You Are Here: AHRQ Home > Research Findings > Health Care Costs > Meeting Medicaid's Cost and Quality Challenges

Meeting Medicaid's Cost and Quality Challenges

The Role of AHCPR Research

This fact sheet describes AHCPR's role in Federal and State policymakers' efforts to control costs and improve the quality of care in the Medicaid program.

Introduction
Care for Elderly and Disabled Populations
Maternal and Child Health
Research and Technical Assistance on HIV and AIDS
Drug Policy
Informing Consumers
System Financing and Management
Conclusion
References

Introduction

The Federal Medicaid program provides a growing safety net for a broad cross-section of the population, and in particular for those with severe and costly health care needs. The program currently pays for a third of all births, finances health care for one in four American children, and covers 60 percent of the poor. Medicaid also pays for half of all nursing home care, subsidizes acute care for poor Medicare enrollees, and has a large and increasing responsibility for people with disabilities and AIDS (Rowland, 1995).

Finding a way to control costs and improve the quality of Medicaid services has provided a growing challenge for both Federal and State policymakers. Although Medicaid expenses in the past grew more slowly than private health care spending, program costs increased dramatically in the late 1980s and early 1990s, thanks to rapid eligibility expansion, a national recession, inflation in health care spending, and State use of statutory loopholes to leverage Federal dollars. Between fiscal years 1988 and 1993, annual Federal and State Medicaid expenditures rose from $54 billion to $131 billion. Between fiscal years 1994 and 1995 these expenditures rose from $144 billion to $159 billion (Personal Communication, Joseph Dunne, Health Care Financing Administration, April 28, 1997).

In part as an effort to control these costs, the Medicaid program has moved rapidly in the direction of managed care. By 1995, nearly one-third of Medicaid recipients (mostly poor children and their parents) were enrolled in some form of managed care (Rowland and Hanson, 1996). The hope is that these delivery changes can not only control costs but also improve the quality of care. Both the Health Care Financing Administration and the States are spending a great deal of time developing and implementing mechanisms to realize these hopes. The role of the Agency for Health Care Policy and Research (AHCPR) during this process has been to:

Provide science-based research to support these Federal and State efforts.
Disseminate research findings and guidelines that managed care plans and providers serving the Medicaid population can use to lower costs and improve quality.
Provide technical assistance to State policymakers and administrators seeking to improve their Medicaid programs.

AHCPR also conducts the Medical Expenditure Panel Survey (MEPS), a source of data for policymakers and researchers on Medicaid. As a nationally representative survey, MEPS collects detailed information on Medicaid coverage, costs, utilization, and health status of Medicaid beneficiaries.

AHCPR research has addressed eight of the inpatient diagnoses and procedures most costly to the Medicaid program. Increasingly, research also has addressed outpatient and long-term care issues. AHCPR also supports 11 research centers that study patient outcomes and the effectiveness of medical treatment for conditions that disproportionately affect minority populations. Finally, through the User Liaison program, the Agency provides technical assistance to State policymakers and Medicaid officials who are attempting to design and implement changes in their programs.

As discussed below, AHCPR research and technical assistance falls into six areas of critical importance to the Medicaid program: care for elderly and disabled populations, maternal and child health, research and technical assistance on HIV and AIDS, drug policy, informing consumers, and system financing and management.

Return to Contents

Care for Elderly and Disabled Populations

Although only about a quarter of Medicaid recipients are elderly, blind, and/or disabled, this population accounts for almost 60 percent of program spending, about $62.6 billion in 1993 (Rowland, 1995). One reason these expenses are so high is that Medicaid pays for long-term care services, whereas Medicare for the most part does not. Long-term care accounts for about 35 percent of Medicaid costs, and most of these services go to the elderly, blind, and disabled (Rowland, 1995). Put another way, the Medicaid program pays for about half of all nursing home care in the U.S., with out-of-pocket payments accounting for most of the rest (Lair, 1992; Short et al., 1992, cited in Cohen and Spector, 1996). For this reason, AHCPR has devoted a large and growing part of its research effort to issues surrounding the payment and delivery of long-term care services and other services for the aged, blind, and disabled population. (For more information, select AHCPR Research on Long-term Care).

