When Bruce Hodgins went to the doctor for a checkup in Sioux City, Iowa, he was asked to complete a lengthy survey to gauge his health risks. In return for filling it out, he saved a $10 monthly premium for his Medicaid coverage.

In Las Cruces, N.M., Isabel Juarez had her eyes tested, her teeth cleaned and recorded how many steps she walked with a pedometer. In exchange, she received a $100 gift card from Medicaid to help her buy health care products including mouthwash, vitamins, soap and toothpaste.

Taking a cue from workplace wellness programs, Iowa and New Mexico are among more than a dozen states offering incentives to Medicaid beneficiaries to get them to make healthier decisions — and potentially save money for the state-federal health insurance program for the poor. The stakes are huge because Medicaid enrollees are more likely to engage in unhealthy practices, such as smoking, and are less likely to get preventive care, studies show.

For years, private employers and insurers have used incentives to spur employees and members to quit smoking, lose weight and get prenatal care, although the record of those programs for changing long-term behavior is mixed, studies show. “Financial incentives are effective at improving healthy behaviors, though the effect of incentives may decrease over time,” said a report last year by the Center for Health Care Strategies, a research group based in Hamilton, N.J.

Another analysis published this month in the journal Preventive Medicine, which looked at 34 studies, found that workplace and other incentives can change health behaviors in the short term, but the effects dissipated once the incentives were taken away.

The Affordable Care Act is behind the latest push of wellness incentives in Medicaid.  Besides Iowa and New Mexico, several other states that have expanded Medicaid under the health law have incorporated such incentives, including Indiana, Pennsylvania, New Hampshire and Michigan. Montana, which is about to become the 29th state to extend Medicaid, also plans to include such incentives.

“People are looking for some creative ways to pass Medicaid expansion and incentivizing healthy behaviors is pretty palatable to both conservatives and liberals,” said Maia Crawford, program officer of the Center for Health Care Strategies. “It’s a potential win-win because of the potential for cost savings and health improvement.”

But getting them to participate in incentive programs can be challenging. For example, an Idaho program that offered a $100 voucher to entice Medicaid recipients to lose weight or quit smoking attracted less than 2 percent of eligible adults after two years.

Among the biggest obstacles is simply getting the word out to enrollees, Crawford said.  But there are other issues, too: Poor people are less likely to understand how the incentives work and to face transportation and other barriers to get to doctor appointments or educational classes that are part of the program.

‘Long Way To Go’ To Learn What Works

Little is actually known about what types of incentives get people’s attention or help change their behavior, said Jean Abraham, associate professor of health policy and management at the University of Minnesota. It’s not clear, for instance, whether rewards are more effective in prodding people to take a concrete step, such as getting a colonoscopy or a mammogram, rather than in changing long-term behaviors, such as smoking. “We have a long way to go to understand what’s most effective,” she said.

The health law sought to get answers to some of those questions by including $85 million to test incentives in 10 state Medicaid programs.

States started the studies in 2012 and 2013 and some are struggling to get participants. Connecticut, for instance, has enrolled only half of the 6,000 people it sought for a smoking cessation program. The program pays Medicaid recipients as much as $350 in gift cards over a year for participating in smoking cessation counseling, using a counseling phone line and having a breathalyzer test showing they haven’t recently smoked. The $10 million, three-year study will compare that group’s health costs against those of a control group of Medicaid recipients who smoke but received no help.

Other states that received funding are California, Hawaii, Minnesota, New York, Nevada, New Hampshire, Montana, Texas and Wisconsin.

Separate from the health law, one of the largest incentives program is New Mexico Medicaid’s Centennial Rewards, which gives most of the state’s 600,000 recipients the chance to earn points to buy health care items.

They gain points each time they engage in a healthy behavior, such as getting a checkup or seeing a dentist. So far, only about 45,000 have registered and only half of those have redeemed points for gift cards.

New Mexico officials say they are not disappointed. “It is not only a new program for us, but a new concept for most Medicaid programs,” said Medicaid spokesman Matt Kennicott.

‘I’ve Never Felt This Good’

 Juarez, 57, of Las Cruces, said the program has motivated her to walk every day at the mall where she works as a hair stylist and helped bring down her blood sugar levels.

“I’ve never felt this good,” she said. “This program motivates me to do more — it’s not so much the money as it’s the improvement in my body.”

