach on a larger scale, with the receipt by its parent organization -- the New York City Health and Hospitals Corporation -- of a $1.75 million grant through the state Department of Health's Chronic Illness Demonstration Project.)

A notable feature of the Medicaid High-Cost Care Initiative was its willingness to address social barriers to care; for example, stable supportive housing situations were identified as a potential way to reduce frequent hospitalizations.

Snapshot profiles of five representative high-cost patients are also provided, illustrating the depth and complexity, as well as the diversity, of health challenges.

The full report is available.

The report was written by Michael Birnbaum, director of policy for the Medicaid Institute™ at United Hospital Fund, and Deborah E. Halper, vice president for education and program initiatives at the Fund.


About the United Hospital Fund: The United Hospital Fund is a health services research and philanthropic organization whose mission is to shape positive change in health care for the people of New York.

About the Medicaid Institute™: The Medicaid Institute at United Hospital Fund provides information and analysis explaining New York's Medicaid program, with the goal of helping all stakeholders redesign, restructure, and rebuild the program.

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