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By Frank Parlato Jr.

Niagara Falls Memorial Medical Center submitted what may be a revolutionary Medicaid cost-cutting proposal last week to Gov. Andrew Cuomo's Medicaid Redesign Team.

The hospital calls their proposal "Medical Home Without Walls."

It focuses mainly on reducing costs for the highest-costing Medicaid patients, the "super-utilizers" of hospital services.

According to one study, 1 percent of patients were responsible for 30 percent of medical costs.

In another study, as an example of how costly high-use, government-subsidized medical users can be: 900 people, living within two blocks of each other, accounted for $200 million in healthcare bills in six years. One patient had 324 hospital admissions in five years. One patient cost insurers $3.5 million.

Gov. Cuomo's panel, given a March 1 deadline to submit recommendations for lowering Medicaid costs while improving patient care, held public hearings across the state. The first was in Buffalo on Jan. 19.

Memorial officials were in attendance.

"We made it clear," said hospital president Joseph Ruffolo, "that another round of 'one-size-fits-all' across-the-board Medicaid cuts would sound the death knell for many of the state's most vulnerable hospitals."

The Medicaid rate-setting method, or "rebasing," implemented by the state in December 2009, hit Memorial disproportionately hard, cutting Medicaid revenues by $2.35 million.

Memorial was the eighth hardest-hit hospital in the state.

Memorial's patients are approximately 41 percent Medicare, and 35 percent Medicaid.

Memorial provides around $7 million of uncompensated hospital care annually on an $85 million budget.

The hospital's state-of-the-art emergency facility is one of the busiest in Western New York, attracting 30,000 visits per year.

"Safety-net hospitals such as Niagara Falls Memorial must be identified and preserved despite the state's budget crisis," Ruffolo said.

During the Governor's Medicaid Panel meeting, Memorial officials did more than complain or beg. They submitted a plan.

Hospital spokesman Pat Bradley pointed to an article titled "The Hot Spotters" published in The New Yorker that focused on the effectiveness of providing intensive outpatient care to complex, high-need patients to help explain the concept of Memorial's cost-savings plan.

By identifying the most expensive patients in the system and directing resources and attention toward them, a Camden, N.J., physician, Dr. Jeffrey Brenner, and his team were able to achieve a 56 percent reduction in emergency room and inpatient hospital stay costs.

The key to the plan is intensive outreach.

Doctors, nurse practitioners, social workers, even "health coaches" join forces to monitor the high-use patient, as opposed to the traditional method of waiting for the patient to contact a doctor or come to the hospital for admission.

Monitoring can include home visits, phone calls to check in with patients, and giving patients increased access to their health team, including e-mail access, off-hours consultation and nurse managers for complex care.

The health team encourages "super-utilizers" to adopt healthy practices, to quit smoking, drinking and drug use, to exercise and improve diet, and the team monitors the patient to ensure he takes his medication.

By applying the savings seen in the Camden sample to the actual 2010 hospital costs of 76 of Memorial's highest-use Medicaid patients, the Medical Home Without Walls proposal would produce an annual net savings of $1,080,931. "If this program were implemented statewide," Bradley said, "thousands of patients would receive an improved level of care, while New York taxpayers would save hundreds of millions of dollars annually."

Memorial, as one of the premier hospitals serving a mainly poor population, may be an ideal choice for a demonstration project.

Twenty percent of the people in this urban area are at or below poverty guidelines. Roughly half are on some form of government assistance.

Niagara Falls' population has some of the highest health indicators in terms of mortality, cardiac and stroke, renal failure, diabetes, behavioral health, teenage pregnancy and inadequate prenatal care.

Memorial employs more than 1,100 workers, making it the third-largest employer in the region, to serve this aging and increasingly government-dependent health-challenged population.

Constantly faced with financial strictures, Memorial has started putting some of the innovative ideas proposed in their plan into practice.

Over the past year, Memorial achieved a reduction of 218 hospital admissions involving chronic conditions that could be treated on an outpatient basis.

This saved the healthcare system $1.35 million, according to Bradley.

Memorial is also one of 147 hospitals in the nation selected by the Robert Wood Johnson Foundation to participate in a collaborative effort to reduce the rate of hospital readmissions for patients with heart failure.

As Ruffolo wrote in the Reporter last month, "The state can significantly reduce Medicaid spending by incentivizing hospitals to find meaningful alternatives to readmission -- not just for heart failure patients but for patients with pneumonia and other chronic conditions such as diabetes. These are the kinds of real reforms that are sustainable and can save the healthcare systems millions of dollars per year."

Memorial Hospital has proposed what may be a landmark remedy for New York's runaway Medicaid costs.

It will be interesting to see if the governor's panel takes up some, or all, of their proposals.

Niagara Falls Reporter www.niagarafallsreporter.com March 1, 2011