Testimony of James R. Kaskie to the New York State Medicaid Redesign Team

Released: 1/20/2011
Good afternoon, I am Jim Kaskie, President & CEO of Kaleida Health, the largest healthcare provider and largest private sector employer in Western New York.  In addition, I am proud to serve as the President and CEO of Great Lakes Health System of Western New York, the organization that brings together Kaleida Health, Erie County Medical Center,  private physicians and the academic programs of the University at Buffalo into a collaborative relationship.

Thank you for the opportunity to provide input to your process. 

I commend the members of the Medicaid Redesign Team for taking on the task at hand.  Your leadership, vision and planning will hopefully define solutions and lead us in a new direction for this vital program. 

We are living in very challenging times. However, each of us must assume a leadership role to work together to find thoughtful, balanced solutions to the fiscal problems facing our State.

Therefore, our organizations - Kaleida Health and Great Lakes Health, are committed to being a part of the solution. 

We are willing to work with your Task Force and the State if you need a demonstration site to test reforms, we stand ready to work with you to re-engineer care by re-engineering the payment system, work with you to address over utilization and help identify social problems that are disguised as health care issues. 

We are leaders committed to change.

For example, during the Berger Commission, Kaleida Health openly supported the reform agenda.  The result?  In Western New York, we are closing outdated facilities, consolidating others and building new, more efficient hospitals and nursing homes.  We have partnered with public and private organizations to create a better healthcare system.  We are working collaboratively to better serve our community.  But, more  reform is needed.

As I have stated many times, cutting your way out of this problem will not work.  We must unbundle the problem of Medicaid spending.  This means understanding the issues of each major component of spending.  These components include long term care, blind and disabled services, outpatient programs, inpatient care, prescription drugs and runaway medical malpractice costs.  Each part of the overall problem requires unique solutions.

Cutting reimbursement to providers without reform of enrollment or benefit policies–while the costs for labor, supplies, heat and power continue to increase, has been disastrous.  The State has disproportionately placed the burden of addressing the Medicaid program and the State’s fiscal challenges on hospitals and long term care facilities that serve the poor.  As I said, cutting is not solving the real problem.

Between 2007 and 2010, the State cut funding and imposed new taxes on health care providers seven different times totaling over $2.5 billion in cuts.  Seven times in three years.  Kaleida Health has been cut almost $30M since 2007.  But we are expected to do the same things for patients that we have always done.  That is not sustainable!  There should not be an eighth round of cuts.  Enough is enough. 

Let us fix the problem.  Let us redesign Medicaid.   Let us redesign care and the payment system. 

Let me share one example of the problem that is hospital specific.  We recently took a small snapshot of Medicaid utilization in 2010 of our emergency departments across our five hospitals.  We wanted to determine if there were patterns that highlight potential abuse or misuse.  The data was alarming:

About 2% of ED patients generated 11% of the visits.  That is over 15,000 Emergency Department visits!  Many of these people each came to our Emergency Room 60-70 times in 2010.

The dominant age group is 45 to 54 years old.  They have numerous mental health and social issues.

The utilizers were more likely to arrive by ambulance (30% of the time) and more likely to leave against advice of doctors (nearly 10% of the time).  Two more major drains on the Medicaid system.

Some of the top diagnosis? Not heart attack or stroke but abdominal pain, headache, backache and coughing. 

In addition, the majority of these patients had multiple co-morbidities, meaning they had more than one illness and many other challenging issues.

Clearly there is a pattern.  Clearly there is a problem.  We are responding to the unbridled demand that the State’s policy and practices foster without solving the key underlying problems that generate such utilization patterns.  Such analysis is needed in each category of Medicaid program spending.

My recommendation for the acute care part of the problem is to re-engineer care, re-engineer the payment system, introduce patient adherence and behavior expectations, and align economic incentives to address the one part of the problem, utilization.  Also, advance the use of electronic medical records to allow better coordination of care. 

Improving care coordination for these patients can result in both better quality and reduced costs over time.  The Medicaid cost-containment initiatives to date have focused on more short term easy to get savings.  But cutting providers who are required to serve those seeking care without changing the benefit and payment design is not a solution. 

Also, as a State, we need to decide if we will care for those who have less resources in long term care settings.  Alternate programs such as assisted living and home care can help address utilization and costs but changes to eligibility thresholds are needed as well.  Cutting long term care without re-engineering the system only makes the problems worse.

We also must have tort reform.  Our physicians regularly report that 25% of what they do for patients, they do defensively.  They practice defensive medicine.  Unbundle this problem and design solutions to solve this problem. 

It is critical that the State take action now to implement sustainable solutions.  I recommend following the eight-point plan prepared by the Greater New York Hospital Association.  I have attached the plan to my comments.

We stand ready to help with those sectors we can to find solutions to the State’s serious budget problems.

No more cuts to the providers.  Let us reform the system.

Thank you.

Download the List of Recommendations - PDF