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25 States Receive Funds to Test New Medicaid Models

Objective is to lower costs and improve care (Feb. 21)

Kathleen Sebelius, Secretary of the Department of Health and Human Services (HHS), has announced that the HHS will provide 25 states with nearly $300 million to test new ways to lower costs and improve care in the Medicaid system.

“State Innovation Model Testing” awards will support Arkansas, Maine, Massachusetts, Minnesota, Oregon, and Vermont in implementing plans for improving the delivery of health care. These six states will use the funds to test multi-payer payment and service-delivery models — including approaches already under way at the Centers for Medicare & Medicaid Services (CMS), such as accountable care organizations — on a broader scale within their states.

An additional 19 states will receive awards to further develop proposals for “comprehensive health care transformation,” according to the HHS.

In a related article, Reuters reports that one of the biggest cost areas is the group of 10 million beneficiaries known as “dual eligibles” — those who qualify for both Medicaid and Medicare. This group, which includes some of the oldest and sickest Americans, represents 15% of the Medicaid population but 40% of Medicaid spending.

According to CMS estimates, Medicare and Medicaid will spend a combined $1.1 trillion in 2013. By 2021, this amount is expected to exceed $1.9 trillion.

Sources: HHS; February 21, 2013; and Reuters; February 21, 2013.

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