Health care project delivers cost savings, important insights for emerging reform models

January 30, 2014 by Laurel Thomas Gnagey, University of Michigan

A Medicaid demonstration program analysis, to measure cost savings of provider service networks in Florida, could give a glimpse into the likely success of Affordable Care Act programs that aim to reduce health care expenditures, according to research from the University of Michigan School of Public Health and the University of Florida.

Specifically, the team found that four years after Florida's Medicaid Demonstration was implemented, the cost of providing care through provider (PSNs) was lower per patient than in counties that were not part of the program, resulting in an overall savings of about 18 percent. Researchers also found that PSNs lowered expenditures more than long-standing health maintenance organizations (HMOs).

Although overall costs of providing care went up over the period studied, the amount of increase in the PSNs was $40 per patient, per month, in demonstration counties versus $186 in non-demonstration counties. Costs per PSN patient were $7 less than for those in an HMO. Nearly 300,000 Florida Medicaid enrollees receive care from either PSNs or HMOs.

"Florida PSNs are led by safety net hospitals—those that have a commitment to serving low-income, uninsured and vulnerable populations—and physician networks. Their experience over the past several years provide important insights into newly forming accountable care organizations and other models," said Christy Harris Lemak, U-M associate professor of health management and policy and one of the study's authors. "This research demonstrates the financial benefit of systems led by providers that are accountable for quality and cost performance."

University of Florida researchers were lead investigator Jeffrey Harman, Allyson Hall and R. Paul Duncan. The study is published in a recent issue of Health Services Research.

Florida has experimented for a number of years with various reforms and models for providing care, the researchers said. Some have resulted in the formation of these community-based collaborative care networks known as PSNs, which now exist in five counties. For this study, the researchers compared two of the demonstration counties with two others not in the program but with similar Medicaid populations.

Like the accountable care organizations established in 2010 as part of the ACA, provider service networks offer a continuum of care to a defined population, support comprehensive performance measurement, identify performance targets, establish payment mechanisms that encourage quality and cost reduction, and use information technology to coordinate care and promote quality, the researchers said.

"More research is needed in this area. Our team continues to examine specifically how the Florida PSNs achieved the cost savings shown here. We also have identified that the are not immediate," Lemak said, adding that a study of the demonstrations at two years did not show the same results that were found at the four-year mark.

"These findings provide some optimism for how other accountable care approaches may fare elsewhere."

Explore further: Study tracks factors linked to creation of accountable care organizations

Related Stories

Study tracks factors linked to creation of accountable care organizations

October 7, 2013
Regions of the U.S. where doctors and hospitals are consolidated into large networks are more likely to have accountable care organizations, medical practice structures intended to improve medical care and cut costs, according ...

Evidence of savings in accountable care organizations and cancer care

December 13, 2013
Approximately 10 percent of Medicare spending is for cancer care, and Medicare spending is nearly four times higher for beneficiaries with cancer than in those without the disease. Little is known about how to curb spending ...

Physicians embrace Michigan program to improve health care

December 9, 2013
A statewide program created by Michigan's largest insurer has succeeded in engaging primary care physicians from the ground up to improve patient care, according to the University of Michigan School of Public Health.

Lower costs from commercial Alternative Quality Contract spill over to patients not covered by the plan

August 27, 2013
A commercial health insurer's large scale demonstration program designed to improve quality and lower costs for subscribers also lowered costs for Medicare patients who used the same health care providers but were not covered ...

AAP updates medicaid policy statement with ACA changes

April 1, 2013
(HealthDay)—The implications of the expansion of Medicaid resulting from implementation of the Affordable Care Act (ACA) on children are discussed in a policy statement from the American Academy of Pediatrics (AAP) published ...

People lacking insurance not likely to migrate to obtain Medicaid coverage

January 6, 2014
Amidst the patchwork nature of Medicaid expansion in the U.S. under the Affordable Care Act (ACA), some have worried that low-income adults in states without expanded coverage might move to states that have chosen to expand—thus ...

Recommended for you

Women run faster after taking newly developed supplement, study finds

January 19, 2018
A new study found that women who took a specially prepared blend of minerals and nutrients for a month saw their 3-mile run times drop by almost a minute.

Americans are getting more sleep

January 19, 2018
Although more than one in three Americans still don't get enough sleep, a new analysis shows first signs of success in the fight for more shut eye. According to data from 181,335 respondents aged 15 and older who participated ...

Wine is good for you—to a point

January 18, 2018
The Mediterranean diet has become synonymous with healthy eating, but there's one thing in it that stands out: It's cool to drink wine.

Sleep better, lose weight?

January 17, 2018
(HealthDay)—Sleeplessness could cost you when it's time to stand on your bathroom scale, a new British study suggests.

Who uses phone apps to track sleep habits? Mostly the healthy and wealthy in US

January 16, 2018
The profile of most Americans who use popular mobile phone apps that track sleep habits is that they are relatively affluent, claim to eat well, and say they are in good health, even if some of them tend to smoke.

Improvements in mortality rates are slowed by rise in obesity in the United States

January 15, 2018
With countless medical advances and efforts to curb smoking, one might expect that life expectancy in the United States would improve. Yet according to recent studies, there's been a reduction in the rate of improvement in ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.