Charles Milligan, who until last month was senior vice president of Presbyterian Health Plan in New Mexico, another Medicaid plan, said he’s seen an increase in members seeking preventive care, such as diabetes screenings and prenatal care. “The rewards program helps us engage with our members,” he said. Still, only about 30,000 of their 200,000 members have registered for it.

Iowa has also faced challenges getting Medicaid enrollees to complete the wellness exam and health risk assessment survey — even though some will have to pay a $5 or $10 monthly Medicaid premium if they don’t.  About 19,500 of the state’s 125,000 enrollees have faced the potential penalty. Of those, about a third completed the wellness exam and assessment.

“The goal is to get people involved and to take a more active role in their own health and we are impressed with what we have achieved,” said Andria Seip, Iowa Medicaid’s Affordable Care Act policy manager.

Hodgins, who enrolled in Iowa Medicaid in January, said he’s glad his community health center advised him about the wellness exam and health survey —not because it saved him money but because he found out that he had high cholesterol and blood sugar, which he’s now working to bring under control.

“I’ve been blessed with decent health for 57 years,” said Hodgins, who recently started a delivery company and doesn’t mind the state prodding him to get examined. “I have to be responsible for my own health. That’s my obligation.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

Affordable Care Act payment model saves more than $384 million in two years, meets criteria for first-ever expansion.

For many older people and their families, particularly those dealing with conditions such as Alzheimer’s or cancer that often require long-term, pricey medical care, running out of money is a nagging concern.

Families are right to be worried, according to a new study that analyzed data from nearly 1,200 people who died between 2010 and 2012 and who participated in the University of Michigan’s ongoing national Health and Retirement Study.

Among people who were age 85 or older when they died,  one in five had no assets left apart from their homes, and 12 percent had no assets left at all, only income from sources such as Social Security or pensions. The analysis by the Employee Benefit Research Institute found that those who died younger were even worse off. Among people who died between age 50 and 64, 30 percent were without assets and 37 percent had only their homes.

Families where someone died at a relatively young age tend to have lower incomes and assets, says Sudipto Banerjee, a research associate at EBRI and the study’s author.

“People with lower assets and income tend to be in worse health,” he says, noting that many studies have found a correlation between health and wealth, showing that wealthier people tend to live longer than poorer people.

The EBRI study didn’t examine the reasons people’s finances were often depleted at death, so there’s no way to know the extent to which health care, specific illnesses or insurance coverage played a role.

Financial experts have long cautioned that medical care for seniors is an expensive concern, partly because some care related to Alzheimer’s disease, for example, is not covered by insurance. In addition, even with Medicare coverage and private insurance, seniors still can face large out-of-pocket expenses for major illnesses. According to an estimate by Fidelity, a 65-year-old couple who retired in 2014 would need $220,000 to cover their health care costs during retirement.

Please contact Kaiser Health News to send comments or ideas for future topics for the Insuring Your Health column.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

As mental health professionals, policy makers and advocates focus on taking steps to mend the fragmented mental health care system, the role of patients and their friends and families is sometimes overlooked.

That’s why the American Psychiatric Association is releasing a first-of-its-kind book to decode in plain English the Diagnostic and Statistical Manual of Mental Disorders – a guide for mental health providers that is also used to determine insurance coverage. The resource, Understanding Mental Disorders: Your Guide To DSM-5, includes in-depth explanations of risk factors, symptoms and symptom management, treatment options and success stories.

This gets at one of APA’s reasons for releasing this volume — to help create a more accurate picture of what a particular illness or disorder might involve.

Jeff Bornstein, a psychiatrist and spokesman for APA, said empowering patients with a better understanding of what they are facing will enable them to better advocate for themselves.

“Sometimes when there is a disagreement with a managed care company, the clinician speaks on behalf of the patient,” Bornstein said. ”But it’s[also] helpful to have family [members] or the patient talk and say ‘I’m telling you, I have this symptom, it’s part of diagnosis X, Y and Z.  Why are you not letting me have the treatment I need?’”

Former Rhode Island Congressman Patrick Kennedy, a mental health advocate, said the book is designed to help families and patients overcome stigma and get more involved in treatment. He said it would have helped him in his own experience with bipolar disorder and alcoholism. “I was the last one to know I had a problem, and that’s often the case for those of us in crisis. … The people around me would have benefited from this,” he said at an event marking the book’s launch.

