Could managed care offset OK’s surge in Medicaid spending for emergency room visits?

By Patrick B. McGuigan | Oklahoma Watchdog

OKLAHOMA CITY — Medicaid-financed emergency room costs statewide grew nearly $10 million to $178.3 million in fiscal year 2013.

The increase, from $169.6 million in 2012, came as SoonerCare, the state Medicaid system, expanded to cover for the first time ever more than a quarter of the state’s 3.8 million people.

Emergency room spending rose sharply in spite of a state Health Care Authority effort begun in late 2011 to curb costs by contacting and counseling frequent ER users.

“After-the-fact” intervention programs, like Oklahoma’s, have marginal or no utility, said Jonathan Small, fiscal analyst at the Oklahoma Council of Public Affairs.

The ER cost increase comes on the heels of the most authoritative study to date, by a Massachusetts Institute of Technology team of researchers that found Medicaid expansion responsible for a 40-percent increase in emergency room use in the state of Oregon.

Researcher Saurabh Jah earlier this year supported the MIT findings.

“On average, an emergency department visit for a non-emergency condition costs seven times more than a community health center visit,” according to one federal report.

Oklahomans have long used emergency rooms for their initial medical visits.

Only eight states and the District of Columbia had a higher emergency room use, per capita, than Oklahoma, the Henry J. Kaiser Foundation reported in 2011.

Emergency services are exempt from Medicaid co-pays, and the state does not limit the number of emergency room visits for Medicaid enrollees.

Medicaid reimbursed for 548,136 emergency room visits in 2013 in Oklahoma. Almost 30 percent of SoonerCare clients — 289,135 — used emergency rooms.

The year before, 250,030 people receiving Medicaid made emergency room visits, and Medicaid reimbursed a total 528,264 visits, an average of more than two visits per person.

That average includes many who visited emergency rooms much more often.

Devon Herrick, global health policy fellow at the National Center for Policy Analysis in Dallas, told Oklahoma Watchdog “frequent flyers” — those who visit ERs three or more times a year — “are apt to be Medicaid enrollees.”

Of the $178.3 million in ER costs in 2013, a little more than $37 million paid for doctors, pharmacy, lab, radiology, ambulance and other ancillary costs.

The average cost per ER visit by a Medicaid enrollee was $325.34.

In FY 2012, when total Medicaid costs for ER services reached $169.6 million — including ancillary costs — the average cost per ER visit for Medicaid patients was $321.

Total state spending for Oklahoma Medicaid was $4.4 billion in FY 2011, then $4.8 billion in FY 2012.

Medicaid spending in the U.S. increased by 10.8 percent while total state spending increased by 7.3 percent in 2011. Then, in fiscal year 2012, state legislatures enacted funding increases for Medicaid that averaged 28.7 percent, “the largest annual increase in the program’s history.”

Several legislators have suggested Oklahoma could get a better handle on ER costs if the state joined 39 others in offering some form of privately managed care.

State Sen. Kim David, R-Porter, has offered up Senate Bill 1495, creating a pilot program that would put counselors in ERs to direct Medicaid recipients to more appropriate and much less expensive general care.

David’s bill, S.B. 1495, is based on market-oriented models in Florida, Louisiana and Kansas. Florida has had success in easing costs and improving patient satisfaction among diabetes and high blood pressure patients.

David’s bill is the best place to start improving Medicaid outcomes without the “expansion” envisioned in the Affordable Care Act, Small said.

Contact Patrick McGuigan at pmcguigan@watchdog.org.