Maximizing quality and value in Medicaid: using return on investment forecasting to support effective policymaking

In order to serve increasing numbers of Medicaid beneficiaries, particularly during an economic recession, states must find ways to maximize the impact of available funds. Some states are identifying new ways of organizing, financing, and delivering health care in order to lower costs without sacrificing quality of care or enrollment capacity. An important tool for helping policymakers design such "value-added" strategies is return-on-investment (ROI) analysis. ROI forecasting has long been used to inform the allocation of limited resources in the private sector. This brief outlines what ROI can do, and in a few cases has already done, in the public sector, to improve quality and control costs in Medicaid.