Updated June 8, 2020
State Health Insurance Marketplace Directors Recommend Federal Efforts to Improve Coverage Affordability and Stability in Light of COVID-19
As the state-based marketplaces (SBMs) take steps to improve access to coverage during the COVID-19 pandemic, affordability of coverage and stability of insurance markets remain significant barriers to health insurance.
On June 1, 2020, SBM directors representing 12 state-based health insurance marketplaces sent a letter to Congressional leaders recommending actions that could help ease access to affordable coverage, including reinsurance, enhanced subsidies, and leniency on penalties for individuals whose income and employment fluctuations may lead to incorrect eligibility determinations.
Starting in early 2020, Idaho will launch a new value-based payment model that will compensate federally qualified health centers (FQHCs) and other providers based on how much they improve the cost and quality of care delivered to Medicaid enrollees. The agency plans to sign contracts to implement the model in January, with implementation beginning July 1, 2020.
Both FQHCs and other types of providers have expressed interest in participating in this value-based model.
Idaho has operated a Medicaid Primary Care Case Management (PCCM) program since 1993 and has worked to advance patient-centered medical homes (PCMHs) since 2008, when the Governor’s Select Committee on Health Care recommended PCMH implementation as a priority. In 2016, Idaho Medicaid launched its Healthy Connections program, which blended the two initiatives. In 2017, the Medicaid agency began working to incorporate value-based payment into Healthy Connections. The agency submitted a State Plan Amendment (SPA) in October 2019 to secure Centers for Medicare & Medicaid Services (CMS) approval of its new payment model, which awards payment to FQHCs and other providers based on how much they improve costs and quality of care provided to Medicaid enrollees.
How Healthy Connections Value Care Operates
In the Healthy Connections program, primary care providers (PCPs) are paid on a fee-for-service basis, plus a per member per month (PMPM) care management fee. Care management fees range from $2.50 to $10 and vary based on the characteristics of the PCP’s practice and the patients attributed to the PCP. Specifically, PCPs qualify for one of four reimbursement tiers based on their capabilities – those who qualify for higher tiers receive higher care management fees. The types of capabilities considered in tier assignment include being able to both send and receive data from the state health data exchange or offering extended hours of service to patients. Also, the PMPM care management fee is higher for beneficiaries with disabilities or special needs.
The Healthy Connections Value Care (HCVC) program will operate under Section 1905(t) of the Social Security Act and builds on the structure of the Healthy Connections program. Participating PCPs will continue to receive both fee-for-service payments and care management fees. Participating PCPs, including FQHCs and rural health centers (RHCs), will participate as one of two types of organizations:
- Accountable primary care organizations are primary care clinics (or groups of clinics) that serve at least 1,000 Medicaid enrollees. Clinics that wish to participate as a group must create a legal entity and sign a joint operating agreement. (Hospitals may not participate in this type of organization.)
- Accountable hospital care organizations are integrated networks of providers that include an acute care hospital and serve at least 10,000 Medicaid enrollees.
Both types of organizations (referred to collectively as value care organizations or VCOs) are expected to contain Medicaid’s total cost of care (TCOC) and improve quality for their Medicaid patients. Both types of VCOs will share in any savings or losses they generate. The specific amounts will be determined through an annual settlement process. Each VCO’s share of savings will depend on the VCO’s performance. A VCO’s share of losses will not be adjusted for performance. However, an accountable primary care organization’s liability for losses is limited to the total amount paid to the organization in care management fees. Importantly, because the model builds on the fee-for-service payment structure and limits accountable primary care organizations’ risk to the amount paid in care management fees, the model enables FQHCs to participate without placing their federally-mandated per visit payments at risk.
How Performance Determines Savings
Shared savings will be distributed to VCOs based on their performance on reducing growth in total cost of care and achieving specified quality measures goals. Idaho Medicaid chooses the measure set in conjunction with VCOs and updates the set each year. For the first year of the program, the set will include hospital re-admissions, emergency department visits, breast cancer screening, diabetes HbA1c test, well-child visits during the first 15 months, well-child visits during ages 3 to 6 years, and well-care visits for adolescents. Idaho publishes the measure specifications in its Healthy Connections website. If a measure does not apply to a practice, that measure is excluded from consideration when calculating share of savings (e.g., pediatric measures are only considered if the practice serves children). However, hospital-related measures apply to all VCOs as PCP performance affects those outcomes.
