Saving Medicaid: Advancing Health Reform

    • February 13, 2013

When Nirav Shah, MD, became New York State’s youngest health commissioner (at age 38) in 2011, reforming the state’s controversial and costly Medicaid program was at the top of his to-do list. A former Robert Wood Johnson Foundation (RWJF) Physician Faculty Scholar (2007-2010), RWJF Clinical Scholar (2001-2003), and Health e-Technologies Initiative grantee (2004), Shah is a leader in the implementation of electronic health records and lower-cost, patient-centered care.

The 100 patients with the highest care needs cost $50 million last year.”

“In the past year, we saved $4 billion [combined state and federal dollars], while adding 154,000 people to the Medicaid rolls and achieving our [Centers for Medicare and Medicaid Services] Triple Aim goals,” Shah said. The state is on track to save $34.3 billion over the next five years. “We are succeeding because we have embraced a participatory model. We went to our communities and asked, ‘what do you need?’ and then designed our plan.”

The Challenge

As of 2009, New York State was spending roughly $53 billion to serve 5 million people—nearly twice the national average—with abysmal results. The state was 50th in the nation in managing avoidable hospital costs and 22nd in quality of care. To complicate matters, politics often trumped patient needs. “Historically, Medicaid had been a political football,” said Jason Helgerson, New York State’s Medicaid director.

The Redesign—Outreach—Solution

Shah began by working with the Medicaid Redesign Team (MRT), a statewide group of experts established by the Governor, which produced 78 initiatives in phase one and 124 initiatives in phase two. These initiatives were shared in the report A Plan to Transform the Empire State’s Medicaid Program. The initiatives included an early embrace of the Affordable Care Act (ACA) through an RWJF-funded online portal that teaches residents about the state’s first health insurance exchange.  Here, Shah and Helgerson share the ideas critical to the MRT’s success:

  • Bringing Stakeholders Together: Determined to include and learn from the full range of parties engaged in the state’s health care system, Governor Andrew M. Cuomo convened a group of nurses, physicians, philanthropists, advocates, legislators, and hospital and health center executives to create the MRT. “We then held public meetings and gathered more than 4,000 ideas,” Helgerson said.
  • Capping Costs: To end years of fractious battles over funding, the MRT created the global Medicaid spending cap—a finite budget plan that requires assessment of new expenditures. “We are able to do this now because we have the data to observe real time expenses and swiftly identify trends,” explained Shah.

    “To get value, you have to understand outcomes, quality and safety, so you must have a mechanism in place to monitor the system,” he advised. “To succeed in cost-savings, look at every single thing you do, and ask: ‘is this providing value to the patient, rather than simply adding volume and churn to the system?’”

  • Coordinating Care: The MRT broke through the silos in the system to implement the ACA tool of health homes. The move dramatically improved care, especially for individuals with two or more chronic conditions. “The 100 patients with the highest care needs cost $50 million last year,” Helgerson explained. “Many logged up to 50 emergency room visits a year.”

    “Creating health homes for these patients and keeping them out of the hospital means addressing far more than health,” Shah said. New York State’s health homes will attend to mental health care, supportive housing, employment needs, and other issues in a single care plan, administered by patient care coordinators using “robust health information technology that is more than an electronic medical record.”

    Candidly, Shah added, “initially it took a lot a cajoling to get people to work together. Hospitals did not easily give up power to the community-based organizations that knew how to best provide some of this care. But by bringing them together and paying through one provider, we were able to greatly enhance care and realize real savings.” Eventually more than 50 health homes covering 57 counties will be in place to care for the state’s entire Medicaid population. 

  • Harnessing the Power of the Workforce: The MRT plans to ensure “that mid-level providers practice at the top of their licenses,” expanding scope of practice for certified nurse practitioners, dental hygienists, and home care aides.
  • Phasing out fee-for-service: One of the most ambitious MRT mandates is the effort to eliminate fee-for-service care in Medicaid over five years. The move to managed care is expected to be completed within three years. “This has generated more discussion than any other change,” Helgerson said, “but our goal is a shared savings agreement that will eventually benefit everyone.”
  • New York’s projected savings are significant but, Shah pointed out, “this is not rocket science.  Instituting the Gold STAMP program to stop pressure ulcers, dispensing generic drugs for up to 84 percent of our medications, and getting people to just talk to each other—these small changes have had a huge impact on our ability to see real savings.”

    Read about the states that are declining to expand Medicaid and leaving insurance exchanges to the federal government.
    Read more about Shah.

    For an overview of RWJF scholar and fellow opportunities visit