Tag Archives: cost curve

Can state Medicaid programs experience savings through medical-behavioral integration?

When it comes to Medicaid costs, a single percentage point can have billion-dollar implications. Medicaid managed care premiums increased only 1.0% to 2.0% on average in recent years. This increase in premiums amounts to $36.5 to $41.9 billion over 10 years in total, with the state governments funding $13.0 to $14.9 billion. Reducing costs by even a tenth of a percent has significant implications for Medicaid, which is why increased behavioral health deserves consideration.

Milliman’s Stephen Melek’s new research paper, Bending the Medicaid healthcare cost curve through financially sustainable medical-behavioral integration, recommends providing more behavioral healthcare services to Medicaid beneficiaries, not fewer, through integrated medical-behavioral healthcare programs.

The paper also presents some data to assess the value opportunity for doing this integration, discusses the language of integrated/collaborative care, addresses the challenges in achieving financially sustainable integration models, and looks at recent innovations and pilot programs that are focused on delivering better healthcare, attempting to achieve better clinical and financial outcomes, and providing input for the case that medical-behavioral integration innovations can work well.

The entire research paper can be downloaded and read here.

Also, for more Medicaid insight from our experts, see here.

What does it mean to bend the cost curve?

Weiss Ratings is reporting that commercially insured medical spending in the United States totaled $234.9 billion over the first nine months of last year, a decrease of $3.7 billion (or 1.6%) from 2009. This is the first decrease in these numbers in 10 years.

What does this mean?

The Weiss Ratings research indicates that total insured enrollment declined slightly in 2010, which may be a driver behind the decrease in overall spending. This enrollment decrease may reflect an ongoing transition in the healthcare system. The ratio of commercially insured people to those either uninsured or in government programs appears to be shrinking. And there are other possible explanations. Increases in deductibles might have influenced utilization, or the risk mix may have changed.

One thing we are reasonably sure of: While the total dollar count for commercially insured medical services has (according to these findings) declined, that is different from the cost trend declining. The S&P Healthcare Economic Composite Index reported that for the 12 months leading up to September 2010 (roughly the same period covered in the Weiss Ratings analysis), the commercial cost trend stood at 8.54%, a figure that marked a deceleration from the prior month. More recently, the analysis of the 12-month average as of the end of November stood at 7.79%. Even more encouraging is a similar period of deceleration in Medicare costs—the trend on Medicare was 3.74% at the end of November. The trend has been slowing down, and this is indeed good news. What needs to be kept in perspective is that a decelerating cost trend is not the same as a reduction in healthcare costs. As we have noted before, it’s important to consider both dollar amounts and percentages when looking at cost increases—not to mention the various undercurrents that can affect these numbers.