NGA recommends states promote healthy behaviors

With the nation's health care costs running at nearly $1.8 trillion per year, of which some $21 billion is used to treat chronic and often preventable conditions such as diabetes, cancer, and cardiovascular disease, the National Governors Association (NGA) says states have an opportunity to save billions of health care dollars each year by promoting healthy lifestyles among Medicaid beneficiaries.

An issue brief, "Creating Healthy States: Promoting Healthy Living in the Medicaid Program," issued by the NGA Center for Best Practices, says governors have opportunities to use three basic strategies to encourage healthy behaviors — providing wellness incentives for beneficiaries, offering tools and incentives to engage Medicaid providers, and targeting and tailoring Medicaid benefits to wellness. New flexibility granted states by the Deficit Reduction Act of 2005 is helping make these opportunities possible, the brief says.

The Deficit Reduction Act eliminated the requirement that certain efforts be implemented statewide, enabling states to target alternative benefit packages to specific subsets of Medicaid beneficiaries in the neediest regions. It also eliminated the so-called comparability requirement, allowing states to tailor benefit programs and services to meet the health care needs of different population groups.

Benefit changes that target and tailor Medicaid benefits may be approved through the State Plan Amendment process. However, because the Deficit Reduction Act applies exclusively to current eligibility groups, states cannot use the law to expand eligibility to new populations. In addition, new benefit packages must be actuarially equivalent to one of the specified benchmark options.

NGA said preventive care and counseling yield substantial benefits for state budgets and patients. Research shows investments in disease prevention and health promotion strategies can result in financial returns for states. In 1998, according to the issue brief, North Carolina implemented disease management program strategies for Medicaid beneficiaries suffering from diabetes, asthma, and cardiovascular diseases through the state's primary care case management program. A 2002 evaluation of the expenditures and use of services among diabetic and asthmatic Medicaid beneficiaries revealed monthly savings of $21 per member. And additional research has demonstrated that diabetes management services yield a net benefit of $2,702 per enrollee compared to traditional care, with the cost of services ranging from $42 to $84 per year.

"Governors have opportunities to cut costs while promoting healthy living practices among beneficiaries through provider and enrollee initiatives, care coordination, and disease management strategies," the Center for Best Practices said. "Experts have concluded moderate weight loss, exercise, and smoking cessation strategies can save billions of health care dollars each year. These efforts can reduce the number of healthy people who develop disease and the need for health care services among people who already have a chronic condition."

The Center quotes Centers for Disease Control and Prevention statistics to make the point. Thus, it is estimated that lifetime medical costs for an overweight person who sustained a 10% weight reduction would decrease by $2,500 to $5,300. If 10% of adults began a regular walking program, an estimated $5.6 billion in heart disease costs could be saved annually. Medicaid could save almost $3.50 in averted neonatal medical expenditures for every $1 spent on counseling pregnant smokers to quit. And states can reap additional benefits through multicomponent programs within and beyond Medicaid, NGA said.

The NGA report said state efforts to provide incentives for healthy behaviors are quite new, but the private sector has used them in employee wellness programs and health plans.

West Virginia. West Virginia is promoting healthier living among Medicaid beneficiaries by offering enrollees an optional, extended benefits package including services not traditionally offered, such as tobacco cessation treatment, nutrition education, diabetes care, chemical dependency treatment, mental health services, cardiac rehabilitation, chiropractic services, and dental care. To gain access to the expanded services, Medicaid recipients must agree to attend scheduled preventive health visits and take medications as directed. Those who choose not to sign the agreement will receive the standard Medicaid benefits package. Those who don't follow the agreement may face disincentives.

Florida. A Florida waiver program is piloting promotion of healthy living through incentives for enrollees who pursue healthy behaviors through preventive services and reduce the risk of poor health outcomes. The pilot will assess a risk-adjusted premium reflecting each beneficiary's health status. Recipients enrolling in customized new health plans will receive monetary incentives for participating in healthy activities such as smoking cessation, annual checkups, and disease management programs.

Indiana. The Medicaid program has worked with the state Health Department to develop the Indiana Chronic Disease Management Program for Indiana residents with chronic conditions. The program provides a number of services and support programs to help beneficiaries with diabetes, heart disease, asthma, and kidney disease.