When people think they may have an issue, or are faced with a diagnosis, they often go to the Internet where misinformation and “horror stories” are widespread, said Paul Gionfriddo, president of mental health advocacy group Mental Health America. “This [book] lays out in clear terms [what a mental disorder diagnosis means] so we don’t have to live in fear of the unknown.”

Take the experience of Melanie Carlson, 33, who suffered a psychotic episode in 2007 when she was 25.  She ended up in a hospital, frightened and confused.

“It was a very traumatic incident. I was afraid of my own thoughts and what I was capable of,” said Carlson, who lives outside Ann Arbor, Mich., and manages her bipolar disorder with medication, exercise, therapy and abstaining from alcohol. But for almost a year-and-a-half she was in denial and refused treatment, mainly because she says her only knowledge of her condition came from media reports about high-profile, often violent events involving mental illness.

She says having more straight-forward information could have helped her understand that she could take care of her disorder and still live a normal life – with a job, friends and family.

“It felt like a hopeless situation,” Carlson said, who is now a social worker helping chronically homeless people get housing. “If I’d had a resource that explained my symptoms … and explained how complying with treatment could produce long-term stability I would not have been … resistant.”

It’s all part of the steady process of removing the taboo from treatment, said Jorge Petit, a psychiatrist and founder of Quality Healthcare Solutions Group, a health care and behavioral health consulting firm in New York City. “It’s no different than diabetes and hypertension — it requires awareness and understanding of how to maintain wellness and not to relapse,” he said.

However, he added that the playing field is still not even.  “It’s hard for people to call the insurance company and say, ‘Why are you sending me a prior authorization notice? It’s the same as having a medical issue.’”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

The federal government popped the cap off drug spending on Thursday, detailing doctor-by-doctor and drug-by-drug how Medicare and its beneficiaries spent $103 billion on pharmaceuticals in 2013.

The most frequently prescribed drug was Lisinopril, a generic used to treat high blood pressure and help patients survive after heart attacks. The drug was prescribed or refilled nearly 37 million times by more than 7 million Medicare beneficiaries at a cost of $307 million.

The brand drug Nexium, used to treat acid reflux and related stomach ailments, cost the most: $2.5 billion for 1.5 million Medicare patients, who filled 8 million prescriptions and refills. The total cost included what was paid by Medicare, beneficiaries and third party groups such as supplemental health plans. The cost covered not just the drug ingredients but also sales tax and dispensing fees. It did not, however, include manufacturer rebates.

Federal officials said they hoped that disseminating the data would lead to new revelations about the prescribing patterns of doctors and for particular drugs. The database identifies doctors by name.

Niall Brennan, the chief data officer for the Centers for Medicare & Medicaid Services, said agency analysts have been examining the data for several years but that “the data is larger and diverse enough that other outside folks may develop insights that we have missed.”

Dan Mendelson, the CEO of Avalere, a Washington, D.C., consulting firm, said the data could provide patients with new questions about their prescription history when they visit their physician. “It’s really important to stimulate conversations that get patients more actively engaged in their care,” he said.

However, he noted that some doctors may not take kindly to a more inquisitive patient and longer conversations. “In the shorter term, I think it will irk some physicians,” he said.

The database tracked 3,450 different drugs prescribed by a million doctors, nurse practitioners, medical students, dentists and other providers.

The most expensive drug per prescription was Carbaglu, a man-made enzyme used to treat people with high ammonia levels in the blood caused by a rare disorder, according to a Kaiser Health News analysis of the data. The drug was dispensed only 24 times, but at nearly $60,000 per claim it cost the government $1.4 million.

Among drugs dispensed to at least 10,000 beneficiaries, the most expensive was Revlimid, which treats anemia in people with blood or bone marrow disorders, KHN found. It is used for some cancer patients. Dispensed for 24,637 patients, Revlimid cost $8,778 per claim. That totaled more than $1.3 billion.

Drug prescribing varied considerably among states, KHN found. Rhode Island and Nebraska had the most claims per Medicare beneficiary, averaging 4.6 per patient. Delaware had the lowest number, with the average number of claims per beneficiary at 3.3.

