Report Backs Cash Incentives, Peer Services, Housing to Help Medicaid Beneficiaries Improve Health, Reduce Costs

NYAPRS Note: The following are excerpts from a newly released report developed by the Empire Center for State Policy, with funding by the NYS Health Foundation.

It focuses on a number of strategies to help Medicaid beneficiaries take a more active role in their wellness and healthcare and includes recommendations to consider cash-like incentives and the expanded use of peer services, health navigators (who could be peers) and supportive housing. See below for more details about these approaches.

It also highlighted the crucial role of NY’s Medicaid Redesign Team Waiver application to expand these approaches.

NYAPRS helped inform this report and has been working with state officials on behalf of the MRT Waiver, which is still being considered by CMS, along with the OPWDD and Superstorm Sandy waivers.


Taking Ownership

The Patient Role in Medicaid

Empire Center for State Policy

December 5, 2012

Complete report in PDF format




New York State has embarked on an ambitious multi-year effort to overhaul its taxpayer-funded Medicaid program, which has long combined high costs with less than impressive health outcomes. Governor Andrew Cuomo’s “redesign” of Medicaid will be heavily focused on “complex, high-cost populations” - the roughly one million Medicaid recipients with long-term disabilities and chronic health problems such as diabetes, heart disease, substance abuse and mental illness.

While most Medicaid recipients in New York are enrolled in managed care, where conditions are carefully monitored and treatment costs controlled, the majority of the chronically ill are still covered on a fee-for-service basis, which tends to reward a high volume of treatments and procedures. The Cuomo administration wants to centrally coordinate and intensively manage health care for this particularly expensive group of patients, with a stronger emphasis on health education and prevention.

The proposed changes, which will require the federal government to waive many of its usual Medicaid rules, are both appropriately targeted and potentially transformational.

But there remains a missing element in the Medicaid redesign: the role of patients themselves.

Many of the most costly-to-treat health conditions - for example, those linked to obesity - are caused or exacerbated by lifestyle and behavioral factors. Even the best-designed and best-coordinated system of managed care will fail to deliver the desired results if too many patients continue to smoke, or fail to exercise adequately or indulge eating and drinking habits that make their health problems worse.

This paper focuses on the Medicaid population with or at risk for chronic diseases (excluding the elderly and disabled in institutional care). It details how incentives to practice healthy behavior and reasonable requirements that patients take ownership of their health care by seeking early preventive care in appropriate settings can lead to better health outcomes and lower costs in Medicaid….

New York is already poised to take an initial step in this direction. It is among 10 states that have received small federal grants to provide direct cash or other rewards to Medicaid patients who enroll in disease prevention and management programs.

Building on this start, New York should become a leader in testing new avenues to engage patients in their health care and improving public health outcomes.

Specific recommendations include:

  • Experiment with a variety of cash or cash-like incentives to encourage patients with chronic conditions to access primary and preventive services, adopt healthy behaviors and follow recommended treatment plans. Such incentives are often called conditional cash transfers, which predicate the receipt of payments on fulfilling certain responsibilities.
  • Remove barriers that limit private managed care plans’ ability to provide higher cash or cash-equivalent rewards for healthier behavior to their Medicaid clients. 
  • Incorporate proven approaches from other states that have already designed incentive programs and mechanisms to boost patient responsibility. 
  • Test multiple approaches on a small scale and evaluate them carefully both to add to the research literature on incentives and to expand successful programs...


Patient-Centered Support

Incentives must be matched with adequate primary care capacity, patient supports and public education. When all three interact, Medicaid patients can understand and more successfully navigate a greatly redesigned Medicaid program. And, with such appropriate supports, patients will be better situated to practice healthy behaviors, seek appropriate preventive care, follow prescribed medical regimens and have better heath outcomes. But with such support should come the expectation that they act responsibly.


New York already offers an array of patient supports in Medicaid for populations with special needs and as part of the redesign plan is broadening patient education and support throughout the Medicaid program.

Patients who are the hardest to serve and the most costly  - those with mental health and/or substance abuse issues and who often lack housing - need ongoing support to change their health habits, understand how to use a redesigned system and seek more appropriate care.


