Getting More Health From Medicaid’s Healthcare Dollar

By Kevin Quinn, vice president, Payment Method Development, Government Healthcare Services, Xerox

Much of the recent focus on Medicaid has been on whether states will expand their programs under provisions in the Affordable Care Act. At this moment, Medicaid covers 62 million Americans — and that number will increase when roughly half of states expand their programs in January 2014. Purchasing healthcare for all of these people means Medicaid accounts for one-sixth of total U.S. healthcare spending. If state Medicaid programs were private-sector companies, 26 of them would rank in the Fortune 500.

Medicaid clearly has the clout to be a volume purchaser of healthcare services. But ever-rising healthcare costs mean Medicaid has had to re-focus its purchasing strategy. It’s not about “buying in bulk,” but rather about slowing (or even reducing) costs while keeping up (or even improving) quality of healthcare and access to it. In other words, Medicaid needs to get more health for its healthcare dollar – especially as its numbers prepare to soar.Getting More Health from Medicaid’s Healthcare Dollar

Medicaid programs will have a variety of issues in the coming years, but when it comes to getting more value for Medicaid’s money, four stand out:

1. Growing use of managed care: There will be more opportunities to improve coordinated care, but there is also the risk that growing concentration on the provider side (especially among hospitals and large physician practices) will reduce the ability of managed care plans to negotiate prices.

2. Pay for quality: This is still rare in Medicaid, especially outside managed care, but it offers the potential to improve healthcare outcomes through financial incentives. A possible glitch: Providers may be hesitant to support initiatives that could adversely affect their bottom line.

3. More attention to long-term care payments: As the largest payer in the long-term care sector, Medicaid is in a position the lead reforms, like bundled payments, pay-for-quality, and appropriate incentives across the long-term care spectrum.

4. Data, coding, and clinical expertise become more important: There’s a never-ending search for improving ways to measure how care is prioritized based on a patient’s presenting symptoms or conditions. And ICD-10, which goes live October 1, 2014, will expand the policy possibilities. Better data can lead to cost savings and improved health outcomes, both of which are essential in value purchasing.

Trying to get better value for every Medicaid purchase has been a decades-long process. Payment methods have certainly evolved, but there’s still work to be done. Paying more for higher quality healthcare and better health outcomes is an important big step in the journey.


Kevin Quinn recently discussed the evolution of Medicaid payment methods at the National Association of State Health Policy annual conference. 

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  1. mustafa October 27, 2013 - Reply


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