Medical Home Savings Claims in Medicaid are Not Plausible

by Al Lewis, Disease Management Purchasing Consortium International, Inc.

AlLewisMedical homes probably do save money in very controlled settings, where the entire team is literally or at least figuratively under one roof, such as Kaiser.  However, the belief that one can overlay a traditional medical home model across an entire state and save money in the process turns out to be total fiction.

The poster child for that fiction, North Carolina’s Community Care program, turns out to cost state taxpayers probably $400 million a year, rather than save them $300 million, as the state’s self-serving and blatantly incorrect analysis claimed.    A more extensive analysis is available for review, and any state is welcome to the backup data as well.

Here’s a press release with more details.

Highlights of the head-scratching implausibilities claimed would be as follows:

  • Physician costs (11% savings claimed). Plausibility check: Wouldn’t North Carolina’s medical society be complaining if doctors were providing more care but getting less reimbursement?
  • Drug expense (5% savings claimed). Plausibility check: Wouldn’t more drugs be prescribed for preventive care?
  • Inpatient care (46% savings claimed). Plausibility check: Since a large percentage of admissions is simply not preventable, a 46% savings requires that virtually every preventable admission was avoided. A specific piece of data was used for another plausibility check: For the diagnosis of asthma – perhaps the most preventable reason for inpatient admission and therefore the diagnosis where one would expect the greatest percentage of savings – admissions fell by only a quarter.
  • Outpatient services (24% savings claimed). Plausibility check: If the care isn’t being provided in the doctor office or with drugs or inpatient care, shouldn’t outpatient costs be rising?

The rampant innumeracy in this field boggles my mind, as does people’s willingness to accept “stories too good to check” at face value, even though it requires about an hour to check them.

One thought on “Medical Home Savings Claims in Medicaid are Not Plausible

  1. Obviously, Mercer has taken a Certification course by DMPC yet!! Shame on them.

    But, realistically, how do you justify those high consulting fees if you always tell the truth.

    The only way we can reduce medical costs is to avoid using services. The only way you can do that is reduce the risk factors that lead to chronic disease. I would content that once disease is present, you are going to have costs. Plus, if you manage the cost well–you often have more costs than if you don’t manage it. The key is getting people healthy enough so they never need healthcare services. Exercise IS medicine, you are what you eat, and prevention is always worth a pound of cure!!

    Dr. Rearick

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