Do Financial Incentives for Medicaid Beneficiaries Increase Use of Preventive Services and Lower Expenditures? Evidence from Ten States

Medicaid beneficiaries face substantial burden from chronic diseases. Incentive programs have been proposed to connect and engage Medicaid beneficiaries with preventive services, thereby changing behavior and preventing chronic diseases. We evaluated the impact of the Medicaid Incentives for Prevention of Chronic Disease program, which funded Medicaid incentive initiatives in 10 states. The focus of initiatives varied by state and included smoking cessation, diabetes prevention, weight loss, and disease management. The value of incentives also varied widely, ranging from a maximum of $50 in one state to over $1,000 annually in another state. Most states randomly assigned participants to incentive and control arms, with both arms eligible to receive preventive services.

We conducted a mixed methods evaluation that included document review, site visits, focus groups, a beneficiary survey, and Medicaid claims analysis. The claims analysis used regression and difference-in-difference methods to test whether incentives increased the use of preventive services and lowered use of other Medicaid services and expenditures.

We find that states can implement Medicaid programs successfully, although they had to overcome administrative challenges and recruiting participants was more difficult than anticipated. Participants in the incentive arms attended significantly more diabetes prevention and weight watchers classes, made more smoking quitline calls, and attended more smoking cessation sessions. Participants who received incentives were very satisfied with program access and quality and believed that the incentives helped them meet their health goals. The programs had no significant impact on the use and costs of other Medicaid services during the evaluation. Administrative costs were relatively high. State evaluations suggest that the incentives had mixed effects on short-term health outcomes, with some significant reductions in smoking and generally insignificant effects on diabetes prevention, weight loss, and risk factor management. Future study is needed to determine whether the impact of Medicaid incentive programs on health outcomes can be improved.