The CMS data is likely to be used in conjunction with other datasets the government has previously released, including what procedures individual doctors billed to Medicare and how much those cost. Analysts are also sure to look for relationships between drugs commonly prescribed by doctors and another Medicare database showing payments physicians received from drug companies for research, gifts, speaking fees, meals or travel.

The Pharmaceutical Research and Manufacturers of America called the data misleading. “Significant price negotiation exists in Part D and results in rebates of as high as 20 to 30 percent for branded medicines,” the association’s president, John Castellani, said in a written statement. “These savings are not reflected in the data. Rebates have been a significant factor in keeping Part D program costs hundreds of billions of dollars below original estimates, while still offering beneficiaries steady premiums and a robust choice of plans.”

The American Medical Association also cautioned that the data could be misinterpreted.

“The data does not account for varying strengths or dosage levels of the medications or varying patient needs,” the association said in a written statement. “For example, a physician could prescribe a low dose of a medication and at a later time need to prescribe another, stronger dosage for the same patient if the low dose isn’t meeting their need or if the patient has an adverse react.”

The government noted that the top 10 most commonly prescribed drugs were generic and the 10 most expensive drugs were all brand name. The finding is not surprising since some brand name drugs are protected from competition by their patents.

An analysis Medicare released with the data found that in some parts of the county brand drugs were dispensed much more frequently than generics. Doctors in the western part of the country, including Washington, Oregon, Idaho and Nevada, and parts of in the Midwest leaned heavily toward generics, which tended to be dispensed between 78 percent and 81 percent of times. Brand drugs were favored in much of Texas and Alaska, where generics were dispensed in between 65 percent and 75 percent of cases.

Federal officials also calculated how prescription patterns varied among medical specialties. Family practice doctors prescribed the most drugs, followed by internal medicine doctors. Among the biggest medical specialties, psychiatrists prescribed the most expensive drugs, averaging $104 for a prescription or refill. While hematologists and oncologists were not among the top prescribers, their drugs averaged $550 per claim. The average cost of all prescriptions or refills was $75.

The data does not present a complete picture of physician prescribing. Most notably, it includes only those drugs for 36 million beneficiaries that were billed to Medicare’s Part D program, which make up 68 percent of all the people on Medicare. It does not reflect the prescriptions doctors wrote for privately insured patients or those on other government programs such as Medicaid. It also reveals nothing about the quality of these treatments or what kind of patients each doctor saw.

To ensure that people could not identify beneficiaries, Medicare omitted prescriptions that were based on 10 or fewer claims per doctor. That excluded 13 percent of claims.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

To understand how the health law is supposed to fix the mediocre, overpriced, absurd medical system, you could read wonky research papers on bundled payments and accountable care organizations.

Or you could look at what’s going on at Baptist Health System in San Antonio.

Under the potent lure of profit, doctors, nurses and managers at Baptist’s five hospitals have joined forces to cut costs for hip and knee replacements, getting patients on their feet sooner and saving taxpayers money.

“Everybody was aligned on this,” said Michael Zucker, Baptist’s chief development officer. “What we’ve seen is just incredible from a cost savings standpoint.”

Baptist made money doing what used to be industry heresy: reducing patients’ use of the medical system.

The hospital group made a deal with Medicare, the huge government program for seniors, as part of an ambitious array of experiments authorized by the Affordable Care Act.

Medicare let Baptist take responsibility for the whole process of replacing knees and hips, from admission to surgery to rehab and anything else that happened within a month. (Normally the system, essentially tied with Methodist Health System as the region’s biggest, manages only what happens within its doors.)

Then Medicare lowered the average amount of what it pays for all that care by 3 percent, giving Baptist a lump sum for each patient getting the procedures. If the system and its orthopedic surgeons reduced costs below that price, they could keep the difference and divvy it up so long as quality didn’t suffer. If costs went up, Baptist was on the hook.

This is a purified form of the health law’s recipe to save health care: Get hospitals, doctors and other providers to work together. Cap their costs. Offer incentives to save and penalties for breaking the budget. Repeat.

A preliminary study of the tests at Baptist and elsewhere, overseen by the health law’s Center for Medicare & Medicaid Innovation, found substantial savings along with shorter patient stays in the hospital and lower use of expensive nursing facilities afterward.

But even the focused program at Baptist may be hard to reproduce elsewhere, experts caution. Successfully applying the model to other diseases and the entire health care system is an even longer shot.

