Palliative care helps individuals with serious illness better manage the symptoms and stressors of disease. These services are interdisciplinary, person- and family-centered, and can help people at any stage of a serious illness.
States are uniquely positioned to influence how Americans think about access, and experience palliative care.
A new, 50-state analysis of Medicaid managed care programs by the National Academy for State Health Policy (NASHP) shows that in the past three years, state Medicaid managed care (MMC) programs have:
- Enrolled more children and youth with special health care needs (CYSHCN);
- Provided more services to them through managed care; and
- Launched more specialized initiatives serving CYSHCN in managed care.
These trends deviate from past approaches as, historically CYSHCN have often been exempt from MMC due to the complexity of their needs. CYSHCN represent nearly 20 percent of children younger than age 19 and have chronic and/or complex care needs that require physical and behavioral health care services beyond what children normally require. As states become more proficient in developing MMC programs, they are increasingly incorporating CYSHCN into their program designs in an effort to improve quality and reduce costs.
NASHP has updated a 50-state chart and map, originally published in 2017, highlighting new developments in states’ MMC programs that serve CYSHCN. The 2017 analysis found that 47 states use some form of MMC (risk-based, primary care case management, and prepaid health plans) to serve CYSHCN, a figure that remains true in 2020, with the same number of states and Washington, DC continuing to use MMC to serve some or all CYSHCN.
NASHP’s new analysis found a downward trend in traditional fee-for-service (FFS) models and a shift toward innovative delivery systems. Given that 47 percent of CYSHCN are covered by Medicaid, this analysis provides important insight into how states are designing services to meet the unique needs of CYSHCN.
The use of managed care delivery systems is widespread, with states contracting with managed care organizations (MCOs), which are paid on a per-member, per-month basis, to provide services for people enrolled in Medicaid. Thirty-eight states use a risk-based model to serve CYSHCN, in which the MCO assumes the financial risk. Ten states use a primary care case management (PCCM) model in which states contract directly with primary care providers and pay them a case management fee for each enrollee’s care coordination, and three states have a prepaid health plan (PHP) through which health plans are paid per-member, per-month for a limited set of services.
In this new analysis, NASHP identified several key trends among the 47 states and Washington, DC that use MMC to serve CYSHCN, such as the use of specialized MMC plans, MMC enrollment policies for CYSHCN, behavioral health service delivery systems, and quality assessment standards for CYSHCN.
MMC Contract Language for CYSHCN
Since 2017, six states have added a specific definition of CYSHCN to their managed care contracts – 29 states now clearly describe this population of children within their MMC program. Including a definition of CYSHCN in a managed care contract can support identification of CYSHCN and can be used to determine eligibility for specific services and supports. Some states align their definitions with the federal Maternal and Child Health Bureau, Health Resources and Services Administration definition, while others are based on specific health conditions or Medicaid enrollment categories (e.g., children enrolled in Medicaid through the aged, blind, and disabled eligibility category).
More states are also evaluating the quality of care that MCOs provide to CYSHCN using measures that account for their unique needs, as compared to 2017. States are required by federal Medicaid regulations to develop a quality assessment and improvement strategy and to contract with an external organization to evaluate the quality of care provided by their MCOs. In addition to meeting these regulations, 39 states now include specific language in their contract regarding measuring quality of care provided to CYSHCN through MMC delivery systems, an increase of seven states since 2017.
MMC Enrollment Policies for CYSHCN
CYSHCN may be eligible for Medicaid coverage through specific pathways to coverage, including those who are eligible for Medicaid’s aged, blind, and disabled (ABD) category, those receiving Social Security Income (SSI), and those who are enrolled in foster care or who are receiving adoption assistance. Additional subcategories of CYSHCN who may be enrolled in Medicaid include American Indian/Alaskan Native (AI/AN) children, those enrolled in Medicaid home- and community-based service 1915(c) waiver programs, and those enrolled in state Title V CYSHCN programs. States are increasingly mandatorily and voluntarily enrolling these subpopulations into MMC. The majority of states continue to enroll children that are eligible for Medicaid through ABD, SSI and youth in foster care or receiving adoption assistance in managed care. Over the past three years, the number of states that enroll AI/AN children and those enrolled in 1915(c) waiver programs has increased by more than 10 for each subgroup. Together, these trends may point to an increased understanding among state Medicaid programs of the diverse needs among CYSHCN subgroups.
Specialized MMC Plans for CYSHCN
Several states have developed specialized managed care plans to meet the unique needs of CYSHCN or subgroups. These plans typically offer tailored benefits that are often not available through their standard MMC plan. The number of states that have specialized MMC plans for CYSHCN has nearly doubled over the last three years.
- Thirteen states (DC, FL, GA, IL, IN, ND, TN, TX, UT, VA, WA, WI, and WV) operate 12 specialized health care plans to serve some or all CYSHCN, an increase of six states since 2017.
- Nine states’ (DC, GA, IL, IN, TN, TX, WA, WI, and WV) specialized plans serve youth in foster care and/or receiving adoption assistance, representing over half of the specialized MMC plans. In 2017, only two such plans existed.
- Six states (DC, IN, ND, TX, UT, and VA) have specialized plans that serve children who are eligible for Medicaid through the ABD category.
- Five states (ND, TN, TX, VA, and WV) enroll children who are enrolled in 1915(c) waiver programs in their specialized plans.
Behavioral Health Service Delivery for CYSHCN
States have historically been more likely to carve behavioral health services out of their MMC plans and deliver these services through distinct behavioral health organizations (BHO) or through FFS arrangements. As more states are shifting to integrate behavioral health and primary care services, they are increasingly providing behavioral health services through their MCOs. As of 2020, 41 states provide behavioral health services through MMC, an increase of eight states since 2017. Six states continue to provide behavioral health services through carve-out FFS and BHO arrangements.
Table 1: States’ MMC Program Design: 2017 – 2020
The table below summarizes key trends across states’ Medicaid managed care programs that serve CYSHCN, such as increases in the number of states that enroll CYSHCN in MMC, offer specialized health care plans that serve CYSHCN, and integrate behavioral health services with primary care for CYSHCN. These and other insights can be found in NASHP’s updated 50-State Chart and Map.
|Feature||Number of States – 2017||Trend||Number of States – 2020|
|Contract provides a clear definition of CYSHCN||23||↑||29|
|Specific quality measures for CYSHCN||32||↑||39|
|Subpopulation enrollment in MMC (mandatory or voluntary for at least one plan)|
|Aged, blind, and disabled||40||↑||42|
|American Indian/Alaskan Native||22||↑||36|
|Foster care youth/adoption assistance||39||↑||46|
|Social Security Income (SSI)||20||↑||33|
|Title V CYSHCN||14||↑||17|
|Specialized plans for CYSHCN*|
|Total states with specialized plans||7||↑||13|
|Includes aged, blind, and disabled||3||↑||6|
|Includes youth in foster care/adoption assistance||2||↑||9|
|Includes Social Security Income||2||↑||3|
|Includes Title V CYSHCN||1||↓||0|
|Behavioral health service delivery system for CYSHCN**|
|MCO provides behavioral health services||33||↑||41|
|Behavioral health services are carved-out into FFS||7||↓||6|
|Behavioral health services are carved-out of managed care and provided by a behavioral health organization||8||↓||6|
*Specialized plans may include more than one subpopulation.
**Some states use more than one approach to provide behavioral health services.
 Children with Special Health Care Needs.” Maternal and Child Health Bureau, December 17, 2019. https://mchb.hrsa.gov/maternal-child-health-topics/children-and-youth-special-health-needs.