In the early 1990s, a significant Agency activity was the development and dissemination of clinical practice guidelines. For example, acute pain, pressure ulcers, and urinary incontinence are conditions common to elderly and disabled patients in acute and long-term care settings. Providers adopting AHCPR guidelines in these areas report that they have been able to speed recovery, improve patient comfort, and reduce costs. Heritage Manor Nursing Home in Chattanooga, for example, used the incontinence and pressure ulcer prevention guidelines to increase the percentage of dry patients from under 33 percent to over 76 percent, and reduced the number of average pressure ulcers from 14 to 5 (AHCPR, 1996a).

For this reason, many States have helped with guideline dissemination and some have incorporated the guidelines into their quality review protocols. For example:

Texas State surveyors of long-term care facilities use the guidelines on pressure ulcers, urinary incontinence, and acute pain to train staff in each of the 10 operating regions. The Texas Department of Human Services also has distributed copies of all 3 guidelines to its nursing staff and over 1,000 long-term care nursing facilities (AHCPR, 1996a).
The Maryland Health Resources Planning Commission has asked nursing homes and other providers to establish clinical practice guidelines regarding incontinence consistent with those issued by AHCPR (AHCPR, 1996a).

The American Medical Directors' Association (AMDA) adapted AHCPR-sponsored guidelines for long-term care use (the single greatest program cost for Medicaid) in five areas: prevention of adult urinary incontinence, evaluation and care for patients with potential heart failure, detection and treatment of depression, pressure ulcer prevention, and pressure ulcer treatment. This decision was endorsed by a steering committee of long-term care associations including the American Health Care Association, the American Association of Homes and Services for the Aging, and the American Society of Consultant Pharmacies. In 1997, AMDA is developing two guidelines, one on falls and one on altered mental states, that will use AHCPR's guideline on early Alzheimer's disease along with other information.

Because the evidence-based method of guideline development pioneered by AHCPR has become well accepted, and because there are now many public and private organizations that develop clinical practice guidelines, AHCPR no longer sponsors development of guidelines. Instead, the Agency supports Evidence-based Practice Centers (EPCs) to conduct syntheses of the scientific evidence on clinical topics of national significance that enable clinicians and health care organizations to develop their own quality improvement initiatives. AHCPR also participates in a public-private partnership with the American Medical Association and the American Association of Health Plans has created the National Guideline Clearinghouse™. The Clearinghouse is a comprehensive, Internet-based source for clinical practice guidelines and related materials.

AHCPR has sponsored research on several issues related to services for aged, blind, and disabled Medicaid recipients. For example:

Diabetes and blindness: AHCPR-supported research demonstrated that appropriate eye screening for diabetics leads to significant cost savings. The study showed that at current screening rates (about 60 percent of the affected population receiving annual eye exams) government programs save up to $14,276 per patient, a total of $248 million, including medical costs under Medicaid. The authors estimate that such screenings preserve 53,986 person-years of sight each year (Chiang, Bassi, and Javitt, 1992; Javitt, Aiello, Chiang, 1994).
Identifying the frail elderly: AHCPR-sponsored research led to instruments that measure a patient's degree of independence in activities of daily living as well as cognitive and social functioning. Nursing homes and other providers of chronic care for the elderly throughout the country are now using these measures as tools to identify their most frail elderly members and to design and target interventions to help them (AHCPR, 1995a).
Long-term care: A current AHCPR-funded study is identifying and testing a methodology for measuring the quality of long-term care. Specifically, the project: (1) identifies dimensions and indicators of nursing home quality using data from Federal administrative records; (2) develops and tests a model for rating nursing home quality; (3) tests hypotheses regarding the relationship among structural, process, and outcome components of nursing home quality; (4) tests the usefulness of the developed rating system for consumers, professionals, and surveyors; and (5) uses the model developed to rate all nursing homes in the United States. Charlene Harrington, Principal Investigator (Grant No. HS07574; period: 4/1/95-3/31/98).

A second study sought to develop an outcomes-based quality assurance methodology for nursing homes in Massachusetts. Francis G. Caro, Principal Investigator (Grant No. HS07585; period: 9/30/93-3/31/96).

