Tool Informs Medicaid’s Business Case for Investing in Prevention

State Medicaid agencies and managed care organizations will now be able to estimate the health impact and health care cost savings of investing in childhood obesity prevention initiatives.

Today, nearly 50 percent of children—over 35.5 million—are enrolled in Medicaid or the Children’s Health Insurance Program. These programs are essential to low-income children, and particularly children of color, who are more likely to lack access to other forms of health coverage. Both programs have been providing medical care to kids for about half a century.

However, the treatment of chronic illness, special needs, and adverse birth outcomes often receive higher priority attention than preventive interventions. This is because treatment for medically complex conditions drives costs in the health care system. So it is where state Medicaid agencies, and the managed care organizations (MCOs) that help them control cost, utilization and quality, invest their time and energy.

With most of the focus on treatment, it’s often difficult to make the case for community-based, family-centered prevention. But some states have started to implement prevention activities addressing childhood obesity and other areas of health promotion and disease prevention.

In Alabama, the Children’s Center for Weight Management started a program, for which it receives Medicaid reimbursement that sends nurses and social workers to assess home environments of children with obesity. Through the program, nurses provide education, counseling, and medication adherence assistance. Washington D.C. offers a program at a community center, funded in part by its local Medicaid agency that includes obesity awareness and prevention, weight management counseling, cooking demonstrations, food shopping field trips, and exercise and dance classes. These are examples of states thinking outside the box to offer health services in nontraditional ways. With some recent innovations, more states will hopefully be encouraged to follow suit.

Making the Business Case for Prevention

Both private insurance companies and public programs like Medicaid play a crucial role in the healthy development of children. It’s important they connect enrollees with services that will best help them live a healthy and happy life even when the solutions go beyond the clinical setting.

This is why Nemours Children’s Health System developed the Prevention Business Case Financial Simulation Tool and accompanying user guide. While exploring strategies for Medicaid investment in preventative health services, Nemours discovered that there was a lack of tools and resources available to state Medicaid agencies and MCOs to make a business case for investing in prevention. To help these organizations fill this need, Nemours developed the Financial Simulation tool using existing research literature and partnering with the Maryland Department of Health to test and validate the tool with Maryland Medicaid data. The Financial Simulation tool provides key “return on investment” (ROI) information to any state interested in exploring and implementing childhood obesity prevention interventions.

The tool allows states’ Medicaid agencies and MCOs to estimate the cost of investing in various childhood obesity treatment and prevention services; health care cost savings resulting from intervention; expected short and medium-term health benefits; and a timeline of savings in order to provide evidence of the business case for Medicaid obesity prevention interventions.

It will be especially useful to state Medicaid agencies and MCOs that can use this data to make the financial case for investing in childhood obesity prevention. A lack of evidence on the costs, savings, and expected health outcomes of child obesity prevention interventions inhibits investment by Medicaid and MCOs. Policymakers searching for reliable evidence to make the case for cost-effective prevention can also use the tool as a resource when deciding legislative and budget priorities. Additionally, local and state health officers can use it to build the urgent case for continued support of Medicaid and can offer solutions of how to best use limited dollars. 

Beyond the immediate benefits of the tool, it also underscores the value of prevention for Medicaid agencies and can help shift decision-making toward prevention and medium and long-term ROI for many chronic health issues. Childhood obesity is a good place to start because of its relevance to lifelong health.

In addition to considering childhood obesity prevention, one strategy many states are exploring is Medicaid financing for home visiting, which offers home/community-based prevention services for pregnant women and families with young children. A recent report titled Medicaid and Home Visiting explored different states’ approaches to financing home visiting services with Medicaid. It would be great to build the “business case model” for interventions like home visiting and others that promote children’s physical, mental and emotional development so states could learn more about the myriad benefits of investing in these approaches.  

Both patients and health systems fare better when prevention and early intervention are used to meet the triple aim: care, cost, and outcomes. And, childhood obesity is a challenge for which prevention is particularly relevant.

If you’re part of a Medicaid agency or MCO, or a policymaker or advocate working on Medicaid-related issues, we encourage you to check out the Financial Simulation tool to learn about the various cost-effective childhood obesity prevention strategies that can be implemented in your state’s Medicaid program.

Learn more about the tool to help states estimate the Medicaid and MCO costs of investing in childhood obesity prevention on Nemours’ Moving Health Care Upstream website.