New Medicaid payment method will save money, MN officials say

Minnesota is the first state in the nation to receive federal approval for a new way of paying for health care in its Medicaid program.

Minnesota will pay some hospitals and clinics based on how well their patients do medically and their ability to cut costs. Right now Medicaid pays HMOs to provide coverage or pays medical clinics directly by the procedure or test. Experts say that "fee-for-service" approach does nothing to rein in costs.

But under the "shared savings" program, the state will contract directly with clinics. Minnesota Human Services Commissioner Lucinda Jesson said if those clinics meet quality standards, patients get healthier, and cut costs, they'll be able to share any cost savings with the state.

"What we're trying to do is provide better care at a better price in our public programs," Jesson said.

Jesson said the idea is to give clinics an incentive to keep patients healthy while cutting costs.

"I hope we have better care for people," Jesson said. "I hope we do more early interventions and more preventions to keep people healthier and I hope we save, and I believe we will save taxpayer money by doing that."

The department expects to start the first projects later this year with about 150,000 enrollees.

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