Even so, policymakers have bet heavily on such arrangements as the solution to the medical-cost spiral. Medicare aims to make half its reimbursements through such “alternative payment” methods by 2018, officials said this year.

At Baptist, which is owned by Tenet Healthcare, the first step was basic financial education. Doctors are famously clueless about what taxpayers, employers and consumers have to pay for the care they prescribe.

“The public is like, ‘Wow, you guys have no idea what that costs.’ We never really did,” admitted Sergio Viroslav, a participating orthopedic surgeon.

Baptist surgeons, who select which artificial joint to use, were shocked to find out how much more some devices cost than others. Once they had a stake in the total bill they became more discriminating shoppers.

Metal hip and knee prices started plummeting “the second the flashlight got lit on the implant makers,” Viroslav said. No manufacturer wanted to be the most expensive.

Surgeons were also surprised to learn that almost half the expense of joint replacement can come from physical therapy, home nurse visits and temporary nursing home stays after the surgery.

Dr. David Fox never paid much notice to the birthday cards that rehab nursing homes sent him. Now that the knee-and-hip surgeon knows what they were making on his referrals, “it’s no damn wonder” they were so nice, he said.

These days Baptist doctors are likely to order home therapy rather than a nursing home stay unless it’s clearly needed. For the nursing homes they do use, they’re more likely to stay in touch, coordinate care and reduce expensive readmissions, they say.

Simply getting independent surgeons to work with their own hospital system and give it financial control took some doing.

“Hospitals and doctors don’t trust each other,” said Fox. “There’s not an orthopedic surgeon out there that trusts his hospital. You can’t find one. If you do he’s lying.”

But at Baptist the parties met, sometimes reluctantly, to discuss how to cut costs, help patients recover quickly and apply science-based rules to recuperation.

Is Warfarin the best blood thinner for a particular patient? How much? What kind of compression stockings should be ordered to stop swelling and clots? Is a cane needed? One rubber tip? Or four?

Doctors and nurses had always asked those questions but never in such a disciplined way.

Compensating diverse caregivers to work together on an episode of treatment such as knee replacement is called bundled payment. Baptist has been through two bundled-payment experiments with Medicare.

One began before the health law was passed and focused only on costs inside the hospital, not on what happened later. That saved $284 per patient.

Zucker declined to give detailed figures on the new test. But adding savings incentives for joint-replacement and post-hospital care saved more than $1 million the first year, he said. At the same time, patients recovered more quickly, with fewer complications and resulting readmissions to the hospital, he added.

Such results mean hospitals and doctors “are thinking much more holistically” about care, not just focusing on their own roles, said Rob Lazerow, a practice manager at the Advisory Board Company who consults with hospitals on payment reform.

Baptist keeps part of the savings and shares part with the orthopedic surgeons — a bonus of up to half their surgery fee if they maintain the highest quality measures and their patients do well. The loss to the nursing homes and other post-discharge providers was their gain.

A typical surgery fee is $1,200 per knee, so hitting all the goals could generate as much as $600 more for a doctor.

“If I do 35 patients a month all of the sudden it’s real money to me,” said Fox — potentially $21,000 a month, although no doctor maxes out the incentive on every patient.

Such “shared savings” with medical providers who were once oblivious to costs are key, said Dr. David Nash, dean of Thomas Jefferson University’s School of Population Health.

“If you change the economic incentives you will change physicians’ practice behavior,” he said.

Knee and hip replacements are relatively easy to manage. They can be scheduled. Doctors have a pretty good idea of what will happen. A more ambitious attempt at reform is trying capped, bundled payments with heart attacks, pneumonia and other conditions that might come with more wild cards.

Even more aspiring is the accountable care organization. Providers in ACOs receive incentives — from Medicare, commercial insurers or perhaps employers — to keep large populations healthy and reduce the cost of care for every kind of ailment.

That’s a much taller order, and results have been mixed.

But what’s going on at Baptist shows what might be possible, experts said.

Standardizing procedures, avoiding overpriced hardware and coordinating care always did make sense for hip and knee replacements. Now, four decades after such surgery became routine, some hospitals and doctors seem to agree.

“That was really good that we did that,” said Viroslav. “It really helps doctors get better. It kind of forced them to look at their practice.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.