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Medicaid Costs and the Logic of IT-Facilitated Population Health: Yakima Valley Knows

May 25, 2015
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Recent GAO statistics speak to the need for truly innovative approaches to managing the care of Medicaid enrollees—such as those unfolding at the Yakima Valley Farm Workers Clinic

Statistics just published by the federal General Accounting Office (GAO) point to some challenging truths for the Medicaid program, which together with the Children’s Health Insurance Program (CHIP), provides healthcare coverage to nearly 60 million Americans, including children, pregnant women, parents, seniors, and individuals with disabilities.

According to the report, “Medicaid: A Small Share of Enrollees Consistently Accounted for a Large Share of Expenditures, published and released on May 8, “A small percentage of Medicaid-only enrollees—that is, those who were not also eligible for Medicare—consistently accounted for a large percentage of total Medicaid expenditures for Medicaid-only enrollees. IN each fiscal year from 2009 through 2011,” the report stated in its introduction, “the most expensive 5 percent of Medicaid-only enrollees accounted for almost half of the expenditures for all Medicaid-only enrollees. In contrast, the least expensive 50 percent of Medicaid-only enrollees accounted for less than 8 percent of the expenditures for these enrollees.”

But there’s more: percentage-wise, the Medicaid enrollees whose care cost the most had the following conditions: mental health conditions (52.64 percent), substance abuse (19.87 percent), diabetes (18.79 percent), asthma (14.2 percent), delivery or childbirth (9.95 percent), and long-term care residence (8.35 percent).  Setting aside delivery or childbirth and long-term care residence, the four other types of conditions are all clearly longer-term conditions that speak to the need for continuous monitoring and effective care management and population health management (with regard to robust health risk assessment across broad populations being cared for by the program).

Further, the vast majority of state governments are rapidly successively turning Medicaid into a broad managed care program, with utilization management, cost controls, and other elements of program management becoming more and more rigorously implemented, as cash-strapped states trim their budgets and work in particular to offset an explosion in long-term care-related Medicaid costs.

The simple fact of all this is plain: there is no going back to unmanaged Medicaid. And yet making population health management and care management work in a program like Medicaid, whose population is subject to personal instability and transience, behavioral health factors, and other vicissitudes, is inherently challenging.

So who’s making all this work? On the provider side, some pioneering medical groups are showing how Medicaid managed care can work—for all concerned—with plan members/enrollees receiving higher-quality care and more robust care management, leading to better outcomes, and with state governments—and therefore the taxpayers—getting more value for funds spent. But success requires intensive investment in and leveraging of, top-flight healthcare IT, for analytics, clinical decision support, and clinical and process improvement.

As I noted in my profile in our March-April issue, of the first-place winning team in HCI’s Innovator Awards Program this year, the leaders at the Toppenish, Washington-based Yakima Valley Farm Workers Clinic are making it happen. Caring for about 130,000 area residents annually, YVFWC’s executives embrace their community; led by CEO Carlos Olivares, they’ve been working furiously to optimally serve their community in ways that acknowledge the perpetually straitened healthcare budgets involved.

Indeed, Olivares and his colleagues at the 26-care-site organization have been focusing on leveraging data and IT in order to succeed in caring for this challenging-to-care-for population. “Typically,” Olivares told me, “large organizations look at their future, and begin to analyze data they already have, and then they say, ‘What do we want to do five years from now?’ That level of strategy is much more difficult to successfully pursue in small organizations that don’t have the data systems the larger ones have.” What’s more, he told me, “We cannot continue to ask our providers to work harder, see more patients, document more, and improve patient care. We need to tap into our data to help them make the right patient care decisions, faster, and with greater accuracy.”

Instead, working with the Burlington, Mass.-based Arcadia Healthcare Solutions), Olivares and his colleagues have invested heavily in IT, building a robust data warehouse that encompasses data from more than 10 sources; developed a comprehensive set of clinical reporting tools that integrates directly into the clinical workflow of the organization and provides physicians and other clinicians with dashboard-based indicators for chronic care management; and they’ve outsourced data analytics management to their partners at Arcadia Healthcare, for maximum operational efficiency.

As I noted in my profile, as a result of their successful leveraging of data, Olivares and his colleagues received $1.6 million in differential, value-based payments last year. And by achieving Level 3 NCQA recognition, they generated $3.50 per member per month in savings, translating into $3 million in incentive payments from payers, not only Medicaid managed care payers, but also commercial health plans.