A third current study addresses the "transfer-of-asset" policy by which Medicaid eligibility for nursing home care is attained by transferring money to children or otherwise disposing of assets. The study will examine the impact of Medicaid rules, including post-l988 spousal asset waivers, on the purchase of long-term care insurance and asset accumulation. Edward Norton, Principal Investigator (Grant Nos. HS08496, AGl3624, HS09515; period: 9/30/96-9/29/98).

AHCPR also funded research that looked at the effect of Medicaid subsidies on the decision of frail elderly to enter a nursing home. The same study also examined the effect on medical service use when Medicaid recipients are switched from fee-for-service medical care to capitated plans. Anthony T. Losasso, Principal Investigator (Grant No. HS08944; period: 8/l/95-7/31/96).
Disabilities: AHCPR awarded the University of Texas Health Sciences Center a grant to examine the effectiveness of alternative treatments for chronic disabling conditions, such as type II diabetes and mental health problems, with an emphasis on the Mexican-American population. Jacqueline A. Pugh, Principal Investigator (Grant No. HS07397; period: 9/9/92-2/28/98).

Return to Contents

Maternal and Child Health

Although the aged, blind, and disabled account for the largest share of program costs, most Medicaid recipients are poor children and their mothers. About half of all Medicaid recipients are children and as noted earlier, Medicaid pays for about a third of all births in the United States. AHCPR research has indicated many ways that Medicaid, and other providers of care to children and pregnant women, can increase quality and reduce costs. For example:

Diabetes in pregnancy: Preconception care and enhanced prenatal care for women with diabetes can prevent complications for pregnant women and their babies, thereby increasing quality of care and saving $1,720 per enrolled woman with diabetes. If the AHCPR-suggested model were followed for even 20 percent of diabetic pregnancies, the country could save over $8.6 million a year. Since the Medicaid program would be likely to cover at least a third of these pregnancies, the costs savings for Medicaid could reach almost $3 million a year (Elixhauser, Weschler, Kitzmiller, et al., 1993).
Primary care for high-risk indigent infants: A demonstration was designed to reduce mortality among low birthweight infants after hospital discharge and thereby reduce the need for intensive care for premature infants in the first few months after discharge. Most of the mothers involved in the study were teenagers from black and Hispanic Dallas neighborhoods. Jon E. Tyson, Principal Investigator (Grant No. HS06837; period: l/1/92-6/30/97).
Prenatal care and infant health: New York State began a major expansion of its Medicaid program in 1990. A current AHCPR-funded study is examining the impact of these changes on prenatal care use and birthweight distribution among African-American, white, and Hispanic enrollees between 1988 and 1991. Theodore Joyce, Principal Investigator (Grant No. HS08424; period: 9/94-12/95). To help determine whether large-scale statewide programs can succeed in reducing adverse birth outcomes, AHCPR funded an evaluation of particular components Washington's 1989 Medicaid expansion. Laura-Mae Baldwin, Principal Investigator (Grant No. HS06846; period: 4/l/94-9/30/97).
Middle-ear illness: Otitis media or middle-ear illness is common in young children. AHCPR recommendations for reducing unnecessary interventions for middle-ear infection in children under 3 could save many children and their families the trauma of surgery, and could also save the country $170 million in medical and indirect costs, even if only one provider in five adopted the guidelines. (Lewin, Rubin, and Gold, et al., 1994). Because Medicaid covers a quarter of all children, about $40 million of this savings could accrue to Medicaid programs. For this reason, State Medicaid programs such as Oregon's are planning to use the otitis media guideline as part of their annual managed care external review.
Immunizations: An AHCPR-funded study found that a vaccine program for children under 6 could prevent 3.7 million chickenpox cases, 3,900 hospitalizations, and 52 deaths each year. Net savings in medical costs and lost work days for Medicaid patients and their families would exceed $150 million a year (in 1990 dollars). If a quarter of these savings accrued to the Medicaid program, savings could reach over $37 million a year (Lieu, et al., 1994). A recent AHCPR study developed strategies for improving the dissemination and adoption of all pediatric vaccine guidelines. Thomas R. Konrad, Principal Investigator (Grant No. HS07286; period: 7/1/92-6/30/96).
Preventive and well-child care: Only one-third of poor preschool children and half of those from more affluent families receive the recommended number of well-child visits, according to a national health survey conducted by AHCPR (AHCPR, 1994). Increasing use of these services can improve outcomes and reduce costs. An AHCPR-funded study assessed the impact of periodic feedback and financial incentives on use of preventive services in a mandatory Medicaid HMO and found no differences between intervention and control groups. Alan L. Hillman, Principal Investigator (Grant No. HS07634; period: 4/1/93-9/30/96).
Childhood asthma: An AHCPR-sponsored project by the American Academy of Pediatrics examined variations in the care of acute asthma in pediatric practice as well as compliance with national guidelines on asthma treatment. The project documented that pediatric providers are generally compliant with national guideline recommendations for the care of children with acute asthmatic exacerbations, although substantial variations from the guideline were noted for patients with a moderate-to-severe presentation. Anthony Alario, Principal Investigator (Grant No. HS07418; period: 9/30/92-9/29/94).
Pediatric gastroenteritis: An AHCPR-funded Pediatric Gastroenteritis Patient Outcomes Research Project is examining treatment variations and outcomes for preschool children with pediatric gastroenteritis in California, Georgia, and Michigan. Preliminary findings suggest that there may be a significant amount of inappropriate care. Antibiotics were used in over a quarter of the episodes, despite the fact that antibiotics are not recommended for conditions involving viral agents. On the other hand, study findings suggest that oral rehydration may be underused. (Pediatric Gastroenteritis: Treatment Patterns and Outcomes Among Disadvantaged Children. Part of the Pediatric Gastroenteritis Patient Outcomes Research Project. Contract No. 282-90-0043.)
Family-centered care: A recent study attempted to determine whether an intervention program that involves children, parents, and physicians in treatment decisions for children with chronic disease improves the health status of children, as shown by both clinical variables and self-reports. Sherrie H. Kaplan, Principal Investigator (Grant No. HS06897; period: 9/30/91-12/31/95).
Adolescent health: An AHCPR study published in the Journal of the American Medical Association identifies how providers can encourage urban adolescents to seek and receive preventive and primary care. According to the adolescents interviewed for the study, the most important provider characteristics are provider hand-washing, clean instruments, honesty, respect toward teens, cleanliness, know-how, carefulness, experience, seronegativity for HIV, equal treatment of all patients, and confidentiality (Ginsburg, Slap, Cnaan, et al., 1995).
Physician fees: Recent research based on the 1987 National Medical Expenditure Survey (NMES) found that children in States with higher Medicaid physician fees were more apt to receive their care from physicians than in more expensive hospital-based facilities, and therefore total expenditures for children in the most generous physician fee States were only about three-fourths of those in the least generous States (Cohen and Cunningham, 1995).
Febrile infants: A current project is researching variations in diagnosis and treatment of infants with high fevers among office-based pediatricians across the country, and how these differences affect outcomes and costs. Robert H. Pantell, Principal Investigator (Grant No. HS06485; period: 5/l/93-l/31/98).
Sickle cell disease: An AHCPR-supported guideline released in 1993 recommends screening of all newborn babies for sickle cell disease and for those who test positive, the administration of protective doses of penicillin (Smith, Kinney, Ames, et al., 1993).
Cancer prevention for minority women: In a randomized controlled trial, investigators assessed the impact of a system of periodic feedback and financial incentives on physician compliance with cancer screening guidelines in HealthPASS, Philadelphia's Medicaid HMO. The study found that providing feedback and bonuses to primary care sites did not significantly improve primary care provider attention to cancer prevention for minority women over 50. Alan L. Hillman, Principal Investigator (Grant No. HS07720; period: 9/30/93-9/29/96).
Assuring quality services: In recent years, the research community as well as public and private payers have focused a lot of attention on development of instruments and mechanisms for monitoring the quality of care. Most of these efforts have focused on adults. A 1995 AHCPR workshop for State Medicaid directors and other senior State officials, "Assuring Quality Services for Children: Opportunities and Challenges in a Changing Health Care System," was designed to help States find or design the tools and systems they need to assure quality of care for children.
Pediatric specialists: AHCPR is sponsoring research on the effects of resources used and quality of care of referrals to pediatric specialists compared to adult specialists for common and uncommon conditions among Medicaid children. James M. Perrin, Principal Investigator (Grant No. HS09416; period: 9/30/96-9/29/98).

