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MEDICAID COMES HOME; Reform of the government-run health program includes an effort to coordinate all aspects of a patient's care through one organization, and it's starting here.

He may not look the part, but Gerald Easley, a 59-year-old diabetic in Buffalo, lives on the cutting edge of health care reform.

Medicaid costs are consuming budgets in New York and other states, forcing a search for solutions that don't undermine services.

One of them, the Health Home, is rolling out now in Buffalo, and patients such as Easley are the target candidates. It's a long-talked-about concept for dealing with the most expensive and most difficult to treat individuals: Assign a single organization to coordinate all care, including follow-up after medical visits and referrals to social services that Medicaid and other forms of insurance generally don't pay for, such as phone calls to address problems ahead of time and referrals to housing.

Advocates describe it as patients getting a coach to watch over them.

One goal is to reduce the frequent, avoidable hospitalizations and emergency room visits that have become common among patients with multiple chronic illnesses, substance abuse problems, mental illness and disabilities.

The Affordable Care Act, if it survives a court challenge, calls for enrolling an additional 16 million people into the Medicaid program across the U.S.

Even without the law, Medicaid costs are ballooning because of rising health care costs, more enrollees from a poor economy and an aging population with huge nursing home expenses.

While the health care reform law presents an enormous enrollment challenge, it also includes important provisions to encourage states to adopt new initiatives to control costs, such as the Health Home program.

"We have a tsunami coming in terms of people in Medicaid. We have to be ready," said Dr. Raul Vazquez, Easley's physician and the leader of one of three Health Home projects getting under way in Erie County.

Medicaid is the national health care program for the disabled and for poor adults and children. It also supports low-income people on Medicare, the federal health care program for those 65 and older. And it is the primary payer in the U.S. for nursing home care.

About 60 million Americans use the program, which is funded jointly by federal, state and local governments but managed by states.

Medicaid will cost New Yorkers about $54 billion this year, more in total dollars and per person than in any other state. It consumes 36 percent of the state budget, more than any other program.

The state is rolling out Health Home programs in phases. Vazquez's Urban Family Practice in Buffalo is one of the three initial Health Home lead organizations chosen for Erie County. The others are Spectrum Human Services and Alcohol & Drug Dependency Services.

These lead groups work with key partners, as well as networks of affiliated health care and social service organizations, including hospitals, doctor groups, care managers and housing services.

For example, Spectrum and its lead partners -- the Catholic Health System and Evergreen Health Services -- have incorporated as Health Home Partners of WNY.

"This is a powerful approach to stabilize people's health and reduce costs," said Bruce Nisbet, chief executive officer of Spectrum.

He said Health Homes represent an attempt to address one of the chief complaints about the U.S. health care system -- that too often care is fragmented, with little communication between those who provide the services. This leads to expensive hospitalizations.

In 2009, for instance, there were 62,043 potentially preventable readmissions to hospitals occurring within 30 days of an initial hospital stay, costing Medicaid $589 million in New York State, according to a Health Department report.

"Because of their chronic conditions, many patients end up being in crisis, medically, very often. Many have unstable lives because of lack of housing or other social issues," Nisbet said.

Of the 5 million Medicaid recipients in the state, about 1 million are considered candidates for Health Homes, including those with developmental disabilities, mental illness, substance abuse problems, multiple chronic health conditions and those in long-term care.

Their treatment costs more than $28 billion a year, which is a large portion of the entire Medicaid budget, according to the Health Department.

One reason their care costs so much is that Medicaid beneficiaries with mental health or substance abuse conditions also have greater costs for physical health issues.

Spending for Medicaid patients with mental health conditions averaged $28,451 in New York in 2003, compared with $15,964 for beneficiaries without mental health conditions, according to a 2011 report by the United Hospital Fund, a nonprofit health services research group.

The state is rolling out the Health Homes initiative in phases, first targeting Medicaid patients with substance abuse and mental health problems, as well as those with multiple chronic conditions. It envisions using payment methods that incorporate performance measures, such as prevention of avoidable hospitalizations.

"A key feature of Health Homes is that the health reform law gives us additional federal money to draw together medical and behavioral care in a structure, and orchestrate wraparound services like housing," said Gregory Allen, the state's director of financial planning and policy for Medicaid.

Easley fits in the category of patients with two or more chronic medical conditions.

In addition to diabetes, the Buffalo resident has asthma, high blood pressure and high cholesterol.

He has had trouble keeping his diabetes under control, but he is doing well now, partly because of his participation in a program in which his weight, blood pressure and sugar level are monitored regularly through a smartphone application.

"What's helped me, is feeling like I have a personal relationship with the people who take care of me," he said.

By keeping his medical conditions under control, Easley is keeping himself out of the hospital, and that's no small matter to him and his doctor.

Diabetes is a lifelong disease, with potentially serious complications, in which a person experiences high levels of sugar in the blood.

He comes from a family with a history of the condition, including his parents. He can list relatives whose diabetes led to amputations and blindness.

"That's not something I want," he said.

Gov. Andrew M. Cuomo last year formed a team to redesign Medicaid, and Health Homes represent a key element of a plan still in the works. The initiatives here are expected to begin enrolling patients this summer.

The way it works is that states adopting Health Homes will get a bigger share of federal Medicaid funding for two years for these patients -- 90 percent of the cost.

"That upfront financing is needed to build the infrastructure," said William Burgin, executive director of Alcohol and Drug Dependency Services.

What happens if the Supreme Court overturns the Affordable Care Act?

Burgin and others say that would be disastrous for a provision of the controversial law that they see as one of the most promising developments in their field in years.

"This should be the model of care, no matter who is in office. We need a smarter, more efficient way to provide care," he said.

Health Homes remain a work in progress and face challenges.

For instance, the dozens of organizations in the new networks need a way to communicate to coordinate care.

The plan in Erie County is to incorporate a common communication system into the existing regional system for sharing electronic medical information among hospitals, doctors and laboratories, coordinated by the HealtheLink organization.

"With Health Homes, we have an opportunity to do what everyone knows needs to happen," said Ann Monroe, president of the Community Health Foundation of Western and Central New York.

The foundation, and the local P2 Collaborative are two educational groups that have been involved in the formation of the first Health Homes here.

"Now it's a matter of making it work," she said.



Medicaid at a Glance

*Funded by federal, state and county governments but managed by states.
*In New York, federal government pays about 50 percent, counties about 15 percent, and state the rest.
*Key services include health care for the disabled and for poor children and adults, and nursing home care for elderly.
*Largest source of health insurance for children and nursing home care for elderly.
*National costs reached $366.5 billion (2009) for 59.5 million enrollees.
*5 percent of New York's 5 million enrollees, mainly the disabled and elderly, account for 54 percent of spending.

Sources: NYS Health Department; Kaiser Family Foundation