The Medicaid agency will retain 20 percent of savings produced by a VCO for administration. The VCO can earn the remaining 80 percent. The VCO will earn half of the available savings (40 percent of total savings) if it maintains quality of care, which is defined as maintaining baseline performance – the individual clinic’s performance on the measure in the previous year – on at least half of the measures in the quality measure set. This half is referred to as the efficiency pool. The other half of the available savings, referred to as the quality pool, can be earned by showing acceptable improvement on the measures in the set — improvement on more measures secures a greater share of savings. Acceptable improvements are either:
- Performing at 90 percent of the state or national benchmark established for the measure (aspirational goal); or
- Producing a 3 percent reduction in the gap between the VCO’s performance and the aspirational goal (individualized annual improvement target).
Supporting Participating Providers
Healthy Connections staff provide support to practices seeking to qualify for a higher tier. Idaho Medicaid plans to continue this support and to offer new types of support to help VCOs succeed. The state has structured other features of the program to encourage provider engagement:
Enrollment policies: On July 1, 2019, Idaho Medicaid implemented an annual fixed enrollment policy (enrollment lock-in). Previously Medicaid enrollees could change their PCCM provider at any time. Under the new policy, enrollee will have 90 days from enrollment with a PCCM provider to change providers. If an enrollee does not change providers within the 90 days, the individual will not be able to do so until that next annual enrollment period, which occurs from May 1 to June 30 of each year. Enrollees can request a change outside of the enrollment period due to special circumstances, such as moving out of the provider’s service area or poor quality of care. This new enrollment policy supports VCOs by creating a more defined and stable panel of patients for the VCOs to manage.
Information on provider performance: Once an FQHC indicates an interest in participating in the HCVC program, Idaho Medicaid generates a cost/quality dashboard showing the clinic’s current performance on both cost and quality. Idaho Medicaid also plans to establish an automated claims data portal for VCOs that will enable them to view their performance on selected qualify measures on an ongoing basis.
Community-level investments in patient health, including addressing the social determinants of health (SDOH). Idaho Medicaid plans to form and support two regional advisory groups to support the work of the VCOs in the region. Regional care collaboratives will consist of physicians who participate in the HCVC program and are responsible for identifying the health care needs in the region and seeking collaborations to improve cost and quality by addressing those needs. Community health outcomes improvement councils will be composed of community stakeholders and are responsible for identifying opportunities to improve health and wellness, including addressing SDOH in their communities.
A Medicaid Perspective
The Idaho Medicaid agency pursued VBP because it wanted to foster cost control, but not at the expense of quality. After reviewing their options, the agency chose to pursue the HCVC model because it allowed it to “begin where they are” by building on the existing PCCM payment structure. The existing Healthy Connections payment model is also well known to – and has the strong support of – PCPs. The agency developed the HCVC model with the input of both hospitals and PCPs, including FQHCs. As the agency sought feedback on successive iterations of the model, the model evolved. Early versions of the model proposed that accountable hospital care organizations would share both savings and losses, but accountable primary care organizations would share only savings. In early 2019, the agency added shared loss for the accountable primary care organizations at the suggestion of hospitals and after consultation with primary care providers.
Agency representatives report they have encountered two major challenges. The first was determining which federal authority to use to implement the model. It could have been implemented as managed care under Section 1932(a) of the act or as fee-for-service under 1905(t).* Idaho ultimately decided that 1905(t) would better support the HCVC model for a number of reasons. Implementing the model under 1905(t) enabled Idaho to avoid the need to require primary care organizations to secure agreements with the hospitals, specialists and other providers whose costs are included in calculations of savings/losses when using a TCOC approach. Idaho found the State Medicaid Director Letter on Policy Considerations for Integrated Care Models, as well as consultation with CMS staff, to be very helpful in guiding the decision. Reflecting on their experience, agency staff advise other states to consult with CMS early in the development of new VBP models. The agency also found it valuable to engage outside experts to help staff evaluate policy options and determine how each option would affect operation.
The second challenge was data. Idaho Medicaid is seeking to build a transparent model — one where participating providers can easily track their performance on cost and quality and have the information they need to improve on both. Idaho Medicaid has a small data team and has found it challenging to implement their data plans. For example, agency staff had hoped to have an automated claims data portal operating at program launch, but now anticipates that the portal will need to launch after January 2020. Similarly, the agency plans to give VCOs the information they need to make referral decisions on both quality and cost, but will not be able offer cost information at program launch.
FQHCs have already expressed interest in participating in the HCVC model as accountable primary care organizations. State officials believe the new model plays to FQHCs’ strengths in panel management and the efforts they have already made to become effective, efficient PCMHs for their patients. Officials, note, however, that in order to produce savings, FQHCs may need to change some aspects of their practice. For example, FQHCs may need to identify which providers in a group (e.g., labs or specialists) produce equally good health outcomes, but at less cost to the Medicaid program and then shift their referral patterns to increase referrals to the less-costly providers within the group.