 See NASHP’s 2017 chart and map here: https://www.nashp.org/state-medicaid-managed-care-program-design-for-children-and-youth-with-special-health-care-needs/
 MaryBeth Musumeci and Priya Chidambaram, How Do Medicaid/CHIP Children with Special Health Care Needs Differ from Those with Private Insurance? (Menlo Park, CA: Kaiser Family Foundation, June 2019). https://www.kff.org/medicaid/issue-brief/how-do-medicaid-chip-children-with-special-health-care-needs-differ-from-those-with-private-insurance/
 Children with Special Health Care Needs.” Maternal and Child Health Bureau, December 17, 2019. https://mchb.hrsa.gov/maternal-child-health-topics/children-and-youth-special-health-needs
COVID-19 has greatly impacted dental care and oral health access in the United States. From closed offices to an increased need for personal protective equipment (PPE), states and providers are both facing challenges to connect patients to dental care. With reduced tax revenue and looming budget crises, states are also facing difficult budget decisions – despite the knowledge that dental benefits can lead to health care savings.
As states confront these challenges, they are using innovative solutions, such as teledentistry, to support providers and connect patients with dental care.
In March, 2020, the Centers for Disease Control and Prevention and the American Dental Association (ADA) released a joint recommendation halting elective dental procedures. As a result, during March and April, over half of all dental workers lost their jobs – accounting for 35 percent of all lost health care jobs during that period. The Health Policy Institute at the ADA estimates that dental care spending will decrease by 66 percent in 2020 and 32 percent in 2021. As states reopen, many have allowed dental practices to resume elective dental procedures, but the ADA recommends the highest level of PPE for dental providers, and the Federal Emergency Management Agency (FEMA) has prioritized PPE supplies for dental providers .
Economic Downturns and Medicaid Dental Care
COVID-19’s impact on the economy will also affect how states provide dental care. Currently, state Medicaid programs are required to cover dental care for children under age 21, but 35 states and Washington, DC also cover dental services for adult Medicaid enrollees. During challenging economic times, such as the Great Recession, states historically cut optional benefits in their adult Medicaid programs. Between fiscal year (FY) 2010 and 2012, 19 states rolled back dental coverage for adults and only eight states have restored their programs between 2013 and 2016.
States are currently expected to face a $290 billion dollar shortfall in FY 2021. Medicaid makes up a large portion of state budgets and is expected to be impacted by state budget reductions in the next year. The Families First Coronavirus Response Act provides a 6.2 percent increase in the Federal Medicaid Assistance Percentage (FMAP) – the federal government’s share of most Medicaid expenditures –creating an influx of federal dollars to states. The FMAP increase also requires that states continue their current eligibility criteria under Maintenance of Effort, a challenge for states as they work to balance budgets.
Some states are prioritizing dental coverage during budget cuts. For example, Maryland’s Gov. Larry Hogan has proposed a $1.45 billion dollar budget cut, but is delaying implementation of postpartum dental coverage in Medicaid rather than cutting the program. West Virginia also is moving forward with implementing a comprehensive adult dental benefit in its Medicaid program.
Support for Dental Coverage in Medicaid Programs
CARES Act Provider Relief Fund. The Provider Relief Fund provides $15 billion to providers, including dentists, who participate in Medicaid and the Children’s Health Insurance Program (CHIP). Dentists can be reimbursed 2 percent of their annual reported revenue from patient care from the fund. The purpose of the fund is to cover expenses lost as a result of COVID-19 and can be used to cover additional expenses like PPE, COVID-19 testing, data reporting, and workforce training.
The US Department of Health and Human Services (HHS) extended the relief fund deadline to Sept. 13, 2020, based on feedback from providers. HHS also plans to release a simplified application form for providers. States can work with managed care organizations and Medicaid providers to raise awareness about the opportunity.
- California’s Medi-Cal Dental Division sent an email to stakeholders reminding them about the opportunity to apply for funding through the Provider Relief Fund.
- Texas Gov. Greg Abbott encouraged Medicaid and CHIP providers in a press release to apply to the fund.
If future federal dollars become available to support providers, states can continue to advertise these opportunities with their stakeholders.
Rewarding dentists who accept Medicaid. As states make difficult decisions about their budgets, several are moving forward with Medicaid rate increases for dental providers. These actions are designed to increase the number of dentists who accept Medicaid and ensure network adequacy for consumers.
- Kansas recently included $3 million in its FY 2020 budget to increase reimbursement for dental providers. Previously, dental providers in Medicaid had not received a reimbursement increase since 2001 and Kansas’ state plan amendment was approved by the Centers for Medicaid & Medicare Services in 2019. This year, the state is appropriating an additional $3 million to reimburse dental providers participating in the state’s Medicaid program, KanCare.
- Louisiana included $2 million in its FY 2020 budget to increase reimbursement for Medicaid dental providers. Louisiana Medicaid promulgated an emergency rule to increase reimbursement for dental exams for children up to age three and restorative dental services.
Use of Teledentistry to Address Gaps in Access to Care
Telehealth can be a tool for patients to stay connected to care when social distancing and stay-at-home orders are in effect. According to the ADA, teledentistry is “the use of telehealth systems and methodologies in dentistry” and can include live, two-way video interaction, storage of digital information, and remote patient monitoring and mobile communication. Teledentistry can be used for consultation and patient education and pain management, and it also can reduce transportation barriers and increase access. This delivery service requires an upfront investment in infrastructure that can be a barrier for service.
Due to COVID-19, 17 states have updated their Medicaid program guidance to include coverage and reimbursement for teledentistry. The Center for Connected Health Policy is tracking state action on telehealth, and new state Medicaid teledentistry guidance is highlighted in this table.
Updated State Medicaid Teledentistry Guidance in Response to COVID-19
|D0140: Limited oral evaluation – problem focused.||Illinois, Iowa, Kansas,* Louisiana, Nebraska, New Jersey, North Carolina, North Dakota, Pennsylvania, Tennessee,* Utah, Washington, DC, Wisconsin|
|D0170: Re-evaluation – a limited, problem-focused (established patient, not a post-operative visit). Assessing the status of a previously existing condition.||Kansas,* Nebraska, Montana, New Jersey, North Carolina, North Dakota, Tennessee,* Utah, Washington, DC|
|D0171: Re-evaluation – post-operative office visit.||Montana, Nebraska, North Dakota, Utah|
|D0191: Assessment of a patient||New Jersey|
|D9110: Palliative (emergency) treatment of dental pain.||Tennessee*|
|D9310: Consultation, diagnostic service provided by dentist or physician other than requesting dentist or physician.||New Jersey|
|D9430: Office visit for observation (during regularly scheduled hours) – no other services performed.||California|
|D9992: Dental case management- care coordination.||Montana|
|D9995: Teledentistry – synchronous, real-time encounter.||Colorado, Illinois, Iowa, Louisiana, Montana, New Jersey, North Carolina, Pennsylvania, Tennessee,* Utah, West Virginia|
|D9996: Teledentistry – asynchronous, information stored and forwarded to a dentist for subsequent review.||Illinois, Montana, North Carolina, Tennessee,* Utah|
Note: Some states require codes to be used in conjunction with other codes.
*Guidance has expired.
Twenty-three states include the practice of teledentistry in their statues and/or regulations. Teledentistry is not new, but more states are participating under the public health emergency. Teledentistry models such as the California Virtual Dental Home for Children are safe, cost-effective and can prevent advanced, costly-to-treat dental issues. These state experiments will be useful to inform the future of teledentistry coverage and reimbursement after the public health emergency ends.
Despite budget shortfalls, states continue to work to improve access to dental and oral health care. Prioritizing access to dental care has been shown to reduce overall health costs. The National Academy for State Health Policy recently convened state dental leaders and will continue to monitor state action to improve access to dental health care amid the public health and economic challenges laid bare by COVID-19.
While billions in COVID-19 federal relief funds have been distributed to health care providers, the funding has primarily gone to large hospital systems, leaving many independent providers to suffer reductions in patient visits and revenues, making them vulnerable to acquisition by large hospital systems – known as vertical consolidation in health care. This report explores the increased financial pressure for vertical consolidation, its financial impact on states and consumers, and what policies states can implement to address the coming wave of vertical health care consolidations.
