No Easy Task: "Reinventing" Medicaid To Improve Health, Contain Costs

Apr 30, 2015

Today is the due date for a plan to cut nearly $180 million dollars from Medicaid. Half of that is state funding, the other matching federal dollars. To close a burgeoning state budget gap, Gov. Gina Raimondo has proposed cutting hospital and nursing home payments. Her “Reinvent Medicaid” task force delivers its recommendations today for finding the rest of the savings in the state’s health insurance program for the poor. Their proposals are aimed at reducing the cost of caring for some of the most complex patients.

Patients like Juana Kollie.

Kollie had a stroke a few years ago, and his health deteriorated. He’s the kind of patient who could cost Medicaid lots of money by landing in a nursing home. That’s not his fault.  And sometimes a nursing home is the best option for frail, older people with a tangle of medical problems. But in a state that spends nearly $320 million dollars a year on nursing home care – like Rhode Island – keeping people out of them is appealing when you’re trying to whittle down a budget deficit.

Juana Kollie visits with staff at the PACE health center in South Providence.
Credit Kristin Gourlay / RIPR

Here’s one way to do that.

All Inclusive Care, At Home
Kollie plays a friendly game of horseshoes with his peers in the PACE health center in South Providence. PACE stands for Program of All Inclusive Care for the Elderly. Many PACE participants like Kollie come here during the day to socialize and get medical care. PACE is part insurance program, part health clinic, part activity center, all rolled into one.

“When I came, I don’t have good memory,” Kollie explained. “My memory was bad because I had a stroke. This is why you see me using a cane. The whole side.

Kollie says his Liberian accent, plus the lingering effects of a stroke, make him a bit difficult to understand. But what’s clear is that after the stroke, he and his wife struggled to manage the new complexities of his care. He was headed for a nursing home. Since enrolling in PACE, Kollie says his memory has improved. A visiting nurse helps him manage his medications at home. And physical therapy has helped him kick the cane over his shoulder most days.

“They always laugh at me! I can put my cane on this shoulder,” said Kollie.

PACE CEO Joan Kwiatkowski, left, with Dr. Tsewang Gyurmey, who leads PACE's medical team, smile beneath participants' artwork.
Credit Kristin Gourlay / RIPR

PACE head Joan Kwiatkowski explains that PACE programs have been around for decades. They exist all over the country, caring for participants who are mostly older and could be in a nursing home. PACE surrounds them with services to help them stay in their homes longer.

Most participants qualify for both Medicare – the federal health plan for older or disabled Americans – and Medicaid, the state health program for the poor. Those programs pay PACE a set monthly fee for each participant. And PACE decides how to use the money. The incentive is to keep patients healthy – and fix problems before they escalate.

“So it’s the timeliness of intervention, it’s identifying things really quickly, and it’s responding really quickly,” said Kwiatkowski. “When you respond quicker with a less intrusive or less dramatic intervention, you are going to save money because they’re not going to the emergency room for that work up.”

A Long History of Attempts At Reform, But Costs Keep Rising
By many accounts, PACE embodies the holy trinity of health care policy: they’ve managed to contain costs, keep patients healthier, and provide high quality care. It’s the kind of program Rhode Island has been trying to expand for years to tamp down rising long term care costs.

Rhode Island’s Executive Office of Health and Human Services secretary Elizabeth Roberts says the state has moved some elders out of nursing homes, but there are more who could be at home.  

“We are still struggling with, how do we have more resources available for people to stay in their homes, in the community,” said Roberts, “while still supporting nursing homes for those who need them. And that rebalancing, we still have some work to do.”

But moving people out of nursing homes is just one piece of a Medicaid puzzle that’s vexed state officials for years.  Roberts’ office compiled a list of 22 separate initiatives to reform Medicaid since 2009.

Despite all those efforts, Medicaid spending has continued to rise. Why? Medicaid officials say it’s partly because health care services cost more every year, and every year more people enroll. It’s why Governor Gina Raimondo called for a major overhaul of the program nearly one in four Rhode Islanders depends on.

One of Gov. Gina Raimondo's first orders after taking office was the creation of the "Reinvent Medicaid" task force.
Credit Office of Governor Gina Raimondo

The plan includes a three percent rate cut for nursing homes and a five percent cut for hospitals. Nursing home representatives say that could affect the quality of care they deliver. Hospitals hope the savings can be reinvested in hospitals in the future. Health and human services secretary Elizabeth Roberts agrees that cutting rates might help the short-term budget outlook.

“The more important conversation is about how we change things for the long term,” said Roberts. “Because the reality is for the nursing homes and other providers, they’ve been here year after year with the same struggle, which is a rate freeze or rate cut. Because we’re never actually getting at the issue of how we manage people’s care in a more affordable, high quality way.”

Changing The Delivery System
“Figuring out how to change the health care delivery system writ large has been a tough nut to crack,” said Linda Katz, a member of the governor’s task force on Medicaid and policy analyst for the Economic Progress Institute.  She says Rhode Island must look beyond Medicaid to fix other pieces of the puzzle, like creating more affordable housing or paying home care attendants better wages.

“I think that we have not been thoughtful about making the necessary investments to support the goal of helping people stay in their homes as long as possible, or to transition people out of facilities that were not really necessary for their needs.

The task force will deliver a list of initiatives aimed at keeping people out of nursing homes and hospitals, like expanding assisted living facilities. Other recommendations zero in on the small number of Medicaid recipients – about seven percent – who account for about two thirds of the program’s costs because of their complex health needs. Proposals include expanding the role of community health teams that visit some of those patients at home and integrating primary and behavioral health care for kids with special needs.

Katz says she’s hopeful this effort to address Medicaid spending is more focused on avoiding the mistakes of the past: “At least there are some of the pieces people identified as being necessary for years but were never put in place.”

Changing the way we deliver health care, like paying doctors for the quality of care they provide rather than the quantity of services they provide, or coordinating a patient’s care among different health care providers to prevent manageable problems from becoming big, expensive emergencies, takes time, and there’s often disagreement about how to implement those changes. But Katz says that’s what’s needed to rein in spending and improve health. 

For the short-term, a better-than-expected budget picture could mean some of the proposed cuts won’t have to be as deep.