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Searching for a business case for quality in Medicaid managed care

Greene, Sandra B.; Reiter, Kristin L.; Kilpatrick, Kerry E.; Leatherman, Sheila; Somers, Stephen A.; Hamblin, Allison

doi: 10.1097/01.HCM.0000318772.59771.b2
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Background: Despite the prevalence of evidence-based interventions to improve quality in health care systems, there is a paucity of documented evidence of a financial return on investment (ROI) for these interventions from the perspective of the investing entity.

Purposes: To report on a demonstration project designed to measure the business case for selected quality interventions in high-risk high-cost patient populations in 10 Medicaid managed care organizations across the United States.

Methodology/Approach: Using claims and enrollment data gathered over a 3-year period and data on the costs of designing, implementing, and operating the interventions, ROIs were computed for 11 discrete evidence-based quality-enhancing interventions.

Findings: A complex case management program to treat adults with multiple comorbidities achieved the largest ROI of 12.21:1. This was followed by an ROI of 6.35:1 for a program which treated children with asthma with a history of high emergency room (ER) use and/or inpatient admissions for their disease. An intervention for high-risk pregnant mothers produced a 1.26:1 ROI, and a program for adult patients with diabetes resulted in a 1.16:1 return. The remaining seven interventions failed to show positive returns, although four sites came close to realizing sufficient savings to offset investment costs.

Practice Implications: Evidence-based interventions designed to improve the quality of patient care may have the best opportunity to yield a positive financial return if it is focused on high-risk high-cost populations and conditions associated with avoidable emergency and inpatient utilization. Developing the necessary tracking systems for the claims and financial investments is critical to perform accurate financial ROI analyses.

Sandra B. Greene, DrPH, is Senior Research Fellow, Sheps Center for Health Services Research, and Research Associate Professor, Health Policy and Administration, School of Public Health, University of North Carolina at Chapel Hill. E-mail: SandraB_Greene@unc.edu.

Kristin L. Reiter, PhD, is Assistant Professor, Health Policy and Administration, School of Public Health, University of North Carolina at Chapel Hill.

Kerry E. Kilpatrick, MBA, PhD, is Professor Emeritus, Health Policy and Administration, School of Public Health, University of North Carolina at Chapel Hill.

Sheila Leatherman, MSW, is Research Professor, Health Policy and Administration, School of Public Health, University of North Carolina at Chapel Hill, and Visiting Professor, London School of Economics, United Kingdom.

Stephen A. Somers, PhD, is President, Center for Health Care Strategies, Hamilton, New Jersey.

Allison Hamblin, MSPH, is Program Officer, Center for Health Care Strategies, Hamilton, New Jersey.

This work was funded by the Center for Health Care Strategies, the Robert Wood Johnson Foundation, and The Commonwealth Fund.

This research protocol was approved by the institutional review board of the School of Public Health, University of North Carolina at Chapel Hill.

© 2008 Lippincott Williams & Wilkins, Inc.