The FQHC Perspective
FQHC representatives report they believe the new model is a move in the right direction. They expressed concerns about some specific aspects of the model, but overall, believe it will be good for their patients and that FQHCs will succeed under the new model. Idaho’s 16 FQHCs serve more than 50,000 Medicaid enrollees living in 54 communities throughout the state. In 2012, 14 FQHCs formed the Community Health Center Network of Idaho. This FQHC-owned network has engaged in VBP contracts with commercial payers since 2014 and also operates a Medicare accountable care organization. This experience and support give Idaho’s FQHCs several advantages that should help them thrive under the HCVC model. Because the network is statewide and HCVC was originally conceived as a purely regional model, initial FQHC interest in participating as a statewide network presented some challenges. But the Medicaid agency adapted the approach and the FQHCs are now interested in joining the program as accountable primary care organizations when the final VCO contract and data are available.
FQHCs also see gaining access to the Medicaid data they need to manage cost and quality as one of the greatest advantages of participation — but they also identified data as a challenge. Although the dashboards the FQHCs received from Medicaid were helpful, they did not provide sufficient detail to enable FQHCs to manage their population as they will need to under the HCVC model. The network anticipates that the Medicaid agency will soon share claims level data, and the network plans to use the data to produce patient registries, identify gaps in patient care, and inform participation decisions.
The FQHCs also identify sharing losses from the program’s inception as a challenge. They would prefer to have one to two years of shared savings-only before they had to also share losses with the Medicaid agency. Officials are confident that their strategy of increasing primary care expenditures to reduce TCOC will produce savings. However, it has been the FQHCs’ experience with other payers that it takes time to fully understand any VBP model and identify what they need to do to succeed under it. For example, because the individual FQHCs serve tend to be more high-risk than those served by other providers, FQHC representatives would prefer to test the Medicaid agency’s approach to risk-adjustment in TCOC for a year or two before being asked to live with the results of the approach. Limiting accountable primary care organizations’ risk just to the care management fee could make sharing in losses from the start of the program more palatable. However, FQHC officials remain concerned that any loss of the income from care management fees will endanger the care management programs that FQHCs have developed with that funding.
The HCVC payment model is Idaho’s next step on its path to:
- Ensure that Medicaid enrollees are served by effective PCMHs; and
- Reward practices that produce savings while maintaining or improving quality with increased payments.
Some challenges, particularly in ensuring that primary care providers have the data they need to manage their patients’ care, remain. However, stakeholders who were interviewed indicated that Idaho was on the right path and were optimistic about the new model’s success.
*A July 2012 letter from CMS indicates that states can also operate integrated programs under other federal authorities, including waivers, but Idaho eliminated these options early in program development
Acknowledgements: The National Academy for State Health Policy wishes to thank Matt Wimmer and Meg Hall of Idaho’s Division of Medicaid and Yvonne Ketchum-Ward of the Idaho Primary Care Association for their contributions. The author also wishes to thank Trish Riley and Kitty Purington of NASHP, as well as NASHP’s Health Resources and Services Administration project officer, Lynnette Araki, and her colleagues for their review and guidance. Finally, the author thanks Kristina Long of NASHP for her assistance in the preparation of this case study.
States, as major purchasers of health care, have a compelling interest to spur primary care providers to adopt the latest research to improve the quality and cost-effectiveness of care. This new report, the third in the EvidenceNOW: Insights for State Health Policymakers Series, highlights policy levers states can use to support the adoption of evidence-based care.
Read/download: State Policy Levers for Advancing Quality Improvements in Primary Care, April 2019
Read/download NASHP’s other two EvidenceNOW: Insights for State Health Series reports:
State-based health insurance marketplaces (SBMs) have emerged as successful models in delivering health insurance to consumers. They consistently outperform other states that use the federal platform in areas of enrollment, affordability, and increased plan offerings and competition. Their flexible structure allows SBMs to focus marketing and outreach efforts and promote policies that generate more health coverage choices at lower costs. The resources below explore the SBM model and how recent state and federal actions are impacting state insurance markets.
State-Based Health Insurance Marketplace Performance, June 30, 2020. This slideshow details data about current state-based marketplace models, enrollment trends, premium growth, and impacts of reinsurance.
State-based Marketplace Leaders Share their Success and Growth with Federal Leaders September 23, 2019 SBM executives came to Washington DC to share how they are succeeding, sustainable, and growing in number.