Independent physician practices are struggling to remain financially solvent in the midst of the COVID-19 pandemic. Although $175 billion has been allocated to health care providers in the Coronavirus Aid, Relief, and Economic Security (CARES) Act and other pandemic response legislation, this funding has largely gone to larger hospital systems or to direct costs of COVID-19 testing and services, and many physician practices and independent community providers have suffered significant reductions in their patient visits and revenues during widespread stay-at-home orders. One foreseeable consequence will be a further acceleration of physician practice acquisitions by large hospital systems and private equity firms, also known as vertical consolidation in health care.
This white paper discusses the increased financial pressure for vertical health care consolidation in the wake of the COVID-19 pandemic; the risks such vertical consolidation pose to states and consumers in the form of higher prices, increased spending, and reduced choice; and explores policies states may pursue to address the coming wave of vertical health care consolidation.
Rising Pressure for Vertical Health Care Consolidation and Its Risks
A. Vertical Consolidation in Health Care is Accelerating
Consolidation of independent physician practices — whether acquired by health systems or venture-backed staffing firms — has been increasing for years. Vertical acquisitions of physician groups by hospitals has increased dramatically in recent years. From 2012-2018, hospital ownership of physician practices grew 128 percent. In 2012 about 25 percent of physicians were employed by hospitals, and by 2018 that figure had grown to 44 percent. Over the 18-months from July 2016 to December 2018, hospitals acquired over 8,000 physician practices, employing 14,000 physicians. In 2018, for the first time, more physicians were employees than owners of their medical practice.
Private equity-backed staffing firms are also gobbling up physician practices. Between 2013 and 2016, private equity firms acquired 355 physician practices, targeting an array of specialties including emergency medicine and anesthesiology (who can engage in out-of-network billing strategies because patients do not select these providers), primary care physicians (who may be sources of lucrative referrals), and dermatology and ophthalmology (with significant income from elective procedures).
Layered atop these existing trends, the COVID-19 pandemic is accelerating pressure for vertical consolidation in health care. Remaining independent physician practices are under dire financial strain due to COVID-19, and even those who previously resisted acquisition face new pressure to sell to large health care systems or private equity investors for financial stability and survival.
B. Risks of Vertical Consolidation: Increased Costs, Loss of Choice, No Improvement in Quality
Evidence suggests that vertical health care consolidation leads to higher health care prices—including higher hospital prices, 14 percent higher physician prices, and 10-20 percent higher total expenditures per patient. Despite promised efficiencies, there are several ways vertical consolidation can increase health care costs. First are the addition of facility fees (described further below) that hospitals can charge for outpatient services provided by acquired physicians. Second, the consolidated entity can leverage its market power to engage in all-of-nothing bargaining and insist on anticompetitive contract terms with health insurance plans, allowing a large system to demand higher prices for all its providers. Third, acquisitions allow hospital systems to direct the referrals of captive physician practices to a greater extent than independent physicians, which increases referrals to for higher-cost (lower value) providers and services. Finally, private equity-backed staffing companies have used a strategy of going out-of-network and charging higher prices to health plans and balance bills to patients to maximize their revenues.
Increasing facility fees are an outgrowth of vertical consolidation of hospitals and physicians. The ability of a consolidated system to charge more for identical outpatient services than can be charged by independent physician practices manifests as facility fees and is a significant factor in the price increases driven by hospital-physician consolidation. When hospitals acquire physician practices, they can tack on an additional outpatient facility fee to the professional service fee that physician practice previously charged. Fees for services at physician’s offices usually include both the professional and overhead costs of the service in a single charge. By contrast, hospital outpatient departments are traditionally paid more than physicians’ offices for performing the same type of service because hospital outpatient settings receive a facility fee to compensate them for the expenses of maintaining standby capacity to service acute care needs that may present at any time in addition to the physician’s professional service fee. But there is nothing to justify a facility fee that is simply the result of the hospital’s acquisition of the physician’s practice—nothing has changed in terms of the location, supplies, technology, staffing, duration or intensity of the care, and the patients are no sicker and do not need more services than when their physician practice was characterized as a freestanding community setting. The higher price is merely the result of a change in corporate ownership, which allows the hospital to charge a facility fee for the acquired physician’s services as though it were rendered in an outpatient department of the hospital. The ability to charge facility fees is one of the main financial incentives driving hospital-physician consolidation.
Increased vertical consolidation in health care reduces consumer choice by creating larger, exclusive networks and driving patients and health plans to pay higher prices. These higher costs and reductions in choice among independent providers is not offset by higher quality or efficiency from improved care coordination. Thus, states are increasingly searching for ways to curb the rising costs and loss of choices driven by vertical health care consolidation.
State Policies to Address Vertical Consolidation in Health Care
The pressure for vertical consolidation created by the COVID-19 pandemic for the survival of physician practices means that, in many cases, states will be unable to prevent this consolidation from occurring. Rather, states must explore policies to provide robust oversight over the consolidated entities to mitigate the risks posed by vertical consolidation. Moreover, state oversight is critical because these vertical mergers fly under the radar of federal antitrust agencies because they tend to be too small in size to be reported under the Hart-Scott-Rodino (HSR) Act.
The following table lists a range of policy tools states can deploy to monitor and oversee vertical health care consolidation:
|A. Data gathering||· All-payer claims databases|
|B. Pre-transaction review and approval||· Notice of proposed transactions
· Prior review, approval, and conditions
|C. Oversight of vertically consolidated entities||· Attorney general enforcement against anticompetitive conduct
· Independent health commission
· Certificates of need authority
|D. Controlling outpatient costs||· Restrictions on facility fees
· Counteracting private equity-backed consolidation
· Global budgets
A. Data: the foundation for any policy
Policymakers need information about the drivers of health care costs, utilization patterns, and transactions to guide policies and target enforcement. States with all-payer claims databases (APCDs) have a rich source of data to inform their policies. APCDs are comprehensive databases of health care claims and data from a variety of payers, including private insurers, Medicaid, Medicare, Children’s Health Insurance Program (CHIP), state employee health plans, and others. Currently 19 states have established APCDs, and an additional four states are in the process implementation.
All of the policies described here would be guided by data — whether studying the price, utilization, or referral effects of vertical transactions; detecting targets for enforcement; providing oversight of vertically integrated entities; planning and assessing the need for new or additional services; quantifying the amount of facility fees charged; enforcing compliance with surprise out-of-network billing rules; or implementing global budgets. In states with APCDs, the data underpinning the policies would come from the APCD. In states without an APCD, each policy described here could include a data reporting requirement to facilitate implementation, such as a data submission requirement for pre-transaction review, CON applications, facility fee reporting, or as part of the global budget process. In addition, states can use data from APCDs or work with payers (e.g., the state employee health plan) to establish consumer transparency tools to help consumers choose high-value providers and to drive a range of other health care policies to improve patient care and control costs.
B. Notice, review, and approval for health care transactions
States could take a more active role monitoring or preventing vertical health care consolidation that poses risks to competition. State attorneys general (AGs), the Federal Trade Commission, and the US Department of Justice can use their parallel antitrust enforcement authority to prevent and regulate anticompetitive mergers or conduct by health care entities.
State AGs can challenge anticompetitive mergers and conduct and bring enforcement actions both independently and in conjunction with a federal action. Although historically reluctant to pursue enforcement against vertical mergers, the federal antitrust enforcement agencies have recently issued draft vertical merger guidelines in a signal that they are looking to develop tools to go after such mergers. But most physician acquisitions go unexamined by federal authorities because the dollar value of these deals is too small to be reported to federal antitrust agencies under HSR thresholds. Thus, state AGs can assume a larger role policing these mergers.
1. Notice of proposed transactions
To further antitrust enforcement and state oversight over vertical health care transactions, states may pass legislation requiring hospitals, health systems, physician groups, and private investment firms to notify the state of any significant proposed merger or contractual affiliation. Specifically, states can require reporting of transactions with dollar values less than the federal HSR thresholds. Transactions should be reported to the state AG and to a state health agency, such as an independent health care commission or the state’s certificate of need authority.
