Many state Medicaid programs suffer awful reputations: outrageously high per capita spending, mediocre care quality, coverage for medically dubious procedures, and widespread fraud, to name just a few problems.
The upside is that for states that can move beyond the politics of Medicaid, or at least head down that path, the opportunities to simultaneously reduce costs and improve patient care and population health are enormous – including some non-traditional services that are already demonstrating tangible results.
Take New York, for instance. The state is working to shed that tarnished image with a massive overhaul of what Medicaid pays for and how, under the navigation of health commissioner Nirav Shah, MD, whose sights are set on leaving fee-for-service entirely.
When Shah, a Buffalo native, came to lead the New York Department of Health, there was no option other than reform of some sort. The state’s $54 billion Medicaid program was growing 13 percent every year, accounting for one-third of the state’s budget and “crowding out education and everything else that we wanted to invest in,” Shah said.
Governor Andrew Cuomo created a Medicaid redesign team, “put 27 people around the table — union leaders, hospital managers, patient advocates, legislators — and said, ‘Figure it out, or else,’” as Shah recounted at a University of Pennsylvania speech in November. “People were scared. They said, ‘We need to figure this out.’”
So far, New York’s Medicaid patient-centered medical homes have helped cut the growth rate from 13 percent to 4 percent — a percentage that’s been set as the cap on future growth — which translates into about $34 billion over five years.
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A former Bellevue Hospital attending physician and comparative effectiveness researcher at NYU Langone and Geisinger Health System, Shah has brought a focus on prevention and evidence-based policies to Medicaid — and is aiming to have all 5.1 million beneficiaries covered through a patient-centered medical home by the end of next year.
Part of that focus on prevention for Shah includes directing Medicaid funding towards non-traditional services including supportive housing and nurses in urban schools, which the state has found help reduce teen pregnancy and youth ER admissions for asthma.
Supportive housing especially is an area Shah has set his sights on, and a part of the challenge in convincing state lawmakers and the federal government to pay for it is getting them to understand the ROI.
Today, Medicaid in New York pays about $750 a day for an inpatient hospital stay and $459 a day for inpatient psychiatry stay, while nationally, incarceration costs about $125 per person per day for jail, and homeless shelters cost about $68 per person a day — compared to $48 a day for supportive housing. “Housing is healthcare," Shah said. "Medicaid should pay.”
For now, though, New York may be going it alone, investing state-only Medicaid dollars in housing. Shah’s Department of Health asked the Centers for Medicare & Medicaid Services for $1 billion for supportive housing. “They said no, ‘We don’t pay for bricks and mortar,’” Shah recounted. “Oh yes you do if it’s called a nursing home. And you trap people in there who don’t need a nursing home.”
Shah may have a better chance getting state lawmakers to expand the nurse family partnership program statewide. Available to Medicaid-covered mothers in New York City since 2003 and expanded to several other counties since, the partnership program sends nurses to visit monthly during pregnancy and for two years following the birth — and it has fairly huge ROI, Shah said.
“There’ve been 33 years of randomized trials on this: it improves outcomes for kids, it improves outcomes for moms, it increases pregnancy spacing, it decreases abortion rates, it increases moms going back to work, it decreases special ed costs. Every dollar spent on the nurse family partnership saves society $5.70,” Shah said. “We want to put $100 million into the nurse family partnership program, because I want to save $570 million.”
Shah also has an outspokenness about the status quo in Medicaid and healthcare that, paired with his authority to regulate providers, has put New York on one of the most ambitious paths to Medicaid reform of any state.
“Everyone is gaming the system,” Shah said. “We were paying for a lot of things that we shouldn’t have been paying for.”
“One of my favorites was — and Medicaid pays for anything under the sun in New York — growth hormone shots for children with idiopathic short stature syndrome,” Shah said. “Idiopathic means they have normal growth hormones and we’re paying tens of thousands of dollars for growth hormone shots so at the end of the day instead of being 5”5’, they could be 5”7’.”
Another target of Shah’s has been invasive coronary stenting.
Two years ago, soon after Shah took office, he learned that 23 percent of all coronary angioplasties in New York would be considered unnecessary according to American Heart Association guidelines.
“I went on the road, gave a lot of speeches and said: Figure it out. Fill your cath labs with underserved women and minorities and everyone else who needs them who you aren’t bothering to treat, but don’t fill them inappropriately,” Shah said. “Today that rate is 8 percent. I haven’t withheld a single dollar, because it’s hard to change things, but that alone — you could do it in 50 other areas,” Shah said, adding: “Prostate cancer anyone?”
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The greater vision Shah has is of a state healthcare “ecosystem” with collaboration in addition to competition and innovation in addition to cost control. That vision includes greater transparency, for the benefit of taxpayers and beneficiaries — but also providers themselves.
For instance, when Hurricane Irene was approaching New York City two years ago, nursing homes in the line of the expected 20 foot storm surge spontaneously coordinated with nursing homes outside the flood zone to evacuate patients using facility vacancy data that the state had started publishing online just a month before.
The New York Department of Health is also putting more pressure on health systems to justify their nonprofit status through more robust and detailed communities benefit plans. About 10 percent of hospital revenue surpluses across the country are going toward community benefit, Shah said.
"Now if you look at that 10 percent, where is it actually going? Half of it is going as write offs for charity care. Is that community benefit, or keeping the full walls of the hospital full? Another third is going toward resident education and training," he said. "Yes we need you to train, but that’s not community benefit.”
As of November 15, Shah is requiring every New York hospital and health system to submit a community benefit plan for review and approval. “I’m only going to approve it if they do two things on a five point prevention agenda,” developed based on local needs with regional stakeholders and public health officials, and “they have to show measurable gains over time.”
“Maybe I’ll publish those community benefit plans online,” Shah said.
For a sense of what New York’s healthcare ecosystem should strive for, Shah offered a short story: On a Saturday morning in 1977, a fire destroyed a Japanese Toyota plant that made 200 variations of p-valves used in braking systems, prompting experts to warn of a massive supply chain disruption that could take six months to recover from.
“And yet it didn’t take six months to reopen that plant or start making cars again. It took five days,” Shah said. “This was not a miracle. What Toyota had was an ecosystem of suppliers and distributors, who before the embers were even cold started faxing each other blueprints for p-valves. There was a sewing machine manufacturer who retooled over 500 hours and started making p-valves 1, 10 at a time, and by that Thursday trucks started pulling in from all around with all kinds of p-valves. What Toyota had was exactly the opposite of what we have in healthcare today.”
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