PIERRE | South Dakota's Medicaid program is launching a new effort to trim spending by using teams of doctors and other health care workers to coordinate care of chronically ill people in the program that pays medical costs for low-income people.

Called a Health Home, a team typically will be led by a primary care doctor and will include health coaches, nutritionists and others to manage care for people with chronic health problems. The initiative, a part of the national health care overhaul, is aimed at keeping patients healthier while avoiding trips to hospital emergency rooms and other expensive care.

"It's targeted. This is really getting at folks who use a high level of health care services," said Kim Malsam-Rysdon, secretary of the state Department of Social Services, which manages the Medicaid program.

For patients with private insurance and others outside the Medicaid program, hospitals and clinics also are stressing coordination among doctors and others to improve care and tackle the rising costs of health care. Curbing health care costs, which have been rising faster than general inflation, will be a key to the success of President Barack Obama's Affordable Care Act.

"We know that care that's not coordinated tends to be more expensive. Things get repeated, things are missed if they're not coordinated," said Dr. Daniel Heinemann, president of the South Dakota State Medical Association.

From 1991 to 2009, per capita health care spending in South Dakota grew an average of 6.9 percent a year, slightly higher than the 6.5 percent national rate. Cost increases nationally slowed to 3.9 percent a year from 2009 to 2011. In 2009, health care spending per capita in South Dakota was $7,056, again slightly higher than the national average of $6,815 per person.

The Affordable Care Act is intended to provide coverage to people who lack insurance by expanding Medicaid, the state-federal program for poor people, and requiring most others to purchase insurance.

South Dakota's Medicaid program now covers about 116,000 people, and state officials have not yet decided whether to expand it to include an additional 48,500.

Malsam-Rysdon said an analysis of current Medicaid patients found about 35,000 would qualify for the coordinated care of the Health Home program, but 21,000 are managing their care effectively now and will have the option of deciding whether to take part. About 1,300 have been identified as top priorities because of their history of costly medical care.

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Health care providers will get extra monthly payments, ranging from about $9 up to $300 depending on patient needs, to take part. The effort will cover patients with heart disease, diabetes, asthma, mental health problems and other chronic conditions. Services will include health coaching, education on disease management and transportation to medical appointments to make sure people get regular treatment.

The federal government will pay 90 percent of the cost of the initiative, which will be analyzed after two years to determine if it's effective in improving health care and cutting costs. Malsam-Rysdon said 105 providers have signed up for the program.

Dave Hewett, president of the South Dakota Association of Health Care Organizations, said the Affordable Care Act itself has helped slow the rise in medical costs by reducing Medicare reimbursements to hospitals and other providers. Hospitals also are working to reduce errors, infections acquired in hospitals and patient readmissions. Family doctors, specialists and others are increasingly sharing information as part of an effort to keep people well instead of just treating them when they are sick, he said.

"We see health care going in a different direction, recognizing that the health care delivery system we had in the early, early 2000s is not going to be sustainable," Hewett said.

Heinemann said doctors also are learning more about the cost of different services so they and their patients can choose appropriate treatments. Doctors are working with patients to make sure they follow instructions to take medications, get follow-up treatment and change their lifestyles, he said.

Heinemann, who was a primary care doctor before becoming chief medical officer for the Sanford Health Network, said the Affordable Care Act should provide insurance coverage that will allow people to get checkups and early treatment.

"We can avoid the heart attack. We can avoid the complications of diabetes. We can do a variety of other things that help reduce the cost of care by averting it or avoiding it," Heinemann said.

"We know that people who have health coverage are healthier and live longer than people who don't," he said.

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