Return to Contents

Research and Technical Assistance on HIV and AIDS

Currently the Medicaid program finances care for 53 percent of all persons living with AIDS (PLWA) and up to 90 percent of all children with AIDS. Medicaid is the largest single payer of direct medical services to PLWAs. Estimated combined Federal and State Medicaid expenditures will be $3.3 billion in fiscal year 1997 (Personal Communication, Joseph Dunne, Health Care Financing Administration, April 28, 1997). AHCPR has sponsored over 100 research projects to help State Medicaid programs control costs and improve quality in care for HIV and AIDS patients. For example:

PCP prophylaxis: AHCPR research conducted at Johns Hopkins Hospital shows that early drug interventions can help reduce the incidence of a common AIDS-related pneumonia. Even if only one AIDS patient in five received such treatment, the country could save $48.8 million a year in hospital costs. Given Medicaid's role in financing care for HIV and AIDS, about $19.5 million of these savings could be expected to accrue to the Medicaid program (Gallant, McAvinue, Moore, et al., 1995; Grant No. HS09101).
Early HIV treatment: A 1994 clinical practice guideline on evaluation and management of early HIV infection documented that early stage HIV care does not require an array of specialists. Because primary care is generally less costly than specialist care, the potential may exist for reducing costs while maintaining quality. The guidelines have been used by peer review organizations such as the Island Peer Review Organization (IPRO) in New York State, as well as other entities charged with maximizing quality and controlling costs for care to Medicaid and Medicare patients with HIV and AIDS (AHCPR, 1996a). AHCPR is reaching HIV-infected pregnant women to inform them about the potential benefits of using AZT to lessen the risk of passing the infection to their babies. Educational materials being developed include brochures and culturally appropriate products in both English and Spanish (AHCPR, 1995b).
Support for patients with AIDS: The Comprehensive Health Enhancement Support System (CHESS) provides on-line services for people facing major life crises such as AIDS/HIV. A recent study found that AIDS patients who use the CHESS system spend 17 percent less time in the doctor's office when they visit. These patients also have lower health care costs, fewer hospitalizations, and shorter hospital stays. In addition to improving the quality of care for AIDS/HIV patients, the study shows, CHESS has reduced treatment costs from $1,200 per month to less than $1,000 (AHCPR, 1995a).
Day limits: AHCPR research found that when Medicaid programs cap the number of paid inpatient days rather than using a diagnostic-related group (DRG) approach, they have an adverse impact on patient care (Buchanan and Kircher, 1994).
Home care: A recent study on home care for terminally ill AIDS patients found that policies that promote dying at home instead of the hospital may improve patient "quality of death," but may not lower health care costs (Bennett, et al., 1995; Grant No. HS062 11).
Community services: An AHCPR-supported evaluation of community-based programs to improve access to social and medical services for persons with AIDS established under a Medicaid waiver found that these programs expanded health care delivery systems and provided substantial services for persons with AIDS. Stephen Crystal, Principal Investigator (Grant No. HS06339; period: 9/30/94-9/30/97).

Return to Contents

Drug Policy

Between 1984 and 1993, Medicaid pharmaceutical expenses increased fourfold from $1.97 billion a year to $7.97 billion. For this reason, evaluations of State cost-control efforts in the pharmaceutical area can be very helpful to States. Because of considerable State interest in this issue, in 1995 AHCPR sponsored a workshop on Medicaid drug utilization review for State Medicaid directors and members of State drug utilization review boards. In addition, the Agency has sponsored research focusing on the effectiveness of various mechanisms designed to control drug costs. For example:

