Minnesota wants to reward health care providers for keeping Medicaid patients healthy, rather than just paying the bills when they get sick.

The new pilot program, which starts with six health care providers and 100,000 people, turns the state’s current health care payment model on its head. Gov. Mark Dayton and Human Services Commissioner Lucinda Jesson, who announced the program Friday, said they expect the change to save the state $90 million over the next three years.

Rather than pay providers each time they see a patient or administer a procedure, the new model would encourage providers to steer clients into preventative care. The goal is to encourage checkups and early treatment, instead of emergency room visits and extended hospital stays.

At the end of the year, if Medicaid expenses come in lower than expected, the providers and the state would split the savings.

"Change the incentives, keep people healthy, be more efficient," said Jesson, as she described the new system for reporters. "Right now, in our health care programs, as in so many across the country, the incentives are to providers and for plans to do more. We pay for people to do more....This is a dramatic change. "

So far, six providers have contracted with the Department of Human Services under the new payment model: Children's Hospitals and Clinics of Minnesota; Essentia Health, CentraCare Health System, North Memorial Health Care, Federally Qualified Health Center Urban Health Network, and Northwest Metro Alliance. Each provider contracts with the state to provide for a set group of the Medicaid population.

For now, both sides have agreed to split profits. In later years, if the system continues, both sides would also share the losses in years when patient care is costlier than the targets. The aim, Jesson said, is to encourage care providers to find creative ways to get people in to see their doctors, rather than waiting until they are so sick that the cost of their care skyrockets.

Providers are willing to take that risk, Jesson said, "because they know that if they do more prevention, if they do more early intervention...we get better health outcomes, and because we have better outcomes (we will) save money."




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