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The “medical home” appears to be saving Illinois taxpayers tens of millions of dollars from the state Medicaid program, a new study shows.

Illinois health officials four years ago began steps to link people enrolled in the state Medicaid health insurance program for the poor to a medical home where treatment and patient referrals are coordinated centrally as a way to keep costs down. From 2006 to 2007, Illinois Medicaid assigned nearly 2 million people to primary care doctors who agreed to coordinate these patients health care for an extra monthly payment under a program called Illinois Health Connect.

A new study by the Washington-based Robert Graham Center shows Illinois Health Connect saved the state $140 million in the fiscal year ended June 30, 2009 and another $80 million in fiscal 2008, which ended June 30, 2008. Figures were unavailable for fiscal 2007 because the program was not fully implemented. The study was commissioned by the Illinois Academy of Family Physicians and paid for from grants from several local health foundations and money from the federal government.

The idea behind a medical home is that the patients get higher-quality medical care, including specialized services upfront in a doctor’s office where costs are much lower than at a hospital. The patient is also encouraged to maintain a closer relationship with the medical home in an intensifying effort to keep patients out of the hospital.

“I think this is the future,” said Julie Hamos, director of the Illinois Department of Healthcare and Family Services, which runs the state Medicaid program.

“The spirit of national health care reform is for someone to have a medical home and coordinate the care around patients with a primary care doctor being the center of that,” Hamos added. “That really is the potential cost savings in health care reform. It is important for us to make a go of this.”

The study also showed a disease management program Hamos department launched has saved more than $300 million over the last three years in helping Medicaid patients adhere to their prescriptions for chronic conditions. The program, known as “Your Healthcare Plus,” is administered by McKesson Corp. through a contract with the state, and helps physicians coordinate care and works with patients to make sure they are taking their medications.

To come up with its cost savings figures, the center’s analysis included looking at Medicaid claims, which indicated a slowing in the rate Medicaid patients used the emergency room. In addition, Your Healthcare Plus reported increases in the number of patients getting vaccinations, which officials say result in fewer hospital admissions.