Although many states already require hospitals to notify state officials of proposed mergers or acquisitions, states could expand the requirement to transactions involving physicians. Existing state examples include Washington State, which passed a law in 2019 to require notification to the state AG of health care transactions, including those involving “provider organizations,” below the HSR (Hart-Scott-Rodino Antitrust Improvements Act) threshold. Connecticut requires 30-days’ notice to the AG and the head of the Office of Health Strategy (Connecticut’s CON authority) of any proposed transaction involving a physician practice of eight or more physicians. Massachusetts requires all provider organizations to provide the AG, the Health Policy Commission, and the Center for Health Information Analysis with 60 days’ notice of any mergers, acquisitions, or affiliations.
In 2020, lawmakers in California proposed legislation (S.B. 977) that would require health systems, private equity groups, and hedge funds to provide notice to, and obtain the consent of, the AG prior to an acquisition of or affiliation with a health system or health care provider. There is an exception for transactions between health care systems and facilities or providers valued at less than $500,000 (but not those involving private equity groups or hedge funds) or a transaction of any value involving an academic medical center, which only need to provide 30 days’ notice and need not obtain the AG’s consent. The California bill goes beyond the notice requirements in other states by specifically including transactions involving private equity and hedge fund investors, not just other health care entities.
|Recommendations on notice of health care transactions:|
2. Pre-transaction review, approval, and conditions
Although state AGs already possess the authority to challenge anticompetitive mergers under federal and state antitrust laws, state policymakers can augment the AGs’ ability to address the risks of consolidation by requiring transactions to be reviewed and approved by the AG, and allow the AG to condition approval on the parties’ competitive conduct. Although a state AG is typically the primary official tasked with approving health care transactions, states can distribute the responsibility for conducting review to other state entities, such as a health care commission or state certificate of need authority.
Waiting periods, subpoena-power. After notice of proposed health care transactions has been given, state regulators require time and the ability to gather information to review the transaction and assess its market impact. Thus, legislation should also include mandatory waiting periods to enable pre-transaction review and the authority to subpoena and obtain economic, market, and competitive information about the proposed transaction.
Review criteria. To guide review, policymakers may specify statutory review criteria to assess health care transactions, such as the extent the transaction will (1) harm health care markets and competition; (2) increase prices; (3) reduce access to health care services; (4) violate fiduciary duty requirements, especially through self-dealing or conflicts of interest; or (5) harm the public interest. Additional review criteria can be applied to specific types of transactions, such as those involving physicians, nonprofit hospitals, or for-profit entities.
Independent review. For transactions that raise competitive concerns, the state officials (AG or health agency) may seek independent review of the transaction either by a designated state body, such as a health care commission, or independent consultants. Independent review can provide more in-depth analysis to aid state AGs or agencies’ assessment of proposed health care transactions. State policymakers could require the parties to the transaction to pay for independent review to relieve the state of the financial burden of conducting complex market analyses.
Conditions. Legislative authority to review and approve health care transactions should also allow the AG to impose conditions of approval on the parties to the transaction. The range of conditions should respond to the criteria for approval and specific market concerns. For example, conditions could include requirements to keep critical facilities or services open, mandated community health investments, prohibitions on future acquisitions or employment of physicians, divesture of entities or providers to preserve competition, rate controls, refraining from charging facility fees for acquired physician practices, or prohibitions on anti-competitive health plan contracting. Even without statutory authority to impose conditions of approval on transactions, state AGs can negotiate consent decrees to settle their claims challenging anticompetitive transactions. One benefit of a statutory approval authority is that, unlike consent decrees, the AG or other state official need not go to court to enforce the conditions of approval.
Post-transactions monitoring. One of the conditions the AG can impose on approving a transaction is that the parties pay for an independent monitor to provide periodic post-transaction reports to the AG and state agencies. The monitor tracks compliance and market effects of the transaction. If the reports identify areas of noncompliance or potential abuses of market power, the state AG can bring enforcement action and seek penalties.
C. Oversight of consolidated entities
Although pre-transaction review is a critical tool, more than 90 percent of health care provider markets are already highly concentrated, so states require mechanisms to regulate anticompetitive behavior by entities that already possess market power. Different state authorities can play a role in overseeing vertically consolidated health care entities, including the state AG, an independent health policy commission, and the state’s certificate of need (CON) authority.
1. AG enforcement against anticompetitive conduct
State AGs possess broad powers under federal and state antitrust laws to challenge anticompetitive behavior of entities with market power. And unlike federal antitrust authorities, state AGs have authority over nonprofit entities.
Vertically consolidated health care entities may engage in a range of anticompetitive conduct, including using their market power to raise prices and exclude rivals, engaging in all-or-nothing bargaining with health plans to demand higher prices for all affiliated providers, and including anticompetitive terms in their contracts with health plans, such as anti-tiering or anti-steering, gag clauses preventing plans from sharing price information with consumers, or “most favored nation” provisions.
State AGs have successfully challenged anticompetitive conduct in North Carolina, California, and Washington. North Carolina’s AG joined the DOJ in a case against Atrium Health, a dominant health system, to challenge its use of anti-steering clauses in health plan contracts, which prevented private health plans from using financial incentives for patients to choose higher-value and lower cost providers. In its settlement of the case, Atrium agreed to stop using anti-steering clauses and preventing health plans from sharing costs with patients.
California AG, Xavier Becerra, brought a case against health care giant Sutter Health, alleging Sutter used its market power to raise prices in the region through its use of anticompetitive contract terms, including all-or-nothing and anti-steering clauses, the use of gag-clauses to prevent disclosure of price and quality information. In late 2019, Sutter tentatively agreed to pay $575 million to settle the case, to stop using all-or-nothing contracting, and to cap out-of-network rates. In June, however, Sutter asked the court to delay approving the settlement, citing losses from the COVID-19 pandemic, despite having received some $200 million in federal relief funding. Final court approval of the settlement is still pending.
On the heels of the AG’s action against Sutter, the California legislature sought to expand the AG’s authority to police anticompetitive conduct by health care entities in S.B. 977. The bill would make it unlawful for a health systems with substantial market power in any market for hospital or non-hospital services to take any action that would have a substantial tendency to cause anticompetitive effects, such as raising prices, diminishing quality, reducing choice or access with respect to hospital or nonhospital (e.g., physician services). Specifically, conduct involving tying or exclusive dealing by a health system with market power would be presumptively illegal.
In a case focusing on vertical consolidation, Washington’s Attorney General Bob Ferguson sued to unwind two hospital-physician transactions by CHI Franciscan health system that drove up prices on the Kitsap peninsula. The complaint alleged Franciscan violated Section 1 of the Sherman Act, Section 7 of the Clayton Act, and the State’s Consumer Protection Act. The parties agreed to settle the case in a consent decree in which Franciscan agreed to pay $2.5 million, divest of a surgery center, notify the state AG of future transactions, and agree to contractual changes, including a bar on using all-or-nothing bargaining with health plans.
In each case, the state AG was able to use enforcement authority to stop anticompetitive conduct by health care providers and enter settlement agreements that prevented the consolidated entities from continuing to abuse their market power. Though settlements included conduct remedies and even monetary relief, they meant the cases did not go to trial and establish legal precedent for future enforcement actions. These cases are resource-intensive and politically charged, but they can challenge abuses of market power by consolidated entities and send a message of deterrence against other powerful providers. State legislatures can aid enforcement by outlawing anticompetitive contracting practices, such as all-or-nothing bargaining, anti-tiering or anti-steering clauses, most-favored nation provisions, and gag clauses. In addition, statutes can augment State AGs’ enforcement authority by declaring unlawful certain anticompetitive practices by health care entities with market power, such as tying and exclusive dealing.
