A cost saving evaluation of Ilinois Medicaid Patient Centered Medical Home program

In 2006, the state of Illinois implemented a primary care case management program (PCCM) called Illinois Health Connect (IHC) as an effort to reduce Medicaid spending and to move toward a Patient Centered Medical Home (PCMH) model. IHC now covers 70% of Illinois Medicaid patients (1.9 million enrollees).

This analysis utilizes Illinois Medicaid claims and enrollment data from Jan 1, 2004 to Dec 31, 2010. We found significant reductions in cost for all Medicaid cohorts. Illinois Medicaid overall costs in 2006 were $9.30 billion compared to $13.43 billion in 2010. The addition of nearly 1 million people to the Medicaid rolls over that period does not make the savings obvious, but based on 2006 costs, we estimate the total savings for 2007-2010 to be $531 million.

Medicaid hospitalization rates were already on the decline by 2006 compared to 2004, and continued to fall by nearly 20% between 2006 and 2010. Avoidable hospitalizations fell by almost 25% comparing 2010 to 2006. Over the same period, hospitalizations also realized efficiency improvements, as bed-days fell by 22.0%. Medicaid beneficiary ER visits rose between 2004 and 2006 but declined by 5.3% as of 2010.

A better understanding of cost and utilization will provide evidence for how Illinois and other states can best plan and pay for future healthcare delivery services. It will also inform medical home demonstrations underway in more than 40 states, most of which have not been fully evaluated.