HHS targets Medicaid costs with new coordinated care models

Targeting Medicaid costs, the U.S. Department of Health & Human Services (HHS) on Friday announced new demonstration projects regarding financial models for coordinated care to reduce spending and improve care.

Fifteen percent of Medicaid beneficiaries qualify for both Medicare and Medicaid; these beneficiaries account for 40 percent of healthcare costs, according to a statement from Administrator Don Berwick of the Centers for Medicare & Medicaid Services (CMS) on Friday.

The Medicare-Medicaid Coordination Office, formed under the Affordable Care Act, is aimed at addressing fragmentation of dual eligibles, such as patients with diabetes, depression, hypertension, and a history of strokes.

"Their healthcare costs are high because they have substantial health needs, said Berwick. "But their costs are also higher because these beneficiaries must navigate two different programs. This fragmentation leads to needlessly expensive, inefficient, and often duplicative care," he said.

The CMS Center for Medicare & Medicaid Innovation will test new financial models to see if they save money and ensure quality of care, as they are intended, according to a CMS press release on Friday.

CMS will test a state-CMS-health plan contract for managed care in which parties will receive payments based on coordinated, comprehensive care. CMS and states also will enter into an agreement in which the state would be eligible for benefits from managing fee-for-service initiatives.

In addition, CMS will establish a new demonstration project for preventing inpatient hospitalizations of nursing facility residents, most of whom are Medicaid and/or Medicare beneficiaries. In 2005, 40 percent of hospital admissions (314,000) of nursing facility residents were preventable, totaling $2.6 billion in Medicare costs, according to the press release.

"By improving care to the most vulnerable of our citizens, we can improve the quality of their lives and prevent wasteful spending," said HHS Secretary Kathleen Sebelius in the press release. "Governors and their staff have been looking for tools to help them accomplish these important goals. I am pleased that we can continue our strong partnership with the states to do this."

To learn more:
- read the Berwick statement
- check out the CMS press release

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