With medical expenses among the nation's highest, New York has begun cutting Medicaid costs by replacing pay-as-you go services with managed care for prescription drugs. And plans are in the works to extend that approach to acute care, long-term care, addiction services and mental health services.
Nearly half the $53.5 billion health care budget for 5.3 million low-income New Yorkers goes for fewer than 700,000 chronically ill, elderly patients.
Analysts say end-of-life interventions and chronic illness also remain major cost drivers affecting privately insured New Yorkers, including 1.1 million expected to enroll for the first time under a new federal mandate.
New York Health Commissioner Dr. Nirav Shah advocates pushing treatment "upstream" into lower-cost primary care and prevention. He said insuring additional people will help to do that, getting them care before they end up in high-cost emergency rooms.
Another important step is giving patients clearly communicated options for end-of-life care, so they can choose to avoid invasive, often painful procedures in attempts to extend their lives, which often mean they'll die in hospitals, not at home or in hospice, Shah said.
"It's a hard conversation," he said.
The Kaiser Foundation reported the state's per-person annual health care spending averaged $8,341 in 2009, fifth-highest among states. That followed nearly two decades of 5.9 percent average annual cost increases, slightly lower than the national average but still double the basic U.S. inflation rate.
Bruce Boissonnault, president of the Niagara Health Quality Coalition that reports annually on patient outcomes at 230 hospitals across New York, said there is a lot of testing going on with the chronically and very ill, even when the outcome of those tests won't change the course of treatment.
"There's a perverse reward for doing more for many categories for patients," he said. "It's fee-for-service for a lot of patient care. The more you do, the more money you make. ... Hospital CEOs get appraised based on revenue growth. That's a big problem."
With Medicaid, state health officials have begun requiring broader enrollment in managed care plans, already showing 24 percent savings in drug costs, extending that approach in 2014 to nursing home benefits and to addiction and mental health treatment the year after.
The largest Medicaid program in the nation, its budget has been lowered by $500 million from two years earlier, ending 13 percent annual growth, while covering 500,000 more people who enrolled in a weak economy.
State Medicaid Director Jason Helgerson said pay-for-service has been the main driver in the rising costs. Other upcoming changes will add hospice to managed care and a joint federal initiative to coordinate services for patients eligible for both Medicaid and Medicare coverage for the elderly, he said.