State Medicaid Innovations Improving Health Care Delivery

States are using their considerable flexibility under Medicaid to streamline health care delivery and improve health, our new report shows, disproving claims by proponents of a Medicaid per capita cap that current Medicaid rules inhibit state reforms.

States are beginning to coordinate physical and behavioral health care services as well as social services.  They’re also moving to integrate services for their most vulnerable beneficiaries by improving communication and data sharing across health care providers and systems to provide effective health services in a timely way.  These efforts are improving health outcomes and making Medicaid more efficient by bridging the gap between health care and other services, such as housing assistance.

For example:

• Missouri has established “health homes” that coordinate care for beneficiaries with chronic physical health conditions or a diagnosed serious mental illness.  Early data from the program show a significant drop in emergency department visits and preventable hospitalizations. 
• Tennessee is one of 44 states participating in the Money Follows the Person program, which helps Medicaid beneficiaries transition from nursing facilities to their own homes, the home of a caregiver, or a community-based residential facility.  Tennessee’s program has produced significant state savings by reducing unnecessary nursing facility stays. 
• A Wisconsin hospital is testing a new way to integrate health services for children with complex medical needs, a rapidly growing group with high health care costs.  Participants are significantly more likely to report that their health needs are being met. 
• Oregon has established accountable care organizations — groups of providers and other entities that partner to provide a range of health care services in a coordinated way — to integrate hospital-based services with primary care, behavioral health care, and other social supports.  The initiative has produced significant declines in emergency department visits and preventable hospital admissions. 

Even as states experiment with new and effective ways to provide care, some policymakers continue to call for fundamentally restructuring federal Medicaid financing in the name of expanding state flexibility, which they claim would allow states to provide improved care at lower cost.  Yet the large and growing federal funding cuts from a per capita cap would force states either to significantly boost state funding or, more likely, to cut eligibility, benefits, and/or provider payments. 

The resulting financial squeeze could also halt or reverse progress toward integrating care and strengthening health care delivery by forcing Medicaid agencies to focus on making cuts rather than improving the delivery of care.