Advance approval: An AHCPR-funded Tennessee study found that prior authorization requirements for nonsteroidal anti-inflammatory drugs (NSAIDs) can reduce Medicaid costs by up to half. Tennessee saved more than $12.8 million in NSAID costs over 2 years from this program, with no increase in Medicaid expenses for other related medical care. If similar prior authorization measures were used nationally for even 20 percent of all NSAID prescriptions, Medicaid could save $175 million annually in prescription costs (Smalley and Griffin, 1995; Grant No. HS07768).
Payment caps: On the other hand, a New Hampshire study showed that caps on Medicaid pharmaceutical benefits can raise health care costs, at least for certain patients. In 198 1, New Hampshire briefly imposed a limit of three prescriptions a month. An AHCPR-supported evaluation study showed that, for adult schizophrenic patients, the resulting increases in acute care and other medical interventions ($1,530 per patient over 11 months) exceeded the savings in outpatient drug costs ($56.54) several-fold (Soumerai, McLaughlin, Ross-Degnan, et al., 1994; Grant No. HS05554).

Return to Contents

Informing Consumers

In the context of AHCPR's efforts to provide information that assists consumers in making choices among health plans, AHCPR has targeted a number of its efforts for Medicaid recipients.

Multimedia kiosk: The development of the "Choice Card," a multimedia kiosk targeting Medicaid recipients in Oregon and Connecticut, was funded by AHCPR. The Choice Card allows each individual to indicate what factors, values, and preferences are important, and to review and compare the relevant information across plans. Lisa Adatto, Contractor (Contract No. 290-95-0041; period: 9/30/95-9/29/97).
Scorecard: This collaborative effort among AHCPR and various health organizations in Oregon resulted in the development of a consumer scorecard that allows enrollees in Oregon's managed Medicaid program to obtain information concerning fees, morbidity rates, and other factors to assist in the selection of a health care provider or plan. Pam Hanes, Contractor (Contract No. 282-93-0036; period: 1/25/95-9/4/96).
Workbooks and videos: In an effort to assist Medicaid recipients and other low-income, disadvantaged, low-literacy, and/or ethnic minority consumers in Rhode Island who are choosing among health plans, AHCPR funded this project that developed two print guides and a video in English and Spanish. Christine Zaracadoolas, Contractor (Contract No. 290-97-0002; period: 9/30/95-3/31/97).
Consumer Assessment of Health Plans Study (CAHPS®): In cooperation with AHCPR, a research consortium is developing a family of surveys and consumer report formats that will help consumers and purchasers select high-quality health care plans and services that meet their needs. AHCPR worked with HCFA to develop CAHPS® modules addressing Medicaid and Medicare. James Lubalin, Ron Hays, and Paul D. Cleary, Principal Investigators (HS09218, HS09204, HS09205; 9/30/95-9/29/00). (Select to access the CAHPS® Web site.)

Return to Contents

System Financing and Management

Finally, rapid changes in public programs and private markets have created new challenges for States that cut across programmatic lines: how to work with private-sector plans, how to measure and monitor quality, how to achieve greater cost-effectiveness, and how to structure financial incentives in a way that supports quality care. AHCPR has conducted a variety of research initiatives and technical assistance programs designed to support States in these efforts. For example:

