The proposed Fiscal Year 2012-2013 budget (in Conference Committee for final touches as of this writing) includes funding and authorization for Ohio to take up the “Health Home” option for Medicaid beneficiaries in the Affordable Care Act.  This provision supports the goal of the Governor’s Office of Health Transformation (OHT) to provide better care coordination for people with multiple chronic conditions, including severe mental illness. Better care coordination and disease management will lead to better patient health — and cost savings.

According to OHT, only 4% of Medicaid enrollees account for HALF of Medicaid spending in Ohio. Among those 4% – or “Hot Spotters” – are people with multiple chronic conditions (including severe mental illness) who cycle in and out of high cost institutional settings – emergency rooms and inpatient hospitals – because they lack care coordination and help with disease management (read Atul Gawande’s “Hotspotters” article in the January 17, 2011 New Yorker). Director of Health Ted Wymyslo has already convened a Health Homes Task Force to start planning Ohio’s exciting initiative.

But wait, there’s more. For two years, Ohio will receive a 90:10 match for state investment in Medicaid Health Homes (the feds pay 90%). That’s right: the federal government will turn $4.7 million (Ohio’s proposed investment) into $47 million.

The new matching funds must be spent on essential services for people with serious chronic health conditions that our current, fee for service system, doesn’t pay for. These services include: Comprehensive care management; Care coordination and health promotion; Comprehensive transitional care from inpatient to outpatient settings; Individual and family support; referral to community and social support services, if relevant; the use of health information technology to link services, as feasible and appropriate.

Take one of those: “comprehensive transitional care from inpatient to outpatient settings.” Too many Ohioans, especially older adults and others with chronic health problems, are discharged from the hospital and suffer a preventable readmission because of poor transitional care. Even worse, older adults and people with disabilities too often transition into nursing homes (sometimes with a one-way ticket) simply because they lack transitional care planning to get them back home. That’s a tragedy for people and a rip-off of taxpayers.

So why, then, isn’t Ohio putting more than $4.7 million into the budget for Health Homes? Everyone working on Health Homes in Ohio knows we could certainly create more Health Homes with more money. The answer from lawmakers: “There isn’t more money.”

My answer to lawmakers: Then find more revenue (please, don’t take it from other essential services). If you don’t know where to find revenue, ask the folks at Center for Community Solutions and Policy Matters Ohio. They can point out tax “expenditures” – aka loopholes or tax breaks – for special interests in Ohio law that we can no longer afford. Or the huge income tax cut to the wealthiest Ohioans, who have not shared in the Recession pain that’s leaving too many Ohioans hungry and homeless.

Simple message: Ohio’s budget needs to invest more than $4.7 million in Health Homes.

Ohio Budget Shenanigans:

Medicaid Managed Care Plans Try to Protect Themselves from Accountability for Quality; Will the Ohio General Assembly Go Along?

Periodically during the budget process, State House reporters have asked me why the managed care plans seem so happy with the budget. At least a part of the answer is found in language that first appeared in the Ohio FY 2012-2013 budget, as passed by the House of Representatives.

One of the bedrocks of health care reform is that we must change how we pay for health care. The current “fee-for-service” system pays for volume, instead of health outcomes, leading to the troubling estimate that 30-40% of current health spending provides either no value or negative value. Thus, the Kasich administration and consumer advocates agree with national experts that we must start rewarding better patient outcomes and population health – and reduce payments for lower than expected results.  

Thus, consumer advocates – and, apparently the administration – were surprised to discover a new provision in the budget bill (HB 153), as passed by the House, that would insulate the Medicaid managed care plans from financial incentives to improve their patients’ health outcomes.  

For several years, 1% of the premiums paid by the state to the Medicaid MCOs were at risk for performance benchmarks. In other words, if an MCO did not achieve those quality benchmarks, they didn’t receive that final 1%. 1% is an awfully small amount to have at risk for meeting quality standards. If we truly want to incentivize MCOs to improve patient outcomes, the state may want to put considerably more than 1% of premiums at risk.

However, the new language “clarifies [sic] that the sum of all withholdings for the Managed Care performance program shall equal no greater than 1% of total premiums.” In other words, the Medicaid Managed Care Plans – capably represented by the Ohio Association of Health Plans – have protected themselves from being held financially accountable for making their enrollees healthier or reducing avoidable health expenditures (such as avoidable emergency room visits or hospital admissions). This provision, which appears to have survived in the Senate, completely undercuts the administration’s ability to create incentives for the Medicaid Managed Care Plans to achieve better care at lower costs.

The challenge with efforts to provide better care at lower costs is that one person’s savings is another person’s revenues. As the Kasich administration rightly pointed out in their budget rollout, if we are going to reduce Medicaid spending, we have to look at where the big spending is. With Ohio paying $6 billion or more to the Medicaid MCOs, it’s time to hold them accountable for performance measures – just as we must do with hospitals and other providers. The 1% cap on MCOs’ pay for performance exposure is the wrong medicine for what’s ailing Medicaid.

The Kasich Administration Budget on Health Care – [Ohio Consumers for Health Coverage]