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EHR adoption has little effect on Medicaid costs, says study

By Kyle Murphy, PhD

In and of itself, the adoption of EHR systems, even those certified for meaningful use, has a neutral effect on Medicaid costs, according to a study published in Medicare & Medicaid Research Review. Rather, it is how these health IT solutions are used, and not just meaningfully, which determines their ability to have a positive or negative financial impact.

“While the magnitude of the impact on ambulatory medical cost was large, approximately 30%,” write Adler-Milstein et al., “the fact that we found an increase in cost of this magnitude in one pilot community and a decrease in cost of this magnitude in another pilot community points to other factors that determine when EHR adoption leads to cost savings.”

The team of researchers observed a pilot program run by the Massachusetts eHealth Collaborative wherein three communities which had adopted EHR systems were compared with six control communities based on changes to ambulatory medical costs covered by Medicaid resulting from the implementation and use of similar EHR technologies.

What the study revealed were marginal differences in cost savings in both sets of communities, intervention and control. “In all intervention and control communities, ambulatory medical costs increased more slowly in the post period compared to the pre-period,” observe the authors. “However, when we analyzed the difference-indifferences of slope, in two of the three intervention communities, ambulatory medical costs increased more slowly compared to control communities.”

Furthermore, the impact of EHR adoption on the bottom line varied slightly between the medical communities participating in the pilot:

In group 2, the pre-to-post difference in slope in the intervention community was -3.06 percentage points compared to -0.95 percentage points in the control communities, suggesting an intervention effect of -1.98 percentage points. . . In group 3, the magnitude of the effect was smaller and did not achieve statistical significance (difference-in-differences of -0.91; p=0.34). In group 1, we found the opposite effect—ambulatory medical cost increased even more slowly in the control communities (difference-in-differences of 2.56 percentage points; p=0.005).

Although total ambulatory medical costs did not show significant cost improvements, the researchers did identify one area where changes were palpable: the number of visits. “We found more compelling evidence that observed changes in ambulatory costs were driven, at least in part, by changes in visit rates,” note Adler-Milstein et al. The push for pay-for-performance rather than pay-for-service would seem to support this notion, as would an emphasis on reducing preventable readmissions.

“We found evidence that EHRs may impact ambulatory medical costs, driven at least in part by changes in visits, but the direction of the effect was not consistent across communities and the net effect was minimal,” the authors explain. “This suggests that EHRs, in and of themselves, can facilitate either increases or decreases in cost, and this likely depends on how they are used and the context in which they are used.”

As a recommendation, the research team suggests that the agencies responsible for the EHR Incentive Programs — the Centers for Medicare & Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) — take a closer look at the requirements of meaningful use with an emphasis on cost savings. “Our results suggest that state Medicaid programs may need to structure meaningful use in a way that specifically encourages providers to use EHRs to save money by reducing inappropriate utilization,” they conclude.

Read the complete study here.

Image Credit: Adler-Milstein et al.

 

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