WVHCA Report: $1.1B Cost Saving from Adoption of HIT

iHealthBeat reports on the release of a new report prepared by CCRC Actuaries for the West Virginia Health Care Authority.

The full report is available via the West Virginians for Affordable Health Care website and is titled, Health Care Financing in the State of West Virginia: An analysis and Projection of the Current System and Potential Transformations, August 2009.

According to the articles, the report indicates that the adoption of health information technology (HIT) and implementation of centralized medical care through medical home concepts could save West Virginia’s health care system more than $1.1B in 2014. The estimates in the report used insurance claims data from more that 800,000 West Virginia residents, including data from Medicaid and Mountain State Blue Cross Blue Shield.

More details in the AP article by Tom Breen from the Charleston Gazette and Washington Post, Report: Health strategy could save W.Va. $1B.

The Washington Post article indicates:

. . . In the case of electronic prescriptions, the report estimates an overall savings of $164 million in 2014, including nearly $51 million in savings to private insurers and $42 million in savings to policyholders. . .

. . . The report estimates that a statewide rollout of medical homes would cost about $45 million up front and incur ongoing costs of about $368 million . . .

. . . Estimates suggest that about nine in 10 health care offices still keep everything in paper. As the new report says, up front costs for physicians run from $25,000 to $45,000 and have annual costs thereafter of between $2,000 and $9,000, steep amounts for small practices . . .

UPDATE: Thanks to a reader comment – you can now read the full report. The report is titled, Health Care Financing in the State of West Virginia: An analysis and Projection of the Current System and Potential Transformations, August 2009.

Following is the Executive Summary of the report which contains some very interesting statistics on the state of health care in West Virginia.

Executive Summary

  • A cohort model was developed to simulate health care eligibility, utilization and insurance availability of the projected 1,828,538 West Virginians in 2009.
  • The model utilizes 8,640 cohorts to represent current insured status, health care utilization, age, gender, and household income.
  • The projected average age in 2009 is 40.2 years.
  • West Virginia is projected to have a population of 1,806,545 in 2019 and the average age is projected to increase to 42.2 years.
  • The number of commercially insureds is 757,884 in 2009.
  • The number of non-Medicare PEIA insureds is 175,324 in 2009.
  • The number of non-dual eligible Medicaid insureds is 321,113 in 2009.
  • The number of dual eligible Medicaid/Medicare insureds is 57,118 in 2009.
  • The number of Medicare eligible PEIA insureds is 37,784 in 2009.
  • The number of other Medicare insureds is 168,571 in 2009.
  • The number of West Virginia CHIP insureds is 24,480 in 2009.
  • The number of uninsured West Virginians is 286,264 in 2009.
  • Health care costs can be defined as charges or as allowed charges. In terms of allowed charges, projected West Virginia expenditures total $13.1 billion in 2009.
  • Allowed charges are projected to grow to $24.4 billion in 2019.
  • In 2009, the uninsured population is projected to incur $3.2 billion in allowed charges, resulting in bad debt and charity care of almost $900 million.
  • Initiative I, Adult Medicaid Expansion, is projected to cost the State of West Virginia $56.8 million and the Federal Government $162.0 million in 2014, while overall health care expenditures will decrease $611.5 million. Low income residents see the majority of the savings, spending $591.5 million less on health care.
  • Initiative II, Adult Medicaid Expansion Combined with an Insurance Mandate for Employers and Individuals, is projected to cost the State of West Virginia $56.8 million in higher Medicaid expenditures and $1,004.3 million in insurance premium subsidy. The initiative will cost the Federal Government $162.0 million in 2014, while overall health care expenditures will decrease $2,176.0 million. Low income residents see the majority of the savings, spending $2,212.8 million less on health care.
  • Initiative III, Adult Medicaid Expansion combined with an Insurance Mandate for Individuals, is projected to cost the State of West Virginia $56.8 million, $983.4 million in insurance premium subsidy. The initiative will cost the Federal Government $162.0 million in 2014, while overall health care expenditures will decrease $1,634.7 million. Low income residents see the majority of the savings, spending $1,656.2 million less on health care.
  • Initiative IV, Medical Home, is projected to save the State of West Virginia $57.3 million in claim expenditures and the Federal Government $199.3 million in 2014, and overall health care expenditures will decrease $642.6 million. Low income residents and insurance companies see the majority of the savings, spending $170.6 million and $173.2 million less on health care, respectively. This initiative requires $45 million of initial costs and a total of $368.2 million of ongoing physician reimbursement per year.
  • Initiative V, e-Prescribing, is projected to save the State of West Virginia $16.0 million in claim expenditures and the Federal Government $53.8 million in 2014, and overall health care expenditures will decrease $164.0 million. Low income residents and insurance companies see the majority of the savings, spending $41.9 million and $45.6 million less on health care, respectively. The cost of implementing e-prescribing has not been projected.
  • Initiative VI, Electronic Medical Records, is projected to save the State of West Virginia $28.3 million and the Federal Government $98.5 million in 2014, and overall health care expenditures will decrease $317.6 million. Low income residents and insurance companies see the majority of the savings, spending $84.3 million and $85.6 million less on health care, respectively. This initiative requires around $25,000 to $45,000 of initial costs and an annual cost of $3,000 to $9,000 per provider. However, these cost estimates appear to be declining over time.