Managed care: Several AHCPR projects have analyzed the impact of managed care on access, quality, and costs under the Medicaid program. One study looked at the question of self-selection into Medicaid managed care. In voluntary managed care systems, does the health status and prior use of services by children in managed care differ from the health status and prior use by children in fee-for-service? Teresa M. Herbert, Principal Investigator (Grant No. HS00089; period: 9/1/94-8/31/96). AHCPR also funded a study to examine whether State and private initiatives to improve access to health insurance coverage have reduced the number of uninsured and altered their composition. The project developed a data set that can be used to estimate the effects of particular State-level reforms or policies, including Medicaid managed care. Frank A. Sloan, Principal Investigator (Grant No. HS08614; period: 4/1/95-3/31/96). A current study synthesizes and classifies existing State approaches and current evaluations of Medicaid managed care programs, reviewing the effect such waivers have had on rural areas. Thomas Ricketts, Contractor (Contract No. 290-93-0038; period: 9/30/96-3/31/98). A companion study is conducting an evaluation of AHCPR's Rural Managed Care Centers. Thomas Ricketts, Contractor (Contract No. 290-93-0038; period: 9/30/96-3/31/98).
Nationally representative survey: The Medical Expenditure Panel Survey, the third in AHCPR's series of medical expenditure surveys, collects detailed information each year on health status, health care use and expenses, and health insurance coverage—public and private—of individuals and families in the United States, including nursing home residents. The survey, which permits comparisons of services, costs, and use for Medicaid recipients and others, is designed to provide researchers and policymakers with information necessary to examine the relationship between individual and family characteristics, including health insurance and medical care use and spending.
Information for policymakers: In June 1995, AHCPR's User Liaison Program conducted a special workshop on integrated State health information systems for State health officers and Medicaid directors in Public Health Service Regions IV and VI. State Medicaid directors are invited to all of AHCPR's User Liaison Program Workshops. Examples of topics of workshops conducted in 1996 and 1997 that touched on Medicaid issues include: Integrated Delivery Systems in Managed Care, Providing Quality Services to Children with Special Health Care Needs Under Managed Care, and Local Health Departments in a Managed Care Environment. The impetus for this last workshop resulted from an AHCPR publication, Assessing Roles, Responsibilities, and Activities in a Managed Care Environment: A Workbook for Local Health Oficials (AHCPR, 1996b).
Payment and quality. A recently published study of the Maryland Medicaid program examined the quality of care provided to patients in different settings such as physicians' offices, community health centers, and hospital outpatient facilities. Quality was measured by access to primary care, technical quality, appropriateness of care, and outcomes. The study found that there were no consistent differences in quality across the care sites and no consistent relationship between cost-efficiency and quality of care (Starfield, Powe, Wiener, et al., 1994; Grant No. HS06 170).

In a separate study of payment and quality in long-term care, researchers sought to determine the impact of payment methodologies and payment levels on quality of care in nursing homes. They found that homes paid on a flat-rate approach use fewer registered nurses (RNs) but more licensed practical nurses (LPNs) than homes paid on a cost basis. They also found that the level of payment affected staffing levels: in more generous systems, homes use more LPNs. Higher staffing levels, in turn, were associated with higher quality. An increase of .5 RNs per 1,000 residents could translate into an estimated 3,000 fewer deaths annually for residents of certified nursing homes. Similarly, a higher intensity of LPN staffing significantly improves functional outcomes. Despite these results, the researchers found no direct relationship between payment methods or levels and quality (Cohen and Spector, 1996).
Emergency Room use: Use of the Emergency Room (ER) for nonemergency care is a significant problem for Medicaid. An AHCPR study in Maryland suggests that requiring preauthorization for nonemergency ER services does not reduce ER use and can increase hospitalization rates (Gadomski, 1995).

Return to Contents

Conclusion

The Medicaid program is likely to undergo considerable change in the future. State responsibility for financing and delivery of care for poor and vulnerable populations is likely to increase, and therefore States will have an increased need for research, measurement tools, and technical assistance programs to help them improve access, enhance quality, and control costs. AHCPR will need to work closely with HCFA and the States to ensure that the Agency's future research and technical assistance efforts respond to these changing State needs.

Return to Contents

References

Agency for Health Care Policy and Research. Real world use of guidelines. AHCPR Pub. No. 96-R034. Rockville, MD: AHCPR, March 12, 1996a.

Agency for Health Care Policy and Research. Assessing roles, responsibilities, and activities in a managed care environment: A workbook for local health officials. AHCPR Pub. No. 96-0057. Rockville, MD: AHCPR, July 1996b.

Agency for Health Care Policy and Research. Better quality can cost less: The evolving role of AHCPR. Interim Report to the National Advisory Council. AHCPR Pub. No. 95-R011. Rockville, MD: AHCPR, September 1995a.

Agency for Health Care Policy and Research. Pregnancy and HIP Is AZT the Right Choice for You and Your Baby? AHCPR Pub. No. 96-0007. AHCPR, Rockville, MD, December 1995b.

Agency for Health Care Policy and Research. Low Income Children: The Effect of Expanding Medicaid on Well-Child Visits. Intramural Research Highlights, No. 38. AHCPR Pub. No. 94-0137. Rockville, MD: AHCPR, June 1994.

Bennett CL, et al. Costs of terminal care for people with AIDS. AIDS Patient Care, February 1995: 7-9.

