WASHINGTON Feb 21 The U.S. Department of Health
and Human Services said on Thursday that it would provide 25 of
the 50 U.S. states with funding to test new ways to lower costs
and improve care within the national Medicaid program for the
The first states to receive State Innovation Model awards
are Arkansas, Maine, Massachusetts, Minnesota, Oregon and
Vermont, which will implement plans to transform their
healthcare delivery system under President Barack Obama's
healthcare reform law, which sets aside $300 million for the
Medicaid, jointly funded by federal and state funds,
accounts for about one-quarter of state budgets nationwide and
has taken on new urgency as a funding item since the recession
expanded the program's enrollment in many areas.
"I understand the real sense of urgency that states feel to
improve the health of their populations, while also reducing
total health care costs, and it's critical that the many
elements of health care in each state - including Medicaid,
public health, and workforce training - work together," Health
and Human Services Secretary Kathleen Sebelius said in a
One of the biggest cost areas includes about 10 million
people known as "dual-eligibles" because they qualify for both
Medicaid and Medicare. The group, which includes some of the
oldest and sickest Americans, represents 15 percent of the
Medicaid population but 40 percent of Medicaid spending.
The six selected states will use funds to test multi-payer
payment and service delivery models, including Accountable Care
Organizations, on a broader scale within their state. Another 19
states will receive awards to further develop proposals for
comprehensive health care transformation, HHS said.
The innovations are seen by healthcare policy experts as a
potential lever for reining in healthcare costs in Medicaid, the
Medicare program for the elderly and disabled, and potentially
spending across the $2.8 trillion U.S. healthcare system.
Medicare and Medicaid, which together serve about 100
million people, are expected to spend a combined $1.1 trillion
in 2013, according to the federal Centers for Medicare and
Medicaid Services. By 2021, spending on the two programs is
forecast to top $1.9 trillion.