We Can Reduce Our Medicaid Costs
Malcolm Bird was a first-time father with a toddler whose pinky finger was bleeding. He rushed his young daughter to a Connecticut emergency room, where a doctor washed off the finger and put a Band-Aid on it. That Band-Aid, which fell off in the car on the way home, cost Mr. Bird $629.
Mr. Bird learned the hard way what most of us already know. The emergency room is an expensive place to treat minor injuries. If your kid cuts her finger, just wash it off and slap a Band-Aid on it. If your kid breaks her leg on a trampoline, go to the emergency room.
Unfortunately, too many people treat the emergency room like a primary care physician’s office, and they don’t just do it once like Mr. Bird. They run to the emergency room when their stomach’s upset, they’re depressed, their back hurts or they get a pimple.
The emergency room is expensive because it’s expensive to run. It exists to save lives, not to dispense really pricey Band-Aids or aspirin. Our health care budget in Louisiana is out of control, and we’ve got to cut costs. As state treasurer, I’m constantly juggling funds for agencies because revenue isn’t supporting expenses.
The Centers for Disease Control and Prevention estimates that 136.3 million people a year visit an emergency room in the U.S. Only 11.9% require hospitalization. Among Medicaid patients, emergency room use is especially high (nearly two-fold higher than those with private insurance).
In Louisiana, we need to care about emergency room use because we’re in the process of adding 375,000 people to the Medicaid rolls. More than one million people in Louisiana already are on Medicaid. Federal and state governments share the cost of Medicaid, which means the taxpayer really foots the bill.
A few years ago, Washington state started looking at utilization of the emergency room by Medicaid patients as the program’s costs soared amid the economic recession. Some patients were going to the emergency room more than 100 times a year. Washington state found that 85 percent of the frequent visitors had serious mental health problems and 48 percent had substance abuse issues.
The state’s political leadership asked the state’s hospitals and doctors to sit down and come up with some solutions. Legislation produced reforms that actually are working and saving the state millions of dollars.
Hospitals now exchange information electronically. They hand out educational materials about alternatives to using the ER. They catalog frequent users of their emergency rooms. They help them get an appointment with a primary care doctor when they need a follow-up visit. They discourage patients from visiting the emergency room to get a prescription for their narcotic fix.
Washington state seized on something commonly identified by health care researchers. A lot of Medicaid patients are misusing the emergency room because they don’t have a primary care doctor that they see regularly.
The results of the reforms were tracked for a year. Here’s what happened: emergency room visits dropped nearly 10%; visits resulting in a scheduled drug prescription dropped 24%; and the rate of visits by those who visited five or more times annually dropped 10.7%. Even better, the reforms helped save the state $33.6 million.
These reforms still are in place, and all hospitals in Washington state are participating. We should take a page from Washington state’s book. We can cut down on unnecessary visits to the emergency room. We can cut Medicaid costs. No one needs a $629 Band-Aid.
John Kennedy is Treasurer for the State of Louisiana