- Did you know that between the years 1975 to 1985, average annual Medicare spending for each beneficiary rose from $472 to $1,579? This is an increase of 12.8 percent per year, according to The Commonwealth Fund. It is no surprise that healthcare reforms over the past several years have focused on decreasing federal spending on medical services.
Many experts within the healthcare industry feel that beneficiary incentive programs could potentially bring a higher focus on patient engagement and push the consumer base toward investing in health and wellness with a focus on preventing disease. Through greater consumer engagement, patient hospital stays are more likely to decrease and thereby garner cost savings for the healthcare industry.
With the passage of the Patient Protection and Affordable Care Act, more focus has been aimed at beneficiary incentive programs and patient engagement. Under section 4108 of the Affordable Care Act, state Medicaid programs are given grants to offer incentives among Medicaid beneficiaries who are taking part in prevention projects and exhibiting healthy behaviors, according to the Centers for Medicare & Medicaid Services (CMS).
There are some specific goals that a state must focus on when applying for a grant in order to develop beneficiary incentive programs. These goals include managing and controlling weight, a quit smoking program, decreasing cholesterol and blood pressure, and either preventing diabetes or improving management of the condition.
States looking to participate in beneficiary incentive programs are required to commit to the endeavor for a minimum of three years, fulfill various requirements from the federal government, and complete evaluations showing incentive program participation, quality improvements and decreased spending.
There are currently 10 states participating in the development of beneficiary incentive programs commonly called the Medicaid Incentives for the Prevention of Chronic Diseases Model including Texas and California.
The hope is that the rise in healthcare expenditures will slow down and costs would decrease when patients engage in preventing disease and improving their wellness and quality of life. Economic incentives among Medicaid beneficiaries have been found to be effective in helping these consumers seek and engage in preventive care as well as healthy behaviors.
While there is a significant push toward stabilizing the rising costs within the healthcare industry, some experts aren’t confident that beneficiary incentive programs will be able to achieve the goal of slowing down the increase in medical costs.
“Estimates on the cost-effectiveness of Medicaid beneficiary incentive programs have also varied,” a brief from the Henry J. Kaiser Family Foundation stated. “States aim to reduce Medicaid costs by encouraging the use of preventative care in order to decrease the need for future high-cost treatments and hospital use. However, government agencies, policy analysts, and patient advocates have questioned the cost-effectiveness of incentive programs given their infrastructure start-up costs, marketing costs, and administrative costs.”
Earlier programs before Medicaid Incentives for the Prevention of Chronic Diseases Model came onboard included Idaho’s Preventative Health Assistance (PHA) Benefits and Indiana’s Healthy Indiana Plan (HIP) in which smoking cessation, obesity rates, and prenatal along with postpartum depression were targeted.
When the Medicaid Incentives for the Prevention of Chronic Diseases Model was established after the Affordable Care Act became law of the land, $85 million was spread across 10 states to be used within five years in order to encourage Medicaid beneficiaries to participate in prevention programs, increase engagement with their doctors, and adopt a healthy lifestyle.
The separate states are required to show whether their programs are working including helping people lose weight, quit smoking, and lower cholesterol or high blood pressure. When it comes to outcomes, however, long-term lifestyle changes such as weight management or smoking cessation have been more difficult for these beneficiary incentive programs to complete.
Nonetheless, these incentives have helped ensure Medicaid beneficiaries receive immunizations and attend the standard medical check-up. As state Medicaid expansion continues due to the provisions of the Affordable Care Act, it is likely that beneficiary incentives could become more intriguing and popular among the everyday Medicaid patient.
Along with high Medicaid costs, the Commonwealth Fund finds that Medicare payment models also needed to change in order to reduce spending, which is why the federal agency has established more value-based care among Medicare patients.
To reduce hospital inpatient costs for the Medicare program, CMS established a payment system in which hospital inpatient services “received a fixed rate of payment per patient based on the average hospital cost nationwide for patients in the same diagnosis-related group (DRG).” This led to a sharp reduction in inpatient costs for the Medicare program.
Currently, there are a wide variety of payment reforms taking place among both the Medicare and Medicaid programs, which providers will need to consider when creating more coordinated, accountable care processes.
“The testing of alternative payment models is still in an early stage. General evaluations have found gains in quality and modest savings, but the results so far have been mixed,” the Commonwealth Fund stated in its report.
“There is some evidence that, as experience with alternative payment models accumulates, savings can increase.38 Key requirements for success include setting incentive payments so that they align with potential savings; targeting interventions that help high-cost, high-need individuals avoid unnecessary hospitalization or emergency room use39; and aligning policies among public and private insurers.”
From bundled payments and the creation of Accountable Care Organizations to the Medicaid Incentives for the Prevention of Chronic Diseases Model, the federal government is constantly pursuing value-based care throughout the healthcare industry.