Calculating ROI: States Using A New Tool To Predict Costs And Benefits Of Medicaid Program Changes

Source: Anna C. Spencer, State Health Notes, Volume 29 Issue 520, July 21, 2008

A new tool is available to help states get the loudest bang for their Medicaid bucks. The Center for Health Care Strategies (CHCS), in partnership with the Robert Wood Johnson Foundation, has developed the Return on Investment Forecasting Calculator. The online tool can help Medicaid agencies and other stakeholders understand the fiscal implications of proposed quality improvement initiatives, such as chronic disease management and health promotion programs.

The ROI Calculator works like this: States supply data on the target population and expected participation costs, baseline costs, health costs and cost trends, length of start-up period and time-frame for analysis (up to three years), intervention costs, and expected changes in utilization of health services resulting from the intervention (for example, decreased use of outpatient care, lab services or pharmaceuticals).

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