Slideshow: State Marketplaces Outperform the Federal Marketplace, April 1, 2019. This slideshows examines how state-based marketplaces outperform the federal marketplace model based on enrollment, affordability, and plan competition.
Chart: Individual Enrollment in Federal and State Health Insurance Marketplaces 2018-2019, April 1, 2019. This chart illustrates how the three marketplace models performed in every state between 2018 and 2019.
Blog: Is New Jersey’s Conversion to a State-based Insurance Exchange a Harbinger?, April 1, 2019. This blog explores why states like New Jersey are considering converting to a state-based marketplace model.
Blog: State-based Exchange Directors Share their Marketplace Success with Congress, March 11, 2019. This blog explores topics shared by marketplace executives with Congressional leaders during a series of meetings in Washington, DC.
State-based Marketplace Resource List, March 6, 2019. State-based marketplace (SBM) resources highlight strategies to support market stability and affordability, the 2019 enrollment period, and how state flexibility enables their success.
Blog: State-based Marketplaces Open for Business, Dec. 19, 2018. This blog describes how SBMs are still at work, even in light of a federal district court ruling striking down aspects of the Affordable Care Act. Includes information on enrollment deadlines for each state.
Blog: How Massachusetts SHOP-ed for a New Small Group Marketplace, May 1, 2017. This blog describes how Massachusetts leveraged Washington, DC’s marketplace technology to create a joint platform for its Small business Health Options Program (SHOP).
Transitioning to an SBM
New Jersey and Pennsylvania Approve Legislation to Launch State-Based Insurance Marketplaces July 9, 2019 This blog recaps recently enacted legislation in New Jersey and Pennsylvania to transition the states to the SBM model.
Blog: So You Want to Build a State-based Marketplace? Here’s How! — Advice from Marketplace Leaders, May 21, 2019. This blog highlights advice from state-based marketplace (SBM) leaders about how to transition to the SBM model.
Webinar: So You Want to Build a State-based Marketplace? Here’s How! May 10, 2019. During this webinar, state-based marketplace (SBM) leaders from Idaho, Massachusetts, Nevada, and Washington, DC discuss what states should know if they’re considering transition to the SBM model.
Blog: Is New Jersey’s Conversion to a State-based Insurance Exchange a Harbinger?, April 1, 2019. This blog explores why states like New Jersey are considering converting to a state-based marketplace model.
Q&A Nevada’s Insurance Director Talks about Transitioning to a State-based Marketplace and Saving Millions, April 24, 2018. Q & A with Heather Korbulic, Executive Director of Nevada’s Marketplace, about the decisions driving Nevada’s conversion to the SBM model.
Blog: How Massachusetts SHOP-ed for a New Small Group Marketplace, May 1, 2017. This blog describes how Massachusetts leveraged Washington, DC’s marketplace technology to create a joint platform for its Small business Health Options Program (SHOP).
Issue Brief: Building a More Efficient Marketplace: Lessons from DC Health Link’s Experience with Open Source Code, March 21, 2016. Issue brief detailing the savings and efficiencies generated from Washington DC’s conversion to an open source system for its marketplace.
Federal Impact on Markets
State Officials Fear Final Public Charge Rule Could Deter Health Coverage Enrollment September 10, 2019 This blog reviews the Administration’s recently enacted “public charge” rule and how the rule may impact enrollment in coverage programs including Medicaid, CHIP and health insurance marketplaces.
Changes to Poverty Measure Could Disqualify Thousands from State and Federal Programs June 17, 2019 This blog examines a proposal issued by the Office of Management and Budget that could impact the annual poverty measure used to assess eligibility for several state and federal programs.
Blog: Annual Federal Insurance Rule Includes Proposals to Address Prescription Drug Cost, Feb. 11, 2019. This blog details the ways the 2020 Notice of Benefit and Payment Parameters proposes to address prescription drug costs through changes in benefit requirements and limits on coupons for prescription drugs.
Chart: Deadline Looms for State Comments on Fed’s Latest Insurance Rules, Jan. 29, 2019. This chart contains details of all the federal changes to insurance market regulations proposed under the 2020 Notice of Benefit and Payment Parameters.
Blog: New Federal Health Reimbursement Proposal Adds New Variables to State Health Insurance Markets, November 6, 2018. This blog describes how proposed regulations grant additional flexibility over the administration of Health Reimbursement Accounts (HRAs).
Blog: Administration Proposes Significant Policy Changes for State Insurance Markets through New 1332 Waiver Guidance, Oct. 23, 2018. This blog explains how new federal guidance changes the requirements for states under section 1332 State Relief and Empowerment Waivers.