2. Oversight by independent commission
Several states have established independent health care cost or policy commissions, insulated from political influence, to provide analysis, recommendations, and oversight of health care market consolidation. The following states have statutorily established a health care commission or board to address health care costs: Colorado, Delaware, Maryland, Massachusetts, Oregon, Pennsylvania, Vermont, and Washington. Connecticut established the Office of Health Strategy to coordinate the state’s health care cost containment strategy. In addition, Rhode Island’s Governor and heads of their health and health insurance agencies convened the Health Care Cost Trends Steering Committee through executive action with funding from a private grant.
Market and transaction analysis. States health care commissions provide in-depth data analysis, often using data from the state’s APCD, and policy recommendations to the Governor, legislature, and executive branch agencies. In addition, health care commissions can have a role in reviewing health care transactions, making recommendations to the State AG and providing post-transaction monitoring. Beyond transaction-specific oversight, health care cost commissions can track health care cost and market trends more broadly across the state.
Health care cost growth benchmarks. Several states have given their health care commissions authority to set and monitor health care cost growth targets. Massachusetts pioneered the approach, which has been replicated in Delaware, Oregon, Rhode Island, Connecticut, and Washington. Common features include: establishing a statewide cost growth benchmark, analyzing data and calculating spending against the benchmark, reporting on cost drivers, and using hearings, transparency, performance improvement plans to encourage providers to comply with targets. While some have questioned whether these health care cost commissions possess sufficient authority to enforce compliance with health care cost growth benchmarks, the Massachusetts experience has proven fairly successful at reigning in health spending growth even with limited enforcement tools. As the model evolves, states may want to enhance the enforcement authority if soft regulatory tools prove inadequate to secure compliance with health care cost growth targets.
3. Oversight by certificate of need (CON) authority
The COVID-19 pandemic has highlighted the importance of health care planning to assure the state’s capacity to address public health crises as well as ongoing demand for health services, particularly in rural areas where a sole provider is responsible for the provision of health care services. Although debate continues over the impact of existing CON laws on competition, price, and quality in the health care market, states with CON authorities have the administrative infrastructure to expand CON from a health facility planning function to an overseer of vertically consolidated health care entities. Over a dozen states already require a CON or require notice to CON authorities for the sale or transfer of health care facilities, including nonprofits health care entities. Moreover, existing facilities often seek CON approval to add or remove services or seek affiliations. These CON requirements could be extended to vertical transactions involving physician groups and play a larger role in ongoing oversight of vertically consolidated providers.
Connecticut’s CON authority, the Health Systems Planning (HSP) office, reviews and requires a CON for all transactions involving a broad range of health care providers, including hospitals and provider groups. HSP conducts an in-depth cost and market impact review for transactions involving the sale or transfer of a hospitals in transactions of a certain size or involving a for-profit buyer and may place conditions on the approval of a CON for a hospital transaction.
To oversee vertical transactions, a state could extend the authority of the CON officials to require a CON for provider group transactions of a certain size, require some form of market impact analysis, and authorize the imposition of conditions of approval for the CON. Such conditions could include refraining from charging facility fees, limiting price increases, maintaining key services, avoiding anti-competitive contracting with health plans, limiting physician employment and exclusive contracting, and satisfying quality metrics, and investing in community and population health services. Oversight over compliance with conditions must be robust, long-term, and backed by enforcement authority, including action by the state AG for violations of conditions or anticompetitive conduct.
In many states, however, CON is highly susceptible to political influence by dominant health systems and other powerful stakeholders. Thus, if CON Authorities are given a larger role in overseeing consolidated health care entities, they need to be insulated from capture by incumbent industry leaders and publicly accountable. To engage in robust oversight of health care transactions and entities’ ongoing activities, CON authorities require financial, claims, and market data, whether submitted as part of the CON application process or from the state APCD, and have capacity for data analysis.
D. Controlling rising costs driven by vertical consolidation
Another set of tools to curb rising costs when vertical consolidation has already occurred include regulations on the outpatient fees themselves. These policies target rising outpatient costs driven by additional facility fees, out-of-network billing by investor-backed physician staffing companies, and changes in referral and utilization patterns.
1. Restrictions on facility fees
The main policy tools available to states to address unwarranted facility fees are transparency and facility fee regulation.
Facility fee transparency. Like all cost-control efforts, transparency is a first step to shine a light on the practice and put patients on notice that they may receive bills for facility fees due to corporate acquisition. However, transparency alone does not ameliorate the problem of facility fees nor does it shield a patient from incurring a facility fee. Even if they are notified of added facility fees, patients may not know what to do with the information and may be unable (or unwilling) to switch providers based on the notification about facility fees.
Examples of state laws requiring facility fee transparency come from Washington, Connecticut, Minnesota, and Texas. Washington and Minnesota’s laws require that, prior to non-emergency care, provider-based clinics that charge a facility fee must notify patients that the clinic is licensed as part of the hospital and the patient may receive a separate charge or billing for the facility component, which may result in a higher out-of-pocket expense; the health care facilities must also prominently post a statement that it is part of a hospital. Connecticut requires a similar notice and requires providers itemize facility fee charges on bills, disclose Medicare’s applicable facility fee rate for comparison, and provide information about the patient’s right to request reduction of the facility fee. Texas law requires that facilities must notify patients that the site charges a facility fee, and the disclosure must include the median facility fee at the facility, the range of possible fees, and the facility fee for each level of care. To enhance transparency, states may require annual reporting of facility fees charged or billed by health care providers, identified by location (e.g., the physician’s office) to be published on a publicly accessible website.
Facility fee regulation. Prohibiting or limiting allowable facility fee charges by providers can eliminate price differences for the same outpatient services based on the location or “site” of service. Medicare has instituted site-neutral payment, based on the view that “if the same service can be safely provided in different settings, a prudent purchaser should not pay more for that service in one setting than another.”
States could adopt policies that would limit or prohibit hospitals and health systems from charging facility fees. For the broadest impact, the state could (a) eliminate all facility fees at locations more than 250 yards away from a hospital’s main campus (a site-specific limit), and (b) eliminate facility fees for outpatient services that do not require additional standby capacity, including evaluation and management (E&M) services, regardless of whether the service is provided on- or off-campus (a service-specific limit).
Connecticut prohibits hospitals from charging a facility fee for outpatient office visits at an off-campus, hospital-based facility. But this prohibition only applies to E&M codes used for office visits, not the full range of outpatient services. In addition, Connecticut does not limit facility fees for on-campus outpatient visits. However, states could implement broader site-specific and service-specific facility fee restriction policies that cover the full range of non-emergency outpatient services and apply both on- and off-campus. For uninsured patients, Connecticut requires providers to charge no more than the applicable Medicare rate for outpatient services received at an off-campus, hospital-based facility, thereby incorporating any Medicare site-neutral payment changes into the amounts charged to uninsured patients.
Eliminating facility fees for the broad range of outpatient services (including those currently enjoying higher site payments under previously consummated acquisitions) is highly contentious and politically difficult. Connecticut legislators originally planned broader facility fee regulation, but they narrowed the requirement after facing strong opposition from powerful hospital facilities and physician groups in the state.
Connecticut’s law on facility fees also set forth a model for enforcement by making a provider’s violations of the facility fee prohibitions an unfair trade practice under the state’s Unfair and Deceptive Acts and Practices (UDAP) law. It is also an unfair trade practice for a provider in Connecticut to report a patient’s nonpayment of a prohibited facility fee to a credit reporting agency. This provides individual patients who have been charged unlawful facility fees or who have not received mandated notices about such fees a private right of action against providers. By contrast, Medicare patients do not have a private right of action if they are improperly charged cost-sharing payments for facility fees. Similarly, states can create an administrative enforcement mechanism for the relevant state agency, such as the Department of Health, to impose administrative penalties for violations of the facility fee policy. Ideally, administrative enforcement would be in addition to private remedies.
2. Counteracting private equity-backed consolidation
Although vertical consolidation between hospitals and physicians tends to reduce the opportunities for out-of-network billing (because employed physicians are more likely to participate with all the plans of their parent health system), the opposite is true for consolidation driven by private equity firms. Surprise medical billing is a key revenue strategy for private equity firms that invest in physician practices where patients are unable to choose their provider, such as emergency physicians or anesthesiologists. These companies strategically go out-of-network so they can seek higher out-of-network charges from health plans and balance bills from patients, driving up premiums and out-of-pocket bills.
