Reader Question 8. How do I Reduce Medicaid costs?
Question: My state “is having trouble controlling Medicaid costs that has a growth rate of 20% or more each year. What’s the best way to approach this problem?”
Answer: The problem is much larger than just Medicaid look at the total impact of health care costs on the state’s budget first. Try breaking your state’s health care into its functions and processes. Then find out which processes have had the greatest growth rate. Audit these areas to find out where the money is going. For example the purchase of prescription drugs, rehabilitation, doctor fees, emergency room costs etc.
If you suspect fraud you will need to know who is getting the money. If you have the files on a database coded in the Structured Query Language (SQL) you can initiate hundreds of queries in just a few hours. It’s like using Google on the Internet. An example query: find all that received more than $100 thousand and served less than 50 cases. These queries can pop out irregularities that help to hone in on suspected fraud cases saving the state millions. The Chances are more likely that you have an obsolete database and will have to ask your data processing personnel to code each individual query. This will cost you a few thousand for each query. It may pay you to move the files from the old database to the new SQL database. If your data-processing manager has objections get a second opinion from other SQL users. I have found that data processing managers like to keep their programmers busy coding. A second advantage of using SQL databases is that other data processing programs can access and use the same database thus providing for an integrated system.
Rising prescription drug costs are a problem. Try forming an alliance with other states to negotiate with drug suppliers for the best prices. In the California Performance Review recommendations article SO70 “Taking Steps to Contain State Drug Costs” you will find that Illinois and Tennessee are already doing just that. Further recommendations for the state of California was to hire a Pharmaceutical Benefits Manager to manage the states drug purchases. They should try to get the same prices that they sell their drugs for in Canada. If they can make a profit there they should not object. For more information see Reader Question 7. “The Economics of Scale in Volume Purchasing“.
On the subject of increased doctor’s fees do two things: First get the legislatures to put a cap on excessive lawsuit settlements that drive up malpractice insurance. Second if this fails to reduce malpractice insurance rates form an alliance with other states and award the lowest priced insurance rates to a single insurance company. If they stick together and refuse to negotiate pool each state’s contribution into a public malpractice insurance fund. You have to prevent the closing of clinics and doctors leaving your state.
Hospital emergency rooms are over flowing with non-emergency cases all over the US and action must be taken. Try to pass legislation allowing only emergency cases in the emergency room. This can help reduce emergency room costs and reduce long waiting times and triage. Emergency room doctors must be exempted from lawsuits resulting from their decisions to turn away non-emergency cases. Non emergency cases should be sent to low cost clinics with after hour’s doctors specifically established for this purpose. Hospitals are closing their emergency rooms due to this problem.
