Medicaid Health Home Reducing Costs and Reliance on Emergency Department: Evidence from Iowa

Abstract

Background: The Affordable Care Act allowed an optional Medicaid State Plan benefit for states to establish Health Homes coordinating care for people who have chronic conditions. Differences in medical home program incentives and implementation styles are important to understand in evaluating effects on key outcomes such as cost and acute care. In Iowa, a Medicaid Health Home (MHH) program was developed targeting Medicaid members with multiple chronic conditions. Provider patient management payments were tied to the number of chronic conditions of MHH members. Objectives: To assess the effects of an Iowa MHH program on total spending, emergency department (ED) utilization, and ED spending. Data: Claims data from January 2011 through December 2013; per member per month unit of analysis. Research Design: We use a difference-in-difference regression design comparing pre/post outcomes for MHH members to pre/post outcomes for Medicaid members not participating in the MHH. We include individual fixed effects and matched controls to minimize the potential for confounding. In addition, we include a series of administrative covariates to control for individual demographic and geographic variation. Results: Participation in the MHH program reduced spending by $132 per member per month. There is also evidence that the largest cost savings occur with a lag, as those in the program longer than a year showed the most savings. Members were less likely to visit the ED compared with traditional Medicaid recipients and ED spending was also lower for MHH members. Conclusions: Participation in a MHH program led to fewer ED visits and lower overall spending among Medicaid recipients in Iowa.