According to a recent State Legislatures article, roughly 5% of Medicaid enrollees account for 50% of all Medicaid expenses. Some of the costliest enrollees are "high utilizers," meaning they have three or more hospital admissions or six or more emergency room visits each year. Through the use of new technology, state Medicaid programs can map their expenditures geographically and identify areas with unusually high numbers of costly patients, including high utilizers (i.e., “hotspots”).
Once officials identify hotspots, they can determine (1) why Medicaid costs are so high in those particular geographic areas and (2) how to provide high utilizers with alternative, lower-cost services that still provide quality healthcare.
Using hotspotting, healthcare providers in Camden, New Jersey found that half of the city's residents used emergency departments or hospitals to treat minor ailments such as head colds and ear infections. In response, New Jersey lawmakers passed 2010 legislation that established a new Medicaid business model, the Medicaid Accountable Care Organization Demonstration Project. According to the article, the new model rewards providers for care coordination, disease control, and cost containment rather than for the number of patients treated and tests or procedures performed.
The article notes that recent case studies indicate the model has achieved patient health improvements and Medicaid cost containment, however researchers are still in the process of formally evaluating its success.
