Fiscal Fitness: How States Cope

Better management of duals is Ohio Medicaid's survival plan

Ohio Medicaid got by with policy changes and rate reductions for the past two years, says Medicaid director John McCarthy, but future efforts are going to focus on better management of high-cost clients, including dual eligibles.

"We are struggling with where our savings are going to come from in the future," says Mr. McCarthy. "Two years from now, we are really banking on the fact that better care coordination and less fragmented services are ultimately going to lead to savings."

About 4% of the Medicaid population accounts for 51% of the program's expenditures, he adds. While some in this group are costly because they live in an institution, explains Mr. McCarthy, others are high-cost because of unnecessary ED visits, diagnostic tests and hospitalizations.

The budget includes $47 million to implement medical homes and accountable care organizations late in 2012, with the hope of achieving savings in the Medicaid program sometime in 2014, says Mr. McCarthy.

"We are developing health homes, and will hopefully get some of them up this year, but the bulk of them will probably be implemented next year," he says. "We are putting those in place to address Medicaid savings further out."

Enrollment is not capped in the Passport Medicaid waiver program, which provides home and community-based services as an alternative to nursing homes for Ohio residents 60 and older, says Mr. McCarthy. "We do have that as a lower-cost alternative to nursing home services. We've been making great strides with that," he says.

Controlling costs of dual eligibles, though, is going to be a major focus going forward, says Mr. McCarthy. "We are trying to come up with a single point of care coordination between Medicaid and Medicare, to ultimately lead to savings in the future," he says. "The problem is, not only do you have Medicaid and Medicare, but within our program you have various other pieces."

For instance, he says, the waiver program doesn't offer care coordination that is included in other programs. The goal is to take all services and put them under a single entity, Mr. McCarthy explains, whether managed care, accountable care organizations, or health homes.

"We are open to all different forms of delivery," says Mr. McCarthy. "But we need something that can better coordinate the care across those programs, ultimately leading to lower costs."