State Bets Paying Docs More Saves Medicaid Money

· May 31, 2011, 2:13 pm

Colorado's Medicaid agency is trying a new strategy that it says could eventually save close to $100 million a year. And those savings would come in large part because the agency would pay doctors more.  It's a strategy that mirrors what the Obama administration is trying to do with the federal Affordable Care Act. Colorado Public Radio Health Reporter Eric Whitney explains why there's optimism that it will work.

WHITNEY: One reason the U.S. health care system is so expensive is because too often it doesn't deal well with people like Brad Imer, a former heavy equipment operator who lives in Grand Junction.

IMER: I've been to one doctor about the bone spurs in my shoulder, another one about the discs in my back, and another one about my carpal tunnel.

WHITNEY: That's in addition to his primary care doctor, who helps him manage his diabetes, and the counselor he sees to help him with his chronic pain and weight loss issues.

IMER: If I tell you this, you won't believe it: I take 17 different medications, plus five shots of insulin a day.

WHITNEY: Imer has a lot to deal with, health-wise. And the way the health system works now, every doctor he sees has a financial incentive to order a test or x-ray, even if the last doctor he saw just did the same thing.
Imer’s lucky, because his primary care doctor monitors all facets of his medical care. He makes sure he’s not getting conflicting prescriptions from different doctors, and that Imer has regular screenings to keep him from needing really expensive care like dialysis.
It’s valuable, money-saving work, but in general, there’s no way for doctors to bill for it.

Laurel Karabostos, the state's deputy Medicaid director says, now there will be.

KARABOSTOS: We'll actually be making a new payment to them, for them to provide these medical home services.

WHITNEY: That's right- Medicaid, the cash-strapped agency famous for under-paying doctors to save money, is now ready to pay them more if they agree to quarterback their patients through the fragmented and often confusing health care system.
So, where are they going to get the money to do that?

KARBOSTOS: We estimated that we would save the cost of the program, as well as 6 percent savings beyond that.

WHITNEY: Yep, Karabostos says paying doctors more will actually saved state Mediciad 6 percent.  Six percent of current state spending on Medicaid is about $96 million. She says the up-front payments to doctors will create savings down the line.

KARABOSTOS: There's a lot of our clients who haven't been hooked up with a medical home, and don't have someone that they call their primary care provider, so by doing that, we can potentially prevent unnecessary hospitalizations or emergency room visits, so that's the type of care that we're really focused on.

WHITNEY: Sounds good, but will it actually save money?

ATHERLY: Sure. Sure, managed care did this.

WHITNEY: Adam Atherly is a health care economist at the Colorado School of Public Health.

ATHERLY: Managed care did this 10 years ago, and they were extremely successful, and we had thousands of studies of managed care, and we found out that with managed care you save money and people are healthier, in general.

Whitney: But I don't know if there's a popular perception that managed care is a good thing?

Atherly: Oh no, there's not. Managed care is down there with the tobacco industry, in terms of evil entities.

WHITNEY: Managed care may have a bad rap in general, but it's not universal. And there are a lot of different ways to do managed care. Patrick Gordon is an executive at the non-profit Rocky Mountain Health Plans. They’ve figured out managed care works best when everybody in a given health care system is willing to work together.

GORDON: The only tool that's required is a table. If people can come around a table and communicate about what the needs in the community are, find ways to share information, find ways to cooperate, a lot can be accomplished through that cooperation.

ERKENBRAK: (Calling a meeting to order) So, guys...I don't mean to interrupt my two favorite hospital CEOs, who are in the room...

WHITNEY: This is one of the tables Gordon is talking about. It's the monthly meeting of the Mesa County Health Care Leadership Consortium. It's a mouthful to say, but basically it's most of the people in health care leadership positions in Grand Junction getting together to talk, including people whose businesses compete - like the CEOs of both hospitals.

They’ve been talking like this for years - they don’t always agree, but everybody here shares the goal of keeping the quality of health care in Grand Junction high, and believes that working together keeps everyone’s costs low.

It’s no surprise that the state is launching its pilot program to pay more for coordinated care here, and in Weld County, where there’s a similar system. The program is actually modelled in part on the way Grand Junction has been operating for years.
The pilot starts here in June, and then rolls out to the rest of the state. Results  - including whether paying more pays off - should be in in about 13 months.

[Photo courtesy St. Mary's Hospital and Regional Medical Center, Grand Junction]

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