Thus, states can counteract the higher costs driven by private equity investment in health care by enacting comprehensive protections against surprise medical bills. As NASHP and others have tracked, a growing number of states have enacted laws against surprise out-of-network billing, which protect many of the state’s consumers and payers from the excess costs from out-of-network bills.
Many of the tools described above — gathering data on pricing and referral trends from an APCD, pre-transaction review, and post-transaction oversight — can include particularized scrutiny for transactions involving private equity or venture-backed investors or staffing companies. An additional policy idea worth exploring is to shore up states’ prohibitions on the corporate practice of medicine to target private investment and control of physician practices by unlicensed corporations.
3. Global budgets
Three states, Maryland, Vermont, and Pennsylvania, have secured arrangements with the Centers for Medicare & Medicaid Services (CMS) and the Center for Medicare & Medicaid Innovation (CMMI) to establish global budgets for health systems within the state. Although global budgets generally target hospitals, vertical consolidation increases spending for hospitals and physicians and for inpatient and outpatient services. Thus, the global payment model could be a tool to contain rising costs posed by vertical consolidation.
Maryland’s global budget model builds on its long-standing all-payer rate setting system, administered by the Health Services Cost Review Commission under a federal waiver allowing higher Medicare payments as part of the system. In 2014, the state moved to an all-payer global budget system for all the acute care hospitals in the state. The state limits per-person hospital spending to a predetermined target growth rate, with a goal on reducing total spending growth and shifting care toward lower-cost settings and primary care. Although early results of the program were mixed, the effects may be limited in part because the program did not initially include physician payments in the global budgets. Subsequent refinements are shifting to a total cost of care model that would extend financial incentives beyond hospitals to physicians and other care settings.
Vermont’s all-payer ACO model involves most of the state’s hospitals and payers to collaborate in a statewide accountable care organization. Vermont’s Green Mountain Care Board is responsible for overseeing the ACO, setting benchmarks and budgets, and evaluating performance and cost-trends among the participating providers. The Green Mountain Care Board also oversees a hospital budget review process that establishes, publicizes, and enforces hospital budgets as a means of controlling health spending.
Pennsylvania has also launched a global budget demonstration for rural hospitals with the federal CMMI that will transition rural hospitals from fee-for-service to a global budget payment. While Pennsylvania does not rely on its Health Care Cost Containment Council to administer the global budget program, the cooperating federal and state agencies established an independent body to administer the program, the Rural Health Redesign Center Authority, though legislation in 2019.
Global budgets work best if they unify all the payers to participate in and contribute to the budget for a region’s health systems. Thus, these global budget models all involve CMS to include Medicare and Medicaid and the state’s biggest payers. In addition, with spending increasingly shifting to outpatient services and driven by physician referral patterns, to effectively control costs, the global budget model must go beyond hospitals to include physicians and outpatient facilities, whether in an ACO or a total-cost-of-care approach. Despite the significant amount of coordination and administrative infrastructure required to implement global budgets, these states have shown that health system budgets may be a way forward in rural and other areas where competition is inadequate and health systems are vulnerable to financial instability.
It is well-established that horizontal hospital consolidation and the concentration of provider market power is leading to uncontrolled increases in health care prices and spending. Yet, vertical health care consolidation between hospitals and physician groups and private equity investment in physician practices has largely gone unchecked, due to the relatively small dollar values of these transactions and pressure for health care integration. Policymakers are now starting to realize the threat posed by vertical health care consolidation, years into a wave of vertical mergers that is accelerating with the strain on independent practices from the COVID-19 pandemic.
States have a critical role in developing policy tools to address vertical health care consolidation, because these transactions escape review by federal authorities. States must consider a range of policy tools with a focus on oversight of vertically consolidated entities and broad regulatory authority over rising costs, because much consolidation has already occurred. States are at the vanguard of this policy effort to address this perennial health policy challenge: soaring health care costs driven by consolidation.
 Dep’t of Health & Human Svcs. CARES Act Provider Relief Fund, https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/index.html#:~:text=CARES percent20Act percent20Provider percent20Relief percent20Fund,lines percent20of percent20the percent20coronavirus percent20response.
 Reed Abelson, Doctors Without Patients: ‘Our Waiting Rooms Are Like Ghost Towns,’ N.Y. Times (May 5, 2020), https://www.nytimes.com/2020/05/05/health/coronavirus-primary-care-doctor.html; Daniel Horn, Wayne Altman, Zirui Song, Primary Care Is Being Devastated by COVID-19. It Must Be Saved. Stat News, April 29, 2020, https://www.statnews.com/2020/04/29/save-primary-care-devastation-COVID-19/; Rachel Weiner, Small medical practices struggle to survive amid coronavirus pandemic, Wash. Post, May 14, 2020, https://www.washingtonpost.com/health/small-doctor-practices-struggle-to-survive-amid-coronavirus-pandemic/2020/05/14/328984e6-9390-11ea-91d7-cf4423d47683_story.html; Marc Zarefsky, 97 percent of Physician Practices Feel COVID-19 Financial Sting: Where to Get Help, Am. Med. Ass’n , May 8, 2020, https://www.ama-assn.org/practice-management/sustainability/97-practices-feel-COVID-19-financial-sting-where-get-help;
 Allison Inserro, Newsroom: Hospital Acquisitions of Physician Practices Continue, Am. J. Managed Care, Feb. 26, 2019, https://www.ajmc.com/newsroom/hospital-acquisitions-of-physician-practices-continue.
 Joanne Finnegan, Report: 8,000 medical practices acquired by hospitals in 18 months, Fierce Healthcare (Feb. 21, 2019), https://www.fiercehealthcare.com/practices/consolidation-trend-continues-8-000-more-hospital-owned-practices-14-000-more-hospital.
 Carole Kane, Updated Data on Physician Practice Arrangements: For the First Time, Fewer Physicians are Owners Than Employees, AMA Policy Research Perspectives (May 2019), https://www.ama-assn.org/system/files/2019-07/prp-fewer-owners-benchmark-survey-2018.pdf.
 Jane Zhu, Lynn Hua, Daniel Polsky. Private equity acquisitions of physician medical groups across specialties, 2013-2016. 323 JAMA 663-665 (Feb. 18, 2020), doi:10.1001/jama.2019.21844; Lawrence Casalino et al, Private Equity Acquisitions of Physician Practices, 170 Ann. Internal Med. 114-116 (Jan. 15, 2019); Stephanie Cameron, Dan Zabinksi, Jeff Stendsland, Congressional Request on Healthcare Provider Consolidation, MedPAC (Nov. 7, 2019), http://medpac.gov/docs/default-source/default-document-library/consolidation-draft-3.pdf?sfvrsn=0.
 Rita Rubin, COVID-19’s Crushing Effects on Medical Practices, Some of Which Might Not Survive JAMA. Published online June 18, 2020. doi:10.1001/jama.2020.11254; Bob Herman, The Coronavirus could force more doctors to sell—or shutter, Axios (Apr. 20, 2020), https://www.axios.com/coronavirus-doctors-practices-sell-close-d59aa9f0-1e01-4a90-82f7-d4ebab26e355.html.
 Laurence C. Baker, M. Kate Bundorf & Daniel P. Kessler, Vertical Integration: Hospital Ownership of Physician Practices Is Associated with Higher Prices and Spending, 33 Health Aff. 756, 760 (2014); Cory Capps, David Dranove, Christopher Ody, The Effect of Hospital Acquisitions of Physician Practices on Prices and Spending, 59 J. Health Econ. 139 (2018); James C. Robinson & Kelly Miller, Total Expenditures per Patient in Hospital-Owned and Physician-Owned Physician Organizations in California, 312 JAMA 1663 (2014); Hannah T. Neprash et al., Association of Financial Integration Between Physicians and Hospitals With Commercial Health Care Prices, 175 JAMA Internal Med. 1932, 1937 (2015).
