In 1975, Ray Hanley was a Medicaid caseworker in Arkansas, where 28 percent of the population was under the poverty level. At the time, Medicaid claims were processed on paper. If there was a mistake, a call was made to the doctor, who might simply cross it out.
"The program was for the poorest of the poor," said Hanley, now health and human services industry executive for HP Enterprise Services.
Today, Medicaid is a healthcare giant" gorilla some would say"covering more than 50 million people and reaching deep into the middle class. (Some state Medicaid plans cover families with annual incomes of $60,000 and $70,000, or 300 percent of federal poverty levels.)
Pharmacy claims are made in seconds. Depending on the state, Medicaid pays between 30 percent to 50 percent of all child deliveries, the majority of mental health services, and 20 percent or more of children's health services. Health reform holds the prospect of adding 10 million to 15 million more people to the Medicaid rolls.
Add it all up and it represents a grip on American healthcare that few other healthcare organizations can match. Yet today, Medicaid is between a rock and a hard place. With state tax revenues drying up, but pressure from balanced budget mandates bearing down, states must cut costs or go bust.
Medicaid's fate"and the healthcare of thousand of its members"is tied to its ability to lower costs, say public health and IT experts. And the key to cutting costs, they argue, is to transform state Medicaid operations into hubs of high-tech care coordination.
"They essentially have little more staff than when they were half the size," said Hanley. "That they've survived at all in very large part is because of the technology"and the only way they are going to be able to sustain this is through more applications of IT."
For payor organizations that means not only processing claims rapidly and accurately, but having the ability to drill into client population data to identify clusters of patients who are consuming a disproportionate share of healthcare services"and costs.
Applying the health IT toolbox of electronic health records, e-prescribing, registries and data warehouses is the key to locating those patients"a diabetes patient who is not refilling her meds, for example"and coordinating with clinicians to head off a more acute"and costlier"flare-up of the disease.
"And if they can't do that, then these programs are going to have a really hard time surviving," said Hanley.
Ground zero?
Medicaid's role in locating high-cost patients and reducing costs via IT is one reason Dr. David Blumenthal, the national coordinator for health IT, has called states "ground zero" in the federal government's plan to jump-start development of a national electronic health record system.
Now one year into what he refers to as a "grand change-management project," the health IT czar is increasingly turning his attention to the health information marketplace outside Washington, DC, on which the $30 billion projected to spur health IT use will play out.
In a raft of year-end grants promoting health information exchange, Blumenthal has cited state health IT organizations as essential to the success of the HIT incentive experiment, especially in finding ways to move health information across state boundaries.
"Medicaid is a partner in that activity" he told state Medicaid managers meeting in Chicago last fall. In asking for their "leadership," Blumenthal urged the crowd to maintain "openmindedness as you think with your colleagues in the states about how to make Medicaid a partner in [HIE]."
Will state Medicaid agencies be switch-points in the nationwide health information network? Can it be a peer organization in state or regional HIE? A mix of government health and IT executives believes the agency is on the right course, though the path is uneven.
Not the least of Medicaid's obstacles is its legacy as a state-only service organization. Despite a highly praised effort to give Medicaid systems national coherence through the Medicaid Information Technology Architecture (MITA), a business and technology planning effort, Medicaid remains a confederacy of organizations, with disparate systems and objectives.
Even so, the Medicaid community has been busy putting itself on a path toward technical and healthcare modernity. Rick Friedman, the director of state systems at the Centers for Medicaid and Medicare Services (CMS) and a tireless MITA advocate, said the next five years will be critical to the organization's ability to stay in synch with the e-health expansion now taking place.
With MITA, Friedman said, "we're saying, dream big and tell us what the [goal] is in your state." Friedman envisions a "three-dimensional collaborative vision," of Medicaid centers exchanging health information within states, between states and with federal health agencies seeking state partners for disease or pandemic surveillance, for instance.
Public care legacy
In finding its place in this network, Medicaid brings some original assets. Unlike most payor organizations, Medicaid was chartered as a safety net provider. Its primary mission was to help patients at the base"ground zero"of the healthcare lifeline. That means it already possesses a patient-centered view of healthcare and its role in it.
"They have a closer sense of mission than some health plans," said Marc Overhage, chief executive officer of the Indiana Health Information Exchange. "They don't have a profit motive. They're there to take care of people" that's their real goal." Using health IT to achieve a modern version of patient centered care"without putting states at further financial risk"is the goal of the current generation of state health policy leaders.
"It's a complete shift from just doing claims processing to getting into the whole realm of managing someone's health over their lifetime," said Otto Doll, chief information officer of the state of South Dakota, who also heads the health IT working group of the National Association of State CIOs. "How do you get them to better manage their children's health and their elders' so that we don't need to spend dollars that we end up having to spend now."
South Dakota is taking the plunge into managed services by tapping a 90 percent federal match from the Department of Health & Human Services to build a new MMIS. At a cost of $65 million, it's the largest IT project the state has ever undertaken, on a par with its entire annual IT budget.
Doll credits Medicaid for bringing architectural discipline into the state healthcare via MITA, which he sees as a logical path of toward integration of the state's human services agencies. Although it's a starting point now, Doll calls it, "one of the closest models we have to figure out how to treat this whole thing as one medical enterprise."
Yet Doll is realistic about Medicaid's limitations, and about the amount of work that lies ahead. "I don't think the rudimentary database we call Medicaid is anywhere near a position to really get into managed care," he said, counting only a "handful of states even close to being in the managed care game right now."
Early adopters
If there are only a handful of state's pursuing progressive Medicaid modernization, most experts agree that New York State is one of them. Alabama, Arizona, Arkansas, West Virginia, Texas and Kansas are also cited as states that are spearheading Medicaid's metamorphosis. Dr. Jim Figge, New York's health director, also takes a patient-based view of the managed care challenge. "This is about getting information to the point of care that clinicians need on an every day basis so that they can do a better job taking care of their patients," he told a