North Carolina. In 1998, North Carolina enhanced its basic primary care case management program, Carolina Access, by working with local physicians, hospitals, and public health and social service providers to improve the quality and reduce the cost of caring for Medicaid beneficiaries. Under Community Care of North Carolina, 15 local provider networks throughout the state collaboratively develop care and disease management systems to support beneficiaries. The North Carolina Medicaid program integrates disease management strategies, public health practices, provider groups, and social services to improve beneficiary health by leveraging access to programs in the state.

North Carolina also has been successful in providing access to health promotion and disease prevention by paying primary care providers at rates similar to those in the private sector.

Illinois. Illinois is promoting important developmental screening tools to identify areas needing preventive or other health services. Officials said this approach of early identification, health promotion, and intervention can improve health outcomes and identify problems before they can affect development. The state provides an extra payment to pediatricians for using a developmental screening tool in addition to the standard well-child exam payment.

Georgia. Although not a Medicaid program, Georgia recently launched a statewide effort to provide financial bonuses to doctors who improve care for more than 500,000 residents with diabetes. Physicians who choose to participate in the incentive program will be evaluated on how well they improve care for patients covered by the Georgia Health Benefit Plan, which covers 640,000 state employees and retirees.

Idaho. Idaho is taking advantage of Deficit Reduction Act flexibility to create benefit packages targeted to the health care needs of different populations enrolled in the state program. Beneficiaries are offered three benchmark plans providing specialized care for enrollees under a primary care case management program — Basic Benchmark Plans for healthy, low-income children and working-age adults; Enhanced Benchmark Plans for individuals with disabilities and special medical needs; and Special Coordinated Plans for the elderly and dual-eligible recipients. Idaho officials hope to incorporate health risk assessments and other screening procedures into the program to help match beneficiary needs to a specific plan's benefits package.

Kentucky. Kentucky was the first state in the nation to provide a comprehensive plan to redesign its Medicaid program under Deficit Reduction Act provisions. Medicaid beneficiaries are offered one of four benchmark plans — Family Choices for healthy children, including SCHIP recipients; Comprehensive Choices for elderly individuals who need nursing facility care and individuals with acquired brain injuries. Optimum Choices for individuals with mental retardation and developmental disabilities in need of long-term care services; and Global Choices for the general Medicaid population, including most adults, foster care children, and medically fragile children.

The NGA Center for Best Practices says Medicaid programs play a key role in providing critical health services to a vulnerable population and could make a major contribution to efforts to achieve better health nationwide. The Deficit Reduction Act of 2005 is seen as expanding state opportunities to assemble a coherent wellness strategy, pilot innovative approaches, and target efforts to those Medicaid recipients with the greatest need and largest potential benefit. As the economic returns on the disease prevention strategies and health promotion services emerge, it says, they will become even more attractive to states facing the rising costs of treating chronic diseases.

NGA senior legislative associate Jennifer Michael, who helped develop the Center for Best Practices document, tells State Health Watch NGA believes states should take steps to save money and improve quality, even while working toward broader reform.

Meanwhile, former Secretary of Health and Human Services Tommy Thompson has brought forward a plan for Medicaid reform through his Medicaid Makeover effort sponsored by the Deloitte Center for Health Solutions. The project brings together legislators, regulators, advocates, and health care experts to discuss and explore best practices.

"Medicaid is the single largest spending item in state budgets," Thompson said. "In half of the states, Medicaid spending exceeds 20% of state appropriations. Medicaid is now the largest single item in overall state budgets, surpassing elementary and secondary education. The fact is that states simply can't afford to meet the increasing costs, forcing states to limit access to critical health care programs."

So far, Thompson has hosted Medicaid Makeover: Learning What Works summits in Atlanta and St. Louis. "We need to change health care in America and Medicaid Makeover creates a platform that will allow us to see what works and what needs an overhaul," Thompson said at the first program in Atlanta. We need to make Medicaid nimble enough to allow states to address the needs of different populations differently. Right now, the lines of responsibility between the states and the federal government lead to confusion and inefficiency. Without prompt, creative, and comprehensive action, this complex and unwieldy program that serves as a lifeline to a vastly diverse group of disadvantaged Americans will continue to deteriorate.

And the four-term Wisconsin governor told the St. Louis audience it would be "great if governors would take pride in bragging about the health of their states. I'd like to envision a time when governors compete to see which state can vaccinate the most number of children, or have the least number of smokers. We need to manage health more than just manage care. Right now, the states don't have enough flexibility to develop innovative Medicaid programs that tackle prevention because they are weighed down by the financial burdens of treatment. This needs to change."

Download the NGA recommendations at Contact Ms. Michael at (202) 624-5300.