 See Capps, Dranove, & Ody, supra note 9 (estimating that a quarter of the 14 percent price increase associated with physician-hospital integration resulted from the addition of facility fees); Neprash et al., supra note 9, at 1937; James D. Reschovsky & Chapin White, Location, Location, Location: Hospital Outpatient Prices Much Higher than Community Settings for Identical Services, Res. Brief No. 16, Nat’l Inst. Health Care Reform, 1 (2014), http://www.nihcr.org/Hospital-Outpatient-Price.
 Amanda Cassidy, Health Policy Brief: Site Neutral Payments, Health Aff. 3 (July 24, 2014), http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_121.pdf; Donna Rosato, The Surprise Hospital Fee You May Get Just for Seeing a Doctor, Consumer Reports (June 13, 2019), https://www.consumerreports.org/fees-billing/surprise-hospital-fee-just-for-seeing-a-doctor-facility-fee/;
Reschovsky & White, supra note 10, at 4.
 In 2020, the dollar value threshold for reportable transactions under the Hart-Scott-Rodino Act is $94 million. U.S Federal Trade Comm’n, Premerger Notification Office Staff, HSR threshold adjustments and reportability for 2020 (Jan. 31, 2020), https://www.ftc.gov/news-events/blogs/competition-matters/2020/01/hsr-threshold-adjustments-reportability-2020.
 Although the Employee Retirement Income Security Act (ERISA) prevents states from mandating that self-insured employer-based plans participate in the APCD, states have secured voluntary participation by these plans. NASHP, Next Steps for APCDs: U.S. Department of Labor (DOL) Rulemaking, Oct. 4, 2016, http://www.nashp.org/next-steps-for-apcds-us-department-of-labor-dol-rulemaking/.
 APCD Council, Interactive State Report Map (as of July 14, 2020), https://www.apcdcouncil.org/state/map.
 Robert Berenson, Jaime S. King, Katherine L. Gudiksen, Roslyn Murray, Adele Shartzer, Urban Institute Research Report: Addressing Health Care Market Consolidation and High Prices 11-14 (Jan. 2020), https://www.urban.org/research/publication/addressing-health-care-market-consolidation-and-high-prices; Erin Taylor & Michael Bailit, State Health & Value Strategies, Issue Brief: Leveraging Multi-Payer Claims Databases for Value (Mar. 25, 2019), https://www.shvs.org/leveraging-multi-payer-claims-databases-for-value-2/.
 Saint Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys., Ltd., 778 F.3d 775, 791 (9th Cir. 2015).
 Federal Trade Comm’n, Press Release: FTC and DOJ Announce Draft Vertical Merger Guidelines for Public Comment, Jan. 10, 2020, https://www.ftc.gov/news-events/press-releases/2020/01/ftc-doj-announce-draft-vertical-merger-guidelines-public-comment.
 15 U.S.C. § 18a (in 2019 the HSR threshold for notification was $90 million).
 The analyses, state examples, and recommendations in this section are drawn from an in-depth report by legal and economic researchers at the Source for Healthcare Price & Competition at UC Hastings College of the Law. Jaime S. King, Samuel M. Chang, Alexandra D. Montague, Katherine L. Gudiksen, Amy Y. Gu, Daniel Arnold, and Thomas L. Greaney, Preventing Anticompetitive Healthcare Consolidation: Lessons from Five States, The Source on Healthcare Price and Competition 11 (June 15, 2020), https://sourceonhealthcare.org/profile/preventing-anticompetitive-healthcare-consolidation-lessons-from-five-states/.
 Id. at 11.
 Act effective as of July 28, 2019, ch. 267, 2019 Wash. Laws, http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Session percent20Laws/House/1607-S.SL.pdf?q=20200124073816.
 Conn. Gen. Stat. § 19a-486i, http://media.sourceonhealthcare.org/Conn_Gen_Stat_19a-486i.pdf.
 Mass. Gen. Laws ch. 6D, § 13, https://malegislature.gov/Laws/GeneralLaws/PartI/TitleII/Chapter6D/Section13.
 S.B. 977, 2019-2020 Reg. Sess., § 1190.10(a) (Cal. 2020) (as amended June 19, 2020), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200SB977.
 Cal. S.B. 977, § 1190.10(f).
 King et al., supra note 21, at 14-26.
 King et al., supra note 21, at 20. (“Substantive transaction reviews, such as a CMIR or HCIS, may require access to trade secrets or other propriety information. To ensure the state has access to all information necessary to conduct a thorough review, state legislatures should grant the AG and other state entities the authority to compel information during the review process and for subsequent investigations following the review.”). The report by King et al. details state examples from California, Connecticut, Rhode Island, and Massachusetts, authorizing state officials to compel the parties to produce information to assist in review. Id. at Appendix F.
 King, et al., supra note 21, at 16. As an alternative to legislative review criteria, at least one state (Pennsylvania) has created a sub-regulatory process and criteria for the AG to review health care transactions involving nonprofit entities. See Review Protocol for Fundamental Change Transactions Affecting Health Care Nonprofits, Office of the Attorney Genereal, Commonwealth of Pennsylvania, https://www.attorneygeneral.gov/protect-yourself/charitable-giving/review-protocol-for-fundamental-change-transactions-affecting-health-care-nonprofits/.
 See, e.g., MASS. GEN. LAWS ch. 6D § 13, https://malegislature.gov/Laws/GeneralLaws/PartI/TitleII/Chapter6D/Section13 (requiring the Health Policy Commission to conduct a cost and market impact review of proposed transactions that will have a significant impact on the state’s ability to meet its cost-growth benchmark or on the competitive market); CONN. GEN. STAT. § 19a-639f, https://www.cga.ct.gov/current/pub/chap_368z.htm#sec_19a-639f (requiring the Health Systems Planning Unit of the Office of Health Strategy—the state’s CON authority—to conduct a cost and market impact review of proposed transactions requiring a CON including the retainer of independent consultants to conduct the economic analysis).
 King et al., supra note 21, at 18-20.
 King et al., supra note 21, at 23-26.
 King et al., supra note 20, at 26-28.
 Brent D. Fulton, Health Care Market Concentration Trends in the United States: Evidence and Policy Responses, 36 Health Aff. 1530–38 (2017).
 Berenson et al., supra note 16, at 33-34.
 Id. At 34-35 (describing these anticompetitive contract terms in more detail and providing examples).
 United States v. Charlotte-Mecklenburg Hosp. Auth., 248 F. Supp. 3d 720 (W.D.N.C. 2017).
 Final Judgement, United States of America and the state of North Carolina v. the Charlotte-Mecklenburg Hospital Authority d/b/a Carolinas Healthcare System, No. 3:16-cv-00311-RJC-DCK (W.D. NC Apr. 24, 2019). https://www.justice.gov/atr/case-document/file/1157461/download.
 Becerra Complaint, People of the State of California ex rel Xavier Becerra v. Sutter Health., CGC 18-565398 (Cal. Super. Ct. S.F. City and Cnty. 2019).
 Jenny Gold, Citing COVID, Sutter pushes to revisit $575M antitrust settlement, Modern Healthcare (June 17, 2020), https://www.modernhealthcare.com/providers/citing-COVID-sutter-pushes-revisit-575m-antitrust-settlement.
 Cal. S.B. 977, § 1191(a).
 Washington State Office of Attorney General, Press Release: CHI Franciscan Will Pay Up to $2.5 Million Over Anti-Competitive Kitsap Deals, https://www.atg.wa.gov/news/news-releases/attorney-general-ferguson-chi-franciscan-will-pay-25-million-over-anti.
 Complaint, State of Washington v. Franciscan Health System, No. 3:17-cv-05690 (W.D. WA Aug. 31, 2017).
