Medicaid primary care spending linked to fewer hospitalizations

A separate study concludes that Medicaid patients are healthier and less financially stressed than the uninsured.

By Doug Trapp — Posted July 18, 2011

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In some states, higher spending on primary care in Medicaid is associated with lower spending on hospitalizations, according to a study of Medicaid spending patterns published in the July Health Affairs.

Health policy experts long have known that Medicaid spending varies widely among states and regions. But less clear is how prices and utilization affect state differences in Medicaid spending. Researchers also have not known if there are associations between Medicaid spending on different types of care.

Researchers examined state Medicaid fee-for-service spending patterns for disabled enrollees who qualify for Temporary Assistance for Needy Families. This provided the most comparable Medicaid data because of the relatively consistent eligibility standards across states for this population, according to article co-author Todd Gilmer, PhD, professor of health economics at the University of California, San Diego.

The study is an attempt to begin to examine Medicaid in a way similar to how Dartmouth Atlas researchers investigate Medicare spending.

The Health Affairs study concludes that both prices and volume are factors in regional Medicaid spending differences. Generally speaking, Middle Atlantic States had the highest overall Medicaid spending because of both high prices and high volume of services. In contrast, the South had low rates for both, and the lowest overall Medicaid spending. Other states had a mix of both factors. The analysis was based on 2001-05 Medicaid data, the best available when the researchers began the work.

Gilmer said he was somewhat surprised to find that the supply of primary care doctors in New England was associated with lower hospital admissions for diabetes, lung disease and adult asthma. Other states, such as New York, had higher hospitalization rates in part because of its large number of available beds.

"This suggests that there is a great deal of room for innovation in Medicaid," Gilmer said.

New England spent more on primary care and pharmaceuticals and less on hospital care, although their overall Medicaid spending was somewhat above the national median. New York's overall spending was near the top.

The study did not address patient outcomes or the quality of care provided, although it did adjust for patient health status and case mix.

But the study is probably flawed because of wide differences in state administration of Medicaid programs and Medicaid populations, said Richard Cooper, MD, adjunct professor of medicine at the Perelman School of Medicine at the University of Pennsylvania.

"There's no way to know if those groups are similar or not," Dr. Cooper said. "It's just very hard to conclude anything other than that there's great variation in Medicaid."

Gilmer said the Medicaid eligibility level for people with disabilities does vary somewhat by state -- from a minimum of about 80% of the federal poverty level to up to 130%. Dr. Cooper said Medicaid utilization increases dramatically with poorer enrollees, but Gilmer doesn't believe these eligibility variations were large enough to affect the study's validity.

Dr. Cooper praised a separate study that concluded people with Medicaid coverage are healthier and less financially stressed than the uninsured. That report, "The Oregon Health Insurance Experiment," was released July 7 by a team of researchers led by the Massachusetts Institute of Technology. The study was funded by the Dept. of Health and Human Services and others.

The report examined adults who enrolled in Medicaid through a 2008 lottery implemented by Oregon, under which an additional 10,000 people qualified for the program. These enrollees were about a third more likely than those who remained uninsured to visit a doctor or hospital during their first 16 months of coverage. They also were 35% less likely to face out-of-pocket expenses and had 25% fewer unpaid medical bills referred to collection agencies.

Some critics have questioned the value of Medicaid coverage, said Amy Finkelstein, PhD, a professor in MIT's Dept. of Economics and one of the paper's lead authors. "This actually suggests that some of the beneficiaries from an expansion of Medicaid are health care providers like hospitals and doctors."

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External links

"Differences In The Volume Of Services And In Prices Drive Big Variations In Medicaid Spending Among U.S. States And Regions," Health Affairs, July (link)

"The Oregon Health Insurance Experiment: Evidence from the First Year," National Bureau of Economic Research, July 7 (link)

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