The federal share of savings is even greater.
For 1 million low-income Georgians covered by the state's Medicaid and PeachCare for Kids insurance plans, the Perdue administration began nudging them toward a concept it called care-management organizations. Three private companies bid for the business, which requires them to provide a more intense level of interaction with patients.
The goal is for case managers to teach more healthful habits. When patients are sick or due for a checkup, they're encouraged to see their primary physician instead of heading to the emergency room.
Staff at the Department of Community Health, which oversees the CMOs, calculated the savings by projecting two scenarios. In one, it assumed the old, fee-for-service insurance plan that the CMOs replaced had merely kept up with inflation. In the other, it assumed doctors and hospitals got some boosts in what they were paid, comparable to the modest increases they've received under the CMO program.
Savings under both scenarios were lowered by including the removal of duplicates and unqualified people in the program after the CMO switch. That didn't change the per-person savings, but it did reduce the number of people it was applied to.
In the future, the two scenarios could save state taxpayers between $135 million and $580 million in fiscal year 2012.
Gov. Sonny Perdue's spokesman, Bert Brantley, said the CMO approach improved the entire state budget by slowing the growth of expenses.
Community Health monitors the performance of the CMOs, from availability of nearby physicians to how many rings it takes before phone calls are answered. A comprehensive audit of their performance is in the works, too.
Doctors and hospital administrators frequently complain that the savings are coming out of their pockets. One way is through the reimbursement rates, pennies for every dollar of charges billed.
Mr. Brantley notes that Mr. Perdue had a plan to boost reimbursement rates that the providers rejected. It involved taxing them and every health insurance company in the state.
The idea was an expansion of a plan set up with the CMOs at the start of the program in 2006.
Then, the state paid a bonus to the CMOs, who paid part of it back to the state as a tax. Because most of the money in the Medicaid and PeachCare programs comes from the federal government, the CMOs' tax to the state was mostly Washington's.
In the expansion, the CMOs would have passed part of their bonus along to the providers, who would also pay a tax back to the state with mostly federal dollars.
The feds eventually grew wise to the scheme and toughened the rules. Mr. Perdue's proposal failed last year in the General Assembly after heavy lobbying by the medical community.
Hospitals also squawk at the frequency with which Medicaid and PeachCare patients go to the ER for nonemergencies.
Mr. Brantley admits there is room for improvement.
"It's important to note that all the CMOs can do is encourage patients to seek care from a physician first," he said. "These are people making individual, personal decisions and they generally do not check with their CMO first before going to the ER."
Reach Walter Jones at (404) 589-8424 or firstname.lastname@example.org.