John Littig

John Littig

A study published January 2, 2014, in Science finds that patients newly insured by Medicaid increase their Emergency Department (ED) visits by 41% over an 18 month period compared to those not offered Medicaid coverage in a randomized lottery. This study from the Oregon Health Insurance Experiment (OHIE), noted for its rigor and randomization, also found that 35 percent of the uninsured population used the ED during the 18 months compared to 42 percent for those who gained coverage, a seven percent increase.

 

These findings contradict claims by some federal and state policymakers during the healthcare debates that expanding health insurance coverage through exchanges or Medicaid will reduce strain on the nation’s Emergency Rooms.

 

An earlier study based on OHIE found that newly insured Medicaid patients increase utilization of primary care services. This suggests that use of primary care does not crowd our emergency department use as hoped. Rather, having medical insurance cuts cost to all medical services and leads to across the board increase in use.

 

Currently, 25 states and Washington D.C. have expanded Medicaid eligibility to 138% of the federal poverty level under the Affordable Care Act. From the Washington Post, according to federal figures, 4.4 million people have newly signed up for Medicaid. According to RAND Corporation, if all states opted into the Medicaid expansion, 27.4 million people could be insured by the program.

 

If we generalize the seven percent increase observed in Oregon, and there are limitations to doing so including the fact that the study takes place in largely white and urban Portland over a relatively short 18 month period, and apply it to the newly insured by Medicaid, we can expect around 300,000 more emergency department visits nationwide based on the 4.4 million noted above.

 

The 4.4 million is likely quite understated – Medicaid numbers will not be tallied until mid-January and comparing year on year statistics is difficult. Nonetheless, an influx of patients can be expected. Healthcare is local and increases in utilization will depend upon the changing payor mix in a specific healthcare system’s service area.

 

Leaving aside the policy discussion, why patients use the ED and role of the ED; what does increased ED utilization mean to risk managers, Enterprise Risk Management committees and other stakeholders?

 

Given the conclusion from the OHIE study that Medicaid increases ED use and potential scale of newly insured via Medicaid, Risk Stakeholders should take a proactive approach to managing risks associated with increased ED use.

 

Some ideas for Risk Stakeholders include:

  • Monitor ED incident reporting to identify any increase in patient harm incidents, factual or perceived, associated with increased wait times or resource availability.
  • Establish and/or engage the ED through a task force or committee for collaborative review and strategic planning.
  • Recommend application of patient engagement strategies to educate healthcare users.
  • Captive owners may look to fund scaling current ED risk mitigation strategies or new risk interventions via a risk management grant.
  • Ask your actuary to break out your system’s current ED loss funding estimates to establish a baseline and monitor progress to the baseline quarterly – early identification of increased incidents will lead to smoother long term loss funding.
  • Towards reducing ED utilization, establish a committee of clinical and administrative leadership to apply Kaizen in review of coordination of care among the healthcare facility, partnering facilities and community health resources.

 

If the results in the OHIE bear out nationwide, it will be interesting to see if EDs nationwide are able to scale services while maintaining current levels of patient safety and quality or if we hit a breaking point and suffer cascading losses associated with failure to scale. Increased interoperability of electronic health records will be vital in effectively managing this growth.

 

Effective Enterprise Risk Management in the face of a rapidly changing environment needs to look forward and connect dots to not only prevent and clean up after messes but add value to the organization. Increased ED utilization is an opportunity to proactively identify, mitigate and manage risks to the ultimate benefit of the patient and their families.

 

By: John Littig

John currently serves as the Chief Finance and Underwriting Officer of The Risk Authority – Stanford, as well as the Vice President of Risk Finance of Stanford University Medical Center.
John has more than 10 years of experience as a health care risk finance professional with experience creating and operating self-insurance trusts, reciprocal risk retention groups, direct issue captives, as well as domestic and offshore captives. John is responsible for procuring and maintaining all property and casualty coverages for the Stanford University Medical Center.

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