The National Governors Association (NGA) and the National Association of State Budget Officers (NABO) released the Spring 2011 Fiscal Survey of States, finding that at least 33 states have plans to reduce Medicaid provider reimbursement rates for the fiscal year beginning July 1.  Facing tough financial climates and the elimination the increased Federal Medical Assistance Percentage (FMAP) funding through the American Recovery and Reinvestment Act (ARRA), on average, governor’s proposed FY2012 budgets include a 2.9 percent reduction in Medicaid funding.  However, states’ share of Medicaid is expected to increase by 18.6 percent as federal funding drops by 13 percent.  In FY2010, Medicaid accounted for an estimated 22 percent of states’ spending.

From the report:

On June 24, the non-profit National Institute for Health Care Management (NIHCM) Foundation released a data brief, Understanding U.S. Health Care Spending, analyzing total U.S. health care spending.  Examining data from the National Health Expenditure Accounts (NHEAs) and the Medical Expenditure Panel Survey (MEPS), the brief notes that annual health care spending reached $2.5 trillion in 2009, or 17.6 percent of the Gross Domestic Product (GDP).  The brief also notes that spending increased 29 percent between 2005 and 2009, averaging $8,100 per person in 2009.  The Foundation found that costs are highly concentrated among a small number of high-cost patients, with approximately 5 percent of the population accounting for 47.5 percent of all spending, while 50 percent of the population accounts for only 3 percent of spending.  The brief also notes that rising prices have played a larger role than increased utilization rates in driving recent cost growth.

From the report:

Health Affairs has released a study finding that hospitals in areas with robust hospital competition tend to address shortfalls between Medicare payments and projected costs primarily by reducing hospital costs.  Conversely, the authors found that hospitals in areas where hospital care is concentrated among a limited number of providers respond by raising the prices they charge private insurers, in a practice known as “cost shifting”.  The authors argue that their findings necessitate a policy discussion about whether increased provider integration will interfere with the national health care reform law’s goal of reducing Medicare spending, as increased integration could reduce market competition and, in turn, increase the use of cost shifting.

Robinson, James. (2011). Hospitals respond to Medicare payment shortfalls by both shifting costs and cutting them, based on market concentration. Health Affairs, 30 (7): 1265-1271. doi: 10.1377/hlthaff.2011.0220. http://content.healthaffairs.org/content/30/7/1265.abstract

Author: James Robinson.

Mathematica Policy Research has released a brief examining opportunities to improve dual eligibles' care through managed care plans in Medicare.  The authors offer background on dual eligibles and state efforts to manage their care.  The brief also examines opportunities for expanding managed care for dual eligibles under the national health care reform law.

From the report:

Only July 8, 2011, CMS announced three new initiatives to assist states in improving care for dual eligibles.  Two new financial models to support state efforts to coordinate care for dual eligibles.  A capitated model in which a state, CMS, and a health plan enter into a three-way contract, and the plan receives a prospective blended payment to provide comprehensive, coordinated care.  A managed fee-for-service model in which a state and CMS enter into an agreement that would permit the state to share in Medicare savings for care coordination initiatives.

Full report: Improving Care for Dual Eligibles: Opportunities for Medicare Managed Care Plans (PDF | 183.71 KB)

Mathematica Policy Research.  (2011).  Improving care for dual eligibles: opportunities for Medicare managed care plans.  Verdier, J.

Health Affairs has released a study examining per capita Medicaid spending, finding significant variance in both spending and service volume across states.  The study determined that the 10 states with the highest per capita spending paid $1,650 more than the national average, of which $1,186 was attributed to increased service volume.  Conversely, the 10 states with the lowest per capita spending paid $1,161 less than the national average, of which $672 was attributed to lower service volume.  The authors emphasize the need for improved understanding of these variations to improve care quality and reduce costs, particularly in the context of expanded Medicaid coverage under national health care reform.

Gilmer Todd, P. and Kronick, Richard G. (2011). Differences In The Volume Of Services And In Prices Drive Big Variations In Medicaid Spending Among US States And Regions. Health Affairs, 30 (7):1316-1324. doi: 10.1377/hlthaff.2011.0106. http://content.healthaffairs.org/content/30/7/1316.abstract

Authors: Todd P. Gilmer and Richard G. Kronick. 

Health Services Research has published a study examining whether medication adherence lowers Medicare spending among beneficiaries with diabetes.  The authors found that adherence does lower Medicare costs, and offered strategies to improve medication adherence and lower costs.

Stuart, B., et. al.  (2011).  Does medication adherence lower Medicare spending among beneficiaries with diabetes?  Health Services Research, 46 (4): 1180-1999.  doi: 10.1111/j.1475-6773.2011.01250.x.  http://onlinelibrary.wiley.com/doi/10.1111/j.1475-6773.2011.01250.x/abstract;jsessionid=BB6A0465FAAD18988396BD81997BF844.d03t04

Authors: Bruce Stuart, Amy Davidoff, Ruth Lopert, Thomas Shaffer, J. Samantha Shoemaker and Jennifer Lloyd.