Three promising patient-centered approaches to reduce emergency room usage, hospital admissions and readmissions and unnecessary institutional care are already being used successfully in New York: peer counseling, health navigators and supportive housing...


Peer Bridgers are laypersons who are in recovery themselves and provide much the same community-based support and services to those discharged from institutional settings.

Data on the effectiveness of peer counseling efforts are compelling:

• Peer Bridger models have been shown to reduce inpatient readmissions by 60 percent in New York.93

• Data from PEOPLe Inc. in New York’s Hudson Valley show a significant drop in hospital readmissions for people with mental illness from their Rose House Project. 94

• Another study by Optum Health showed a 73 percent drop in Tennessee and 44 percent in Wisconsin of days spent in the hospital.95

• NYS Peer life coaches are poised to help thousands of beneficiaries to return to work while they keep their Medicaid benefits, a program that has been shown to reduce annual Medicaid use by 50 percent.

Peer services for children and families that demonstrate a commitment to helping patients navigate the Medicaid system are used effectively in New York and in numerous other states in the mental health and substance abuse fields.97


Health navigators can be trained to act as effective case managers to educate patients about Medicaid changes and guide them in their choices.

Many of those testifying at the public hearings on the MRT waiver suggested expanded use of health navigators to help patients understand and transition to the new managed

care system.98

Health navigators can be trained laypersons or health care workers who use case manager and care-coordination skills to build close relationships with patients. Through in-person, phone and other ongoing communication, they help the patient understand the complexities of the health care system and access primary preventive care and supportive services instead of more costly services.

The goal of health navigators is to help patients self-manage their care, which in turn leads to better health outcomes through less reliance on emergency room and inpatient care.  One case study in Flint, Michigan, showed that the navigator program, after  six months of working with a patient, improved lifestyle behaviors by:

• Increasing physical activity;

• Helping patients quit smoking;

• Improving self-management of diabetes;

• Reducing incidence of depression; and

• Reducing chronic pain.

After the navigator program was implemented in Flint, there was a 50 percent decline in hospital emergency visits and inpatient admissions.99

Another study and focus-group survey provides details on a health navigator program in Florida, Health Connect in Our Community (HCiOC) in Miami-Dade County,  that employed navigators and community health workers to  address health disparities among minority groups.

Activities included linking clients with medical homes, making appointments for them and tracking them to see if they attend their appointments. The program is culturally sensitive, which is critical for reaching the most underserved children and families in MiamiDade, particularly its large Haitian population.  Clients of the program are very satisfied with the HCiOC services they receive. 100


Providing supportive housing to those who are either homeless or institutionalized solely because they have no place to live has demonstrated effectiveness. Increasingly, research shows that such investments can result in significant Medicaid savings.101

The supportive housing model is simple. By housing people and providing them with a variety of individually based supportive services, Medicaid  costs can be  substantially reduced among groups with chronic health problems. Supportive services include case management, crisis intervention, counseling, linkages to health homes and care coordination, and coverage for emergency care and hospital inpatient treatment.102

Analysis of a sample of  more than  28,000 Medicaid recipients in need of supportive housing demonstrates that  the  housing  could save more than  $1 billion in Medicaid costs, tied predominantly to inpatient, emergency room and long-term-care services.103

Based on  national data that show supportive housing saves 60 percent through reductions in emergency room use and inpatient costs,104 New York could potentially save more than $650 million in these two areas over five years.105

Citing this evidence, New York is requesting permission from CMS, as part of its waiver request, to invest $750 million from projected federal Medicaid savings into expanding supportive housing services over five years.106

Together, these three patient-centered care coordination and case management efforts demonstrate a clear commitment by New York to help Medicaid clients with chronic conditions understand the changes in care delivery, navigate the system and gain access

to cost-effective  preventive  care.  Similar assistance is already provided to healthier Medicaid clients through facilitated enrollment, nurse home-visiting programs107 and other avenues.

As in welfare reform, the primary point is that patients in publicly financed programs such as Medicaid need to take responsibility, in this case for their health care...