What is Medicaid?
Medicaid is a federally subsidized, state-run program that provides health insurance to more than 70 million people in the United States. Medicaid covers some of the nation’s most vulnerable patients: low-income adults and children, dual eligible patients (i.e., patients on both Medicare and Medicaid), disabled patients, patients requiring long-term care, and those struggling with behavioral health or substance abuse conditions. The program provides a critical safety net for these patients.
1. Health Outcomes Disparities
This safety net is especially important given that lower income patients have strikingly worse health outcomes compared to patients with higher incomes:
- Life expectancy up to 10 years shorter for women and 14 years shorter for men
- More functional limitation, chronic medical conditions and behavioral health issues than patients with no insurance at all
- Poor dental health in children
- Disparities often worse along racial/ethnic lines
“Social determinants of health” strongly drive these poor health outcomes; see the figure below for examples.
2. Financial Accessibility and Sustainability
To help address disparate outcomes, recent policy reform has sought to make Medicaid services accessible to more low-income patients by expanding financial eligibility.
What does this really mean? In 2019, the Federal Poverty Level for a family of three is $21,330/year and for an individual is $12,490/year. “Medicaid expansion” allows coverage of patients who earn up to 138% of the Federal Poverty Level.
37 states have adopted this income eligibility threshold, but the remaining states provide Medicaid coverage for patients up to a lower annual income threshold (see figure below). For these remaining states, many patients fall into a coverage gap – earning too much to qualify for Medicaid and too little to qualify for federally-subsidized private health insurance.
For the 37 states participating in Medicaid expansion, access to care increased for many. However, given our nation’s aging population, many questions have arisen about how to make Medicaid sustainable, high quality, and affordable. How to fund Medicaid from federal, state, and individual patient contributions has been the subject of significant national debate.
This debate is coming at a critical time as Medicaid expenditure in FY 2017 exceeded $570 billion, roughly 3% of the United States’ $19 trillion GDP. Medicaid is the third largest domestic program in the federal budget and expenditure has been growing at more than 5% per year.
How we can work to improve outcomes and reduce healthcare costs
The answer is a work in progress but we do have some initial data points. The United States healthcare system as a whole has begun shifting from fee-for-service to value-based care (i.e., reimbursement contingent primarily on quality of care rather than quantity of services provided). Recently, Medicaid ACOs (Accountable Care Organizations) have been developed as a way to bring value-based care to the Medicaid population.
Medicaid ACOs are implemented in many different ways, but are typically risk-sharing agreements between state Medicaid programs and providers of healthcare within the state.
The goal is to financially incentivize health systems to make better decisions, and thereby control costs and improve outcomes. In turn, if higher quality Medicaid services are provided at a lower cost, health systems get to share in the financial savings.
At least 10 states have active Medicaid ACO programs and many others are developing or contemplating developing such a program. In Massachusetts, 6 ACOs joined the MassHealth (Massachusetts Medicaid) ACO Pilot in December 2016. Based on the strength of initial results, a formal program with 17 Medicaid ACOs was launched in April 2018.
Insights from almost every Medicaid ACO in Massachusetts
Great – now all health systems have to do is make cost-effective and high-quality decisions, right? Unfortunately, accomplishing this can be as difficult as it sounds. We decided to speak with as many MassHealth ACO leaders as possible to better understand key pain points. Here’s what we learned:
1) “Who is in my Medicaid ACO?” MassHealth members are automatically enrolled in an ACO based on their primary care provider. Although health systems receive regular lists of Medicaid ACO members, this information is often not easily connected to existing electronic medical record, population health, or care management platforms. As a result, the right information is not always available for the right people in real-time.
2) “Behavioral health and substance abuse are toughest.” Some ACOs cited a lag in data as a result of privacy laws. Others described a lack of resources, programs, or community-based partnerships to get patients seen by the right providers. Many ACOs cited challenges in prioritizing interventions amongst these patients, given the prevalence of behavioral health issues in their assigned population.
