State Medicaid Savings Created by Better Access to Health Services, UAMS Study Shows

By Nate Hinkel

The study bucks the popular belief known as the “woodwork effect,” which means that if government makes it easy for people to get Medicaid to help pay for long-term care services for them in their home, more people will want those services, thereby increasing costs to the state.

“The previous thought was that people generally rely on unpaid help from family and friends to stay out of nursing homes,” said Holly Felix, Ph.D., assistant professor in the UAMS College of Public Health, who co-led the study. “This doesn’t cost the state or the federal government any money. But if states offer in-home long-term care services, people who would not have otherwise used formal services will ‘come out of the woodwork’ to use them more.”

The study’s key finding shows that the state’s Medicaid system had a net savings of more than $2.6 million over three years when Medicaid-eligible elderly and disabled adults with unmet long-term care needs in a three-county area were sought out and connected to home and community-based long-term care services.

“The intervention resulted in a more than 23 percent reduction in annual Medicaid spending per participant,” Felix said. “That’s significant considering the greater demand for long-term care on the horizon as the ‘Baby Boomer’ generation ages.”

By 2020, projections show annual government spending on long-term care peaking at $140 billion with state Medicaid programs covering as much as 63 percent of those costs.

Past research examining the effects of targeting those in need of long-term care services has not shown cost savings, most likely because of how that population was identified. More effective methods of identifying those individuals at risk of nursing home entry and linking them with appropriate home and community-based services would achieve a better match between long-term care needs and service delivery. That’s where a reduction in long-term care spending could be realized.

Seeing that potential, in 2005 the Arkansas Medicaid program funded the Tri-County Rural Health Network, a community-based nonprofit organization, to implement the three-year (2005 to 2008) Community Connector Program. The program employed trained community health workers, known as “Community Connectors”, to connect Medicaid-eligible adults with unmet long-term care needs with services that provide home and community-based long-term care.

“For the first time community health workers were used as a mechanism to go out and target those in need of long-term care services,” Felix said. “They canvassed communities and used their existing networks to not only connect people with health services but to educate them on what services were available. It proved to be very effective.”

The program was limited to Lee, Monroe and Phillips Counties in the heart of the state’s Delta region known for its health disparities and limited resources. As a result of the study’s findings, the state has expanded the program into 15 other counties in the southern Delta region of the state.

“This study not only provides evidence that using community health workers is an effective way to connect disabled and elderly residents and adults with disabilities to available long-term health services, but it also shows that enhancing access to those services saves the state money,” Felix said. “Those are significant findings considering the scarcity of evidence previously available regarding the cost-reducing effects of non-institutional long-term care services in state Medicaid programs.”

Felix was recently invited to speak and share her innovative findings in Washington D.C. at a National Press Club briefing, “New Directions in Systems Innovations.”