Buchanan RJ, Kircher FG. Medicaid policies for AIDS-related hospital care. Health Care Financing Rev 1994; 15(4):33-41.

Chiang YP, Bassi LJ, and Javitt JC. Federal budgetary costs of blindness. Milbank Quarterly Review 1992; 70(2):319-40.

Cohen JW, and Cunningham PJ. Medicaid physician fee levels and children's access to care. Health Affairs Spring 1995; 14(1):255-262.

Cohen JW, and Spector, WD. The effect of Medicaid reimbursement on quality of care in nursing homes. Journal of Health Economics 1996; 15: 23-48.

Elixhauser A, Weschler JM, Kitzmiller JL, et al. Cost-benefit analysis of preconception care for women with established diabetes mellitus. Diabetes Care 1993; 16(8):1146-57.

Gadomski AM, et al. Diverting managed care Medicaid patients from pediatric emergency department use. Pediatrics February 1995; 95(2):170-178.

Gallant JE, McAvinue SM, Moore RD, et al. The impact of prophylaxis on outcome and resource utilization in Pneumocystis carinii pneumonia. Chest 1995; 107(4):1018-23.

Ginsburg KR, Slap GB, Cnaan A, et al. Adolescents' perceptions of factors affecting their decisions to seek health care. JAMA 1995; 273(24):1913-18.

Javitt JC, Aiello LP, Chiang Y, et al. Preventive eye care in people with diabetes is cost-saving to the Federal government: Implications for health reform. Diabetes Care 1994; 17(8):909-17.

Lair TJ. A profile of 1987 nursing home users under 65. National Medical Expenditure Survey Research Findings 13. AHCPR Pub. No. 92-0060. Rockville, MD: Agency for Health Care Policy and Research, 1992.

Lieu TA, et al. Cost-effectiveness of a routine varicella vaccination program for US children. JAMA 1994; 271(5):375-381.

Lewin VHI, Rubin R, Gold W, et al. Otitis media in 2-year olds: Current treatment patterns and estimated costs of practice guidelines. Appendix I: cost report. In Stool SE, Berg AO, Berman S, et al. Otitis media with effusion in young children. Guideline Technical Report, No. 12. AHCPR Pub. No. 95-0621. Rockville, MD: Agency for Health Care Policy and Research, 1994.

Rowland D. Medicaid: The health and long-term care safety net. Testimony before the Committee on Finance, United States Senate, June 29, 1995.

Rowland D. Hanson K. Medicaid: Moving to Managed Care. Health Affairs Fall 1996; 15(3):150-152.

Short PF, et al. Public and private responsibility for financing nursing home care: The effect of Medicaid asset spend-down. Milbank Quarterly Review 1992; 70(2):277-298.

Smalley WE, Griffin MR. Effect of a prior-authorization requirement for nonsteroidal anti-inflammatory drugs by Medicaid patients. N Engl J Med 1995; 332(24):1612-17.

Smith JA, Kinney TR, Ames B, et al. Sickle Cell Disease: Screening, Diagnosis, Management, and Counseling in Newborns and Infants. Clinical Practice Guideline No. 6. AHCPR Pub. No. 93-0562. Rockville, MD: Agency for Health Care and Policy and Research, April 1993.

Soumerai SB, McLaughlin TJ, Ross-Degnan D, et al. Effects of limiting drug-reimbursement benefits on the use of psychotropic agents and acute mental health services by patients with schizophrenia. N Engl J Med 1994; 331(10):650-5.

Soumerai S, et al. Payment restrictions for prescription drugs under Medicaid: Effects on therapy, cost, and equity. N Engl J Med 1987; 317(9):550-556.

Starfield B, Powe NO, Wiener JR, et al. Costs vs. quality in different types of primary care settings. JAMA Dec 28, 1994; 272(24):1903-1908.

Return to Contents

AHCPR Publication No. 97-0044
Current as of August 1997

Internet Citation:

Meeting Medicaid's Cost and Quality Challenges: The Role of AHCPR Research. AHCPR Program Note. AHCPR Publication No. 97-0044, August 1997. Agency for Health Care Policy and Research, Rockville, MD. http://www.ahrq.gov/research/mednote.htm