 Consent Decree, Complaint, State of Washington v. Franciscan Health System, No. 3:17-cv-05690 (W.D. WA May 13, 2019), https://agportal-s3bucket.s3.amazonaws.com/uploadedfiles/Another/News/Press_Releases/ConsentDecree_1.pdf.
 Berenson et al., supra note 16, at 37-39 (discussing the tradeoffs between litigation and legislative approaches to combat anticompetitive practices by health care entities).
 Berenson et al., supra note 16, at 49-53. In 2020, Washington passed H.B. 2457, creating the Health Care Transparency Board and authorizing it to establish a health care cost growth benchmark, http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Session percent20Laws/House/2457-S2.SL.pdf#page=1.
 Conn. Gen. Stat. § 19a-754a.
 Office of the Rhode Island Health Insurance Commissioner, RI Health Care Cost Trends Project, http://www.ohic.ri.gov/ohic-reformandpolicy-costtrends.php.
 See, e.g., “What Is the Delaware Health Care Commission?” Delaware.gov, https://dhss.delaware.gov/dhcc/about.html; “What is the Pennsylvania Health Care Cost Containment Council?” http://www.phc4.org/council/mission.htm.
 For example, the Massachusetts Health Policy Commission performs analysis of the market impact of proposed health care transactions and makes findings and recommendations to the Attorney General. Act of 2012, ch. 224, 2012 Mass. Laws, https://malegislature.gov/Laws/SessionLaws/Acts/2012/Chapter224; Massachusetts Health Policy Commission, “Market Oversight,” https://www.mass.gov/market-oversight.
 Milbank Memorial Fund, Health Care Cost Growth Benchmarks By State, Accessed July 21, 2020, https://www.milbank.org/focus-areas/total-cost-of-care/health-care-cost-growth-benchmarks-by-state/ (noting that Massachusetts, Oregon, and Washington’s cost growth benchmarks were established legislatively, while Connecticut, Delaware, and Rhode Island’s were established by Executive Order); Elsa Pearson & Austin Frakt, Health Care Cost Growth Benchmarks in 5 States, JAMA Forum (June 4, 2020), https://jamanetwork.com/channels/health-forum/fullarticle/2767017.
 Lisa Waugh & Douglas McCarthy, How the Massachusetts Health Policy Commission Is Fostering a Statewide Commitment to Contain Health Care Spending Growth, Commonwealth Fund (Mar. 5, 2020), https://www.commonwealthfund.org/publications/case-study/2020/mar/massachusetts-health-policy-commission-spending-growth; Joel Ario, Kevin McAvey, Kyla Ellis, Implementing a Statewide Healthcare Cost Benchmark: How Oregon and Other States Can Build on the Massachusetts Model, Manatt Health (December 2019), https://www.manatt.com/Manatt/media/Documents/Articles/RWJ-Phase-5-Report-Cost-Benchmarking-Paper-December-2019_FOR-WEB.PDF.
 Berenson et al., supra note 16, at 53; Waugh & McCarthy, supra note 51.
 NASHP staff internal analysis suggests that the following states require CON review of certain health care transactions: Arkansas (only for specified facilities), Connecticut (CON required for transfer of a facility of a large practice group), Delaware (CON for acquisition of a non-profit healthcare facility), Hawaii (administrative review only), Illinois (exemption required), Kentucky, Maine, Massachusetts, Michigan (CON required for acquisition of an existing facility), Mississippi (CON required for change in ownership of existing health care facilities, major medical equipment, or a health service), Missouri (CON required for change of owner, operator to an existing CON approved project not yet complete), New Jersey (for general hospitals only), New York (CON required for change in ownership, consolidations, or creation of parent entities), Oklahoma (only long-term care, psychiatric, and chemical dependency treatment facilities),Washington (sale, lease, or purchase of an existing hospital).
 Conn. Gen. Stat. § 19a-638 (“A certificate of need issued by the unit shall be required for [. . .] [a] transfer of ownership of a health care facility [or] [. . .] [a] transfer of ownership of a large group practice to any entity” except as specified”).
 Conn. Gen. Stat. § 19a-639.
 Wash. Rev. Code § 70.01.040, http://media.sourceonhealthcare.org/WA_70.01.040.pdf. Minn. Stat Ann. §62J.824 (2018) https://www.revisor.mn.gov/statutes/cite/62J.824
 Conn. Gen. Stat. §19a-508c, http://media.sourceonhealthcare.org/Conn_Gen_Stat_19a-508c.pdf.
 Acts 2019, 86th Leg., R.S., Ch. 1062 (H.B. 1112) (2019),https://statutes.capitol.texas.gov/Docs/HS/htm/HS.254.htm.
 Medicare Payment Advisory Commission, Report To the Congress: Medicare Payment Policy 75 (2014), http://www.medpac.gov/docs/default-source/reports/mar14_entirereport.pdf. In 2015, Congress passed the Bipartisan Budget Act requiring Medicare to implement site-neutral payment for outpatient services (other than emergency department services) furnished at any new, off-campus hospital outpatient departments, meaning these services will be reimbursed at the same, lower rates as freestanding physicians’ offices. This Medicare site-neutral payment policy went into effect in 2017 for outpatient locations acquired or built after 2015. In 2018, CMS has expanded the policy to cover E&M office visits at sites previously exempted under the 2015 law. CMS’s expansion of site-neutral payment was challenged in court and upheld on appeal before the D.C. Circuit in 2020. Litigation is ongoing. Am. Hosp. Assn. v. Azar , D.C. Cir. App., No. 19-5352.
 In 2019, Massachusetts Governor Charlie Baker proposed a comprehensive health care cost containment package that included both site-specific and service-specific limits on facility fees. H. 4134, 191st Gen. Ct., 2019-2020 Sess. (Mass. 2019), https://malegislature.gov/Bills/191/H4134.
 Conn. Gen. Stat. § 19a-508c(k).
 Arielle Levin Becker, House nearing deal on massive health care bill, CT Mirror, May 29, 2015, http://ctmirror.org/2015/05/29/house-nearing-deal-on-massive-health-care-bill/.
 Conn. Gen. Stat. §19a-508c(k).
 Conn. Gen. Stat. § 20-7f.
 Zack Cooper, Fiona Scott Morton, Nathan Shekita, Surprise! Out-of-Network Billing for Emergency Care in the United States, (Feb. 2020 preprint) https://www.journals.uchicago.edu/doi/pdfplus/10.1086/708819; Zack Cooper, Hao Nguyen, Nathan Shekita, and Fiona Scott Morton, Out-Of-Network Billing And Negotiated Payments For Hospital-Based Physicians, 29 Health Aff. 24 (2020), https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.00507.
 NASHP, Comprehensive State Laws Enacted to Address Surprise Balance Billing (updated March 14, 2019), https://www.nashp.org/wp-content/uploads/2019/03/Surprise-Billing-Laws-Chart-final-for-pdf-3.14.19.pdf; Manaasa Kona, State Balance-Billing Protections, Commonwealth Fund (updated July 20, 2020), https://www.commonwealthfund.org/publications/maps-and-interactives/2020/jul/state-balance-billing-protections.
 See, e.g., Cal. S.B. 977 (2020), which would specifically apply AG approval and oversight to health care transactions involving private equity or hedge funds.
 Centers for Medicare and Medicaid Services, Maryland All-Payer Model, Accessed July 23, 2020, https://innovation.cms.gov/innovation-models/maryland-all-payer-model.
 One study found that Maryland’s all-payer global budget system reduced total spending compared to out-of-state controls. Susan Haber et al., Evaluation of the Maryland All-Payer Model: Second Annual Report, Prepared by RTI International for CMS (Aug. 2017), https://innovation.cms.gov/files/reports/md-all-payer-secondannrpt.pdf. However, another study found no changes in utilization, so the savings were likely attributed to lower hospital prices. Eric T. Roberts, et al., Changes in Health Care Use Associated with the Introduction of Hospital Global Budgets in Maryland, 178 JAMA Internal Med. 260-268 (2018), available at: https://www.commonwealthfund.org/publications/journal-article/2018/