03/18/2010 05:12 am ET Updated May 25, 2011

REDUCE Act Cuts Health Care Costs, Helps End Homelessness

A lot is being said and written about access to health care these days. But unless we get a handle on how to lower the ever-escalating costs of health services, efforts to ensure that all Americans have equal access to care may only produce headaches and a larger national debt.

Credible reports suggest that universal coverage would help drive down expenses somewhat, but we must simultaneously find ways to better manage our health care delivery system so that unnecessary expenditures are reduced or eliminated. President Obama and many in Congress understand this reality and are continuously searching for ways to bring down hospital costs, drug prices and other medical expenses, while striving for the overall goal of expanding insurance coverage.

One way to more effectively control costs is to rein in the overuse and misuse of hospital emergency rooms and other costly crisis services. One might ask, "What does this have to do with the goal of ending homelessness?" Actually, years of research have clearly demonstrated that a small subset of patients termed "frequent users," many of whom are homeless, consume expensive publicly-funded, emergency health services at disproportionately high levels. Why?

First, many frequent users are uninsured and emergency rooms are their only health care option. Second, less expensive community care providers have difficulty getting reimbursed by Medicaid for the comprehensive services this population needs.

Finally, a lack of funds for the health, mental health and substance use treatment some people need to maintain stable housing, means that many remain homeless. They "survive" on the streets until their untreated health or mental health issues create a crisis situation, requiring expensive emergency care. Once treated in the ER, they return to the streets, where their health will again deteriorate, resulting in yet another trip to the ER. The cycle will continue because the coordination of multiple health, mental health and housing organizations that would be necessary to fully address -- and successfully manage -- the complex and serious health care needs of many frequent users, is not possible within an emergency room.

Several studies from around the country have shown us that the price of providing care in emergency rooms and crisis centers is far higher that providing care in community based health services to the frequent user. For example, one study in New York found that just 21 percent of Medicaid beneficiaries incurred 76 percent of annual program costs.*

This compelling evidence has convinced US Senators Sherrod Brown (OH), Jeanne Shaheen (NH) and Robert Menendez (NJ) to introduce the Reducing Emergency Department Utilization through Coordination and Empowerment (REDUCE) Act (S. 1781), which would establish state Medicaid pilot programs to better coordinate care for frequent emergency room users and also save taxpayers' money.

The Medicaid pilot programs would give states the flexibility to implement innovative and coordinated community-based services for people who are, or are most likely to be, frequent users of emergency health care and hospitals. States would be permitted to target outreach and more effective services to frequent users, and obtain reimbursement for coordinated medical and behavioral health care, case management, and flexible services and supports that have been demonstrated to be effective in reducing the avoidable use of hospital and emergency health care.

"Far too many people rely on Emergency Room services for routine or primary care," Senator Brown said earlier this week in a statement announcing the REDUCE Act. "By strategically expanding outreach services to frequent ER visitors and better coordinating their care, we can cut the associated costs to taxpayers. This initiative takes an important step toward fixing our broken health care system and improving the quality of care for communities across the country."

We couldn't agree more. CSH and its partners proposed and advocated for this Medicaid demonstration project earlier this year as part of the national health care reform dialogue.
We applaud those members of Congress who have thoughtfully considered the research and are responding with this timely legislation, and urge both sides of the aisle to get behind REDUCE Act. Our hope is that the REDUCE Act is a first in a series of initiatives that will result in more effective practices for serving frequent users of health services, especially those who are homeless.

Read the summary of the REDUCE Act

* In New York State, 21 percent of Medicaid beneficiaries with very complex health care and social service needs incurred 76 percent of the $47 billion in annual costs of the program. Indeed, data show that as few as three percent of Medicaid enrollees may drive as much as 30 percent of Medicaid spending. (United Hospital Fund, Medicaid Institute, 2008).