3) “Adults and children.” Approximately half of all Medicaid patients are children. These children have diverse needs often varying by age but are also dependent on their parents for access to healthcare. Excluding pediatric hospitals, many inpatient facilities often have fewer pre-existing workflows for children than for chronic illness in the geriatric population.
4) “How do we impact social determinants of health?” Many systems used at least one electronic platform to track patients at risk. Health system leaders expressed that beyond plugging patients into publicly available resources, the best next step is often unclear. Follow-up questions included: How does one make sure the patient actually obtained access to appropriate services? How does a health system cope with factors that it cannot directly impact, but which make a massive difference to patient outcomes?
5) “How do I get in touch with my patients?” For Medicaid patients, care delivery often shifts to the ED and outpatient setting. A key question is how workflows and care priorities should be properly standardized to deliver cost-effective care in these settings.
The Path Forward (for improved healthcare delivery)
Providing cost-effective care for the Medicaid population will require innovative care delivery models, creative use of technology and data, and a commitment to addressing non-medical barriers to access.
Lessons learned from states that have already successfully piloted Medicaid ACOs further show that data collection, analytics, and community-based partnerships are specific keys to success.
These shifts in approach create new opportunities for both startups and established organizations to drive innovation. For example, our startup Radial Analytics has received funding from the National Science Foundation to provide actionable insights to point-of-care providers who see Medicaid patients in the ED.
We are partnering with a Massachusetts Medicaid ACO to pilot a new technology solution that addresses the above opportunity areas. Alongside work being done in the private sector, grants from state organizations such as the Massachusetts Health Policy Commission are prompting providers and payers to think creatively about how to leverage innovation to address challenges they see every day.
The next chapter of healthcare reform is being written today. Change is being embraced already by forward-thinking provider and payer organizations, and those who wait will have change forced upon them through regulation and shifting market dynamics. Change unlocks opportunity to deliver better care to the patient – our most important objective.
More about Radial Analytics
Radial Analytics is a Massachusetts-based startup and participant in the 2019 MassChallenge HealthTech program that has developed a platform for health systems participating in value-based care to improve quality and reduce expenditure. Our initial product, Smart Placement, is a real-time decision support solution that has been shown to avoid unnecessary SNF stays for elders while also boosting quality and outcomes. Our technology platform has broad applicability to other transitions of care and patient populations; we are now embarking on solutions to address both end-of-life care and social determinants of health.
CenterofBudgetandPolicyPriorities,“PolicyBasics:IntroductiontoMedicaid,”16-Aug-2016. [Online]. Available: https://www.cbpp.org/research/health/policy-basics-introduction-to-medicaid. [Accessed: 25-Aug-2017].
J. Paradise, “10 Things to Know about Medicaid: Setting the Facts Straight,” The Henry J. Kaiser Family Foundation, 09-Jun-2017. [Online]. Available: http://www.kff.org/medicaid/issue-brief/10- things-to-know-about-medicaid-setting-the-facts-straight/. [Accessed: 14-Aug-2017].
Raj Chetty, Michael Stepner, Sarash Abraham, “The Association Between Income and Life Expectancy in the United States, 2001-2014.,” JAMA, vol. 315, no. 16, pp. 1750–1766, Apr. 2016. Jaffer Shariff and Burton L. Edelstein, “Medicaid Meets Its Equal Access Requirement For Dental
Care, But Oral Health Disparaities Remain,” Health Aff, vol. 35, no. 12, pp. 2259–2267, Dec. 2016.
“Total Medicaid Spending,” The Henry J. Kaiser Family Foundation, 2017. [Online]. Available: http://www.kff.org/medicaid/state-indicator/total-medicaid- spending/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:% 22asc%22%7D. [Accessed: 15-Aug-2017].
“Average Annual Growth in Medicaid Spending,” The Henry J. Kaiser Family Foundation, 2017. [Online]. Available: http://www.kff.org/medicaid/state-indicator/growth-in-medicaid-spending/. [Accessed: 15-Aug-2017].