Blog: Lower Cost, Short-Term Insurance Plans Approved, but at What Cost to State Markets and Consumers, Aug. 7, 2018. This blog summarizes changes to federal regulations governing short-term limited duration insurance plans, state actions to regulate these plans, and what implications these changes may have for states’ markets.
Blog: The New Association Health Plan Rule: What Are the Issues and Options for States, June 26, 2018. This blog details all the changes made under a new federal rule regulating association health plans (AHPs)
Blog: New Insurance Rules Allow States to Revise Marketplace Coverage as Rate-Filing Deadlines Near, April 17, 2018. This blog provides a detailed summary of changes made by the 2019 Notice of Benefit and Payment Parameters, the federal rule governing health insurance in 2019.
Blog: How Elimination of Cost-Sharing Reduction Payments Changed Consumer Enrollment in State-based Marketplaces, March 20, 2018. This blog provides an update on how state regulators adjusted their insurance markets in response to the federal decision to eliminate funding for the cost-sharing reduction program. An accompanying chart documents resulting shifts in enrollment by metal level in state-based marketplace states.
SBM Responses to Federal Actions
Blog: State-based Exchange Directors Share their Marketplace Success with Congress, March 11, 2019. This blog explores topics shared by SBM executives with Congressional leaders during a series of meetings in Washington, DC.
Letter: State Exchange Leaders Express Concern about Potential Rule Changes, February 19, 2019. Letter from 13 SBM executives to the U.S. Department of Health and Human Services regarding changes proposed under the 2020 Notice of Benefit and Payment Parameters.
Letter: Twelve State-based Exchanges Outline Strategies to Stabilize Individual Market, August 29, 2018. Letter from 12 SBM executives to the Senate Health, Education, Labor and Pensions Committee detailing consensus strategies to bring stability to the individual insurance market.
Letter: State-based Marketplace Directors Ask Senate Leaders to Support a Reinsurance Program, February 6, 2018. Letter from 10 SBM executives to the Senate Health, Education, Labor and Pensions Committee to support Congressional efforts to stabilize insurance markets.
How States Stabilize Markets
Q&A: How Maryland Uses Multiple Policy Levers to Improve Health Coverage, Affordability, and Access October 14, 2019. Maryland’s Health Insurance Marketplace Executive Director discusses how reinsurance and a new easy enrollment program will help spread affordable coverage in the state.
How Washington State Is Reducing Costs and Improving Coverage Value – A Q&A with its Health Benefit Exchange CEO August 5, 2019 In this interview, Washington’s marketplace CEO discusses plans for implementation of Washington’s public option and standard benefit design.
How California Is Moving the Needle on Coverage and Costs: An Interview with Covered California Leaders July 29, 2019. In this interview, officials from Covered California talk about the implementation of California’s new law to expand health insurance subsidies and reinstate the individual mandate.
Webinar and Blog: State Reinsurance Programs Lower Premiums and Stabilize Markets — Oregon and Maryland Show How, Dec. 11, 2018. This blog describes early results from Maryland and Oregon’s implementation of a reinsurance program for their individual insurance market. Additional details are shared in a webinar linked in this blog.
Blog: Health Coverage and Human Service Program Eligibility: Considerations for States Weighing Systems Integration, Oct. 2, 2018. This blog describes various policy considerations for states that are interested in implementing more integrated eligibility systems for their health and human services programs.
Blog: How State Policymakers Spent Their Summer: Stabilizing Their Insurance Markets, Sept. 11, 2018. This blog provides a round-up of new state legislation passed to implement an individual mandate and to regulate short-term insurance and association health plans.
Blog: #NASHPCONF18: Policymakers Share Their Approaches to Stabilize State Individual Insurance Markets, Aug. 28, 2018. This blog recaps a NASHP conference panel with state officials highlighting strategies used to stabilize markets and identify lingering challenges to insurance markets’ affordability and choice.
Blog: #NASHPCONF18: State Policymakers Share Views on Evolving Individual Insurance Markets, Aug. 21, 2018. During NASHP’s 31st Annual State Health Policy Conference, experts and state officials assessed the dramatic sea changes that recent federal action has imposed on their individual health insurance markets, what they are doing to stabilize them, and what the future holds.
Webinar and Blog: Ministry, Association, and Short-Term Health Insurance Plans – What’s a State to Do? May 29, 2018. During this webinar, experts reviewed major trends expected for insurance markets, and state actions and tools to encourage stability and consumer protections in the midst of these changes.
Blog: States Face Short Deadlines to Address the Risks of Short-term Insurance Plans, May 1, 2018. This blog reviews options for state regulation of short-term insurance plans in light of proposed federal rules to expand their availability.
Q&A with Pennsylvania’s Insurance Chief: Jessica Altman Explores the Evolving Role of Insurance Coverage, April 10, 2018. Altman speaks with NASHP about the evolving role of health insurance coverage in state and national politics.
Webinar: How Would a State Individual Insurance Mandate Work? Feb. 7, 2018. This webinar dives deep into Massachusetts’ individual mandate and a new proposal in Maryland to create an auto-enrollment process for individuals through its insurance marketplaces.
Webinar: Prohibiting Discrimination under the Affordable Care Act—State and Federal Roles and Responsibilities, April 18, 2016. This webinar examines the state role in prohibiting discrimination in health insurance coverage per requirements issued under the Affordable Care Act including the impacts of nondiscrimination requirements on insurance markets.
On March 5 and 6, 2019, state-based exchange directors convened in Washington, DC for peer-to-peer discussions and meetings with Congressional staff and federal officials, hosted by the National Academy for State Health Policy (NASHP). The meeting has become an important annual event for the state-based exchanges – which provide the infrastructure, websites, and customer support for individuals and small businesses to purchase health insurance.
The exchange directors and their staff had much to share. They highlighted the importance of state flexibility in designing programs that work for their local markets, noting that their enrollment numbers in 2019 outperformed those of states that use the federal exchange, despite considerable challenges to the stability of the insurance markets.
The exchange directors also shared data about program successes and continued to voice their unanimous support for state flexibility to maintain auto-enrollment and “silver loading” and other strategies to address affordability.
On March 6, 2019, the House Energy and Commerce Subcommittee on Health invited two exchange leaders to testify during a hearing on “Strengthening Our Health Care System: Legislation to Lower Consumer Costs and Increase Access.” Peter Lee, executive director of Covered California, and Audrey Gasteier, chief of policy and strategy for the Massachusetts Health Connector, provided expert and thoughtful testimony, responding to lively questioning from subcommittee members. Read Lee’s and Gasteier’s testimonies.
State-based exchange directors have built a strong community of leaders who are working together to achieve their shared goal of providing access to affordable, quality health coverage. Each state has different approaches and priorities, but by working together they make sure their successes and lessons learned are shared and progress is advanced. Explore the State-based exchange Resource List. NASHP is proud to support their efforts.
State policymakers must often take action during an emerging crisis even when evidence identifying the best policy approach is not be available. This report, Evidence-Based Policymaking Is an Iterative Process: A Case Study of Antipsychotic Use among Children in the Foster Care System, explores successful state responses to dramatic increases in antipsychotic prescription rates in Medicaid-enrolled children in foster care. It highlights several strategies, including payment reforms, delivery system innovations, and quality supports for clinical care.
The report results from a convening by the National Academy for State Health Policy of researchers and state officials with expertise in financing and operating Children’s Health Insurance Program and Medicaid programs, children’s health, and health policy and pharmacy research. The meeting preceded the release of a Patient-Centered Outcomes Research Institute-funded study, which examines the comparative effectiveness of state oversight systems in Ohio, Texas, Washington, and Wisconsin.
The Centers for Medicare & Medicaid Services (CMS) had a mixed response to two states’ innovative efforts to control Medicaid drug costs in June. The agency denied Massachusetts’ 1115 waiver request to create a closed Medicaid drug formulary, but it approved Oklahoma’s State Plan Amendment that authorizes supplemental rebates for value-based purchasing arrangements with pharmaceutical manufacturers.
Here’s a snapshot of the two applications :
The Massachusetts 1115 waiver request contained a provision that allowed the state to exclude certain low-value drugs – which render fewer benefits relative to their costs — from its Medicaid drug formulary. Currently, states must cover all prescription drugs as a condition of their participation in the federal Medicaid Drug Rebate Program (MDRP). In its denial of Massachusetts’ waiver provision , CMS reiterated that a state would have to fully forgo participation in the MDRP in order to create a closed formulary, and that federal costs from the closed formulary could not exceed costs that would have been incurred otherwise. CMS’s response to Massachusetts mirrors the Trump Administration’s proposal for a five-state demonstration project to test the impact of allowing states to negotiate their own drug formularies outside of the rebate program.
|Learn More at NASHP’s Rx Summit, Aug. 15-17, 2018, Jacksonville, FL
To learn more about these two states’ efforts to control drug costs and other new and emerging state strategies, attend NASHP’s 31st Annual State Health Policy Conference’s Summit on State Strategy and Tactics to Lower Rx Prices on Aug. 17, 2018, in Jacksonville, FL.
The summit, open only to state officials, includes a panel discussion on “New Tools for Medicaid to Cut Drug Costs” with speakers from Massachusetts, Oklahoma, New York, and other states. Learn more about the conference here and register by July 20 to get the early bird discount.
Oklahoma’s State Plan Amendment, which enables value-based purchasing, was approved by CMS, making it the first state plan to incorporate supplemental rebates for value-based purchasing agreements with drug manufacturers. The state will negotiate additional rebates from drug manufacturers for high-cost drugs that do not achieve agreed-upon outcomes. Through support from the Laura and John Arnold Foundation, NASHP awarded Oklahoma a sub-grant in October 2017 to advance value-based purchasing as a solution to rising drug costs. NASHP’s sub-grant to Oklahoma supports the data analytics required to explore the feasibility and design of contracts for value-based purchasing of specific drugs. The results of this value-based purchasing initiative including findings on how to expedite data analytics will be shared with other states interested in following in Oklahoma’s footsteps.
Medicaid payment models in many states are shifting away from rewarding providers for the quantity of care they provide to models that reward high-quality, coordinated care that addresses some of the broader social factors that influence health and well-being. One example is New York’s Value-Based Payment (VBP) Roadmap, which rewards Medicaid providers and community-based organizations for addressing the social and economic impacts on health — such as access to healthy food, safe housing, and reliable transportation — that make up 80 percent of the factors affecting people’s health.
In New York’s model, Medicaid VBP contractors — such as accountable care organizations (ACOs), hospitals, or individual providers and their partnering networks — enter into value-based payment arrangements with Medicaid managed care organizations (MCOs). Those arrangements take one of three forms. In the Level One VBP arrangement, a traditional fee-for-service arrangement is augmented by a shared savings payment to the VBP contractor when quality scores are met. Level Two is similar to Level One, but the VBP contractor is responsible for losses if care costs more than expected and if quality targets are not met. In Level Three VBP, the MCO gives VBP contractors a set amount — a capitated or per patient, per month payment — to cover the total cost of care while meeting quality targets.
For example, a Medicaid MCO can pay a VBP contractor a flat rate or capitated payment for all the care and services required by a person with diabetes, including assistance meeting health-related social needs. VBP contractors can also develop innovations to support their VBP models. For example, one ACO in western New York partnered with a ride-sharing company to take people to urgent care or after-hours primary care as needed.
As part of the National Academy for State Health Policy’s (NASHP) accountable health models workgroup, Ryan P. Ashe, director of Medicaid Payment Reform at the New York State Department of Health, explained in a recent interview how his state’s Value-Based Payment Roadmap addresses social determinants of health.
What is your state’s value-based payment roadmap?
It is a plan to move New York Medicaid’s payment system toward a VBP model that emphasizes value instead of volume, in order to ensure the long-term sustainability of investments in clinical improvement, system transformation, population health, and community engagement, among other things. The roadmap, which charts a path toward making at least 80 percent of Medicaid managed care provider payments contracted in a VBP model, was approved in July, 2015 and updated in June 2016 and given final approval by the US Centers for Medicare & Medicaid Services (CMS) as part of the state’s Section 1115 demonstration project. The shift to value-based payment is intended to improve health and well-being of people and populations, increase the quality of clinical care, and reduce costs.
Did patients, providers, community members, and other stakeholders provide input into the roadmap’s design?
Yes. The roadmap was developed through a comprehensive and significant stakeholder engagement process. A VBP workgroup served as the advisory body guiding all major policy decisions that shape the model. The VBP workgroup was composed of providers as well as individuals from advocacy groups, community-based organizations, MC0s, and representative associations (including health plan, hospital, and physician-focused associations), among other groups. Clinical advisory groups were developed to inform clinical and behavioral health-related VBP arrangements. They also provided expertise and thought leadership, especially in relation to the design of the individual VBP arrangements such as integrated primary care and the total cost of care arrangements, for example. Subcommittees were developed to tackle specific opportunities within the VBP model. For example, a social determinants of health (SDH) subcommittee tackled a number of topics, including how the state can incentivize providers and MCOs to invest in the social factors affecting health. Comprehensive stakeholder engagement has been a cornerstone of our VBP model, and enabling a channel for public comment on the roadmap was a very important element as we moved forward. In fact, it is a practice we continue today and will continue tomorrow.
How does the roadmap motivate payers and providers to address the social determinants of health?
The VBP model requires VBP contractors — such as ACOs, hospitals, or individual providers and their partnering networks — to implement at least one intervention that addresses an SDH. The model also requires investment in interventions and rewards contractors for addressing social determinants of health, depending on the level of risk adopted in the VBP arrangement.
VBP contractors contract with MCOs under one of three arrangements:
- Level 1 is an upside-only shared savings arrangement
- Level 2 is an upside and downside risk-sharing arrangement
- Level 3 is a prospective per-member, per-month payment and/or prospective bundled payments
|“… effectively addressing social determinants of health gets to the root cause of poor health. For example, establishing stable housing helps individuals manage their medication, and access to healthy food helps address complications related to obesity or diabetes.”|
VBP contractors in Levels 2 or 3 must address at least one social determinant of health.
VBP is a mechanism to stimulate innovation and sustain transformation where it occurs. The idea is that by establishing a target goal based on overall spend and incentivizing quality, health care providers at all levels, including MCOs, will work together to provide the absolute best level of care, achieving the highest level of quality in a manner that avoids complications or emergency rooms visits that otherwise results in higher costs. In many instances, effectively addressing social determinants of health gets to the root cause of poor health. For example, establishing stable housing helps individuals manage their medication, and access to healthy food helps address complications related to obesity or diabetes. VBP creates a framework where investments in SDH interventions becomes much more important and a foundation for successful arrangements between provider partners and MCOs.
Community organizations have important insight into the needs of the communities they serve. How are they involved in implementing and guiding the roadmap?
Community based organizations are a key stakeholder in the our VBP model. It’s the community-based organizations that often have the direct line into the communities. VBP contractors in Levels 2 or 3 are required to contract with at least one community-based organization. The roadmap also recommends that MCOs and providers work with community-based organizations on interventions targeting SDH. There is a template that MCOs and community-based organizations must use when contracting with one another to implement an intervention targeting a social determinant of health. The template asks the MCO and community-based organization why they selected the intervention. For example, did they leverage an existing assessment of community needs? Or, was the decision informed by existing information sources such as the 211 service database, which tracks calls to the state’s health and human services information line? The template is a way for the state to operationalize the inclusion of CBOs in VBP arrangements. Moreover, it helps us to begin to collect information on best practices that explain why SDH interventions are being selected and how their success is being measured.
Does the state have any say over which social determinants of health that MCOs, providers, and community-based organizations address?
We want to give MCOs and community-based organizations the flexibility to design their interventions to meet the needs they see, and we want to emphasize and support opportunities to achieve the true value of the interventions. The VBP model accepts interventions that focus on five key social domains. To that end, the social determinants of health subcommittee developed a menu of evidence-based interventions that target these five key areas:
- Economic stability;
- Health and health care;
- Neighborhood environment; and
- Social, family, and community context.
The menu identifies the specific social determinants affecting each area, and lists evidence-based interventions providers can use to address them. For example, prescriptions for fruits and vegetables and nutritional counseling are possible VBP-funded interventions for food insecurity. Rental assistance, respite care, and legal services are interventions for people experiencing homelessness and housing instability. VBP contractors can pay for such interventions with savings from their Medicaid MCO payments.
Can you share any examples of how partners have used the menu of interventions to address the social determinants of health?
Yes. One provider partnered with a ride-sharing company to provide better access to medical appointments for low-income patients, because evidence shows that a lack of reliable transportation is often the main cause for missed appointments.
Another community-based organization subcontracts with some Medicaid plans to deliver medically-tailored meals to people with life-threatening illnesses. The organization says it has reduced health care costs by 28 percent compared to the costs incurred by people with similar diagnoses who did not receive medically-tailored meals, and evidence suggests such programs can improve health by reducing spending.
What is next for the roadmap?
The roadmap is a “living document,” that is updated annually and reviewed with CMS. Updates to the roadmap reflect the evolution of the model, which includes feedback from the stakeholder community. We continue to refine our arrangements and overall approach and those updates are included in the annual submission to CMS. The VBP model will continue to look at all areas of health care within Medicaid, including pharmacy, dental and transportation.
The state is committed to achieving the goal of transitioning at least 80 to 90 percent of total MCO expenditures into Level I or higher VBP arrangements. It is important to establish a framework where innovative models of care delivery can move forward, and once refined, can be sustained. This is a transformation about the way we deliver care, and also about the way we think about care, and that is where social determinants become very important. The roadmap establishes the way forward, but it also seeks to achieve a key goal — improving health outcomes for people — and that is important to remember.
Support for this work was provided by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the foundation.