Friday, May 24, 2013

Medicaid payment reform may be reducing costs but legislature delays further implementation

Posted By on Fri, May 24, 2013 at 4:20 PM

Good news on the Medicaid cost front: in a joint Public Health committee meeting today, Department of Human Services officials testified that for the third straight quarter, cost growth of the program has slowed. This represents the slowest growth in 25 years (spending is still rising but is rising significantly more slowly than the long-term trend), and comes despite an improving economy and an increase in the rate of enrollment. Along with additional money coming in via healthcare expansion, the reduced costs mean that Medicaid providers will not face rate cuts or freezes as planned.

It’s too early to ascribe the cost reductions to the Payment Improvement Initiative, which incentivizes providers to control costs, but it’s looking more and more like the Initiative — which is in its early phases, so far only covering five episodes of care — has been effective at beginning to encourage providers to identify low-hanging fruit in terms of unnecessary spending. In health policy language this is the "sentinel effect”: basically, you’re likely to work more efficiently if you know someone is going to be looking over your shoulder.

DHS had planned to add four new episodes of care to the initiative, but they hit a roadblock today in the legislative review process. Legislators peppered them with a series of meandering questions (and comments) focused on one of the episodes, Oppositional Defiant Disorder (ODD), complete with lots of irrelevant discussion about whether it was really an illness or whether parents should just do a better job of disciplining their kids. Leaving aside the legislators’ belittling of ODD, many seemed completely unaware that whether or not Medicaid should cover it was not up for debate. The question was simply whether to include the new episodes of care in a reform effort to reduce costs (indeed, if a legislator was worried that something like ODD leads to overcharging, including it in the payment initiative would be one way to help alleviate those concerns). In the end, the committee passed on giving their stamp of review, following the dubious logic of Rep. Kelley Linck, who said "when there’s this many questions, I’ve always found that voting no or turning it down always makes it come back better" (which means that anything is bound to fail with the likes of Rep. Kim Hammer in the room, offering up a diarrhetic barrage of quantity-not-quality legislative oversight).

The final decision to delay was issued by the Senate Chair Cecile Bledsoe, who happens to also be a general opponent of the Payment Improvement Initiative (Bledsoe can be counted on to fight anything that might possibly nick at a doctor's paycheck). The decision, made informally and without discussion, will likely delay implementation of the four new episodes, which will cut into cost savings (projected to be more than $1 million per year in total, 30 percent of which is Arkansas's portion of the federal-state match).

DHS officials plan to work with Bledsoe and House Chair John Burris to get members additional information, and hope to avoid having to wait until the next joint meeting (currently unscheduled). DHS spokesperson Amy Webb added that in the future they will aim to do more to address concerns with members prior to meetings. I suspect that she is overestimating their willingness to do homework ahead of time and underestimating their ability to think up random questions on the fly, but we shall see. After the jump, a few classic Rep. David Meeks tweets (Tweeks?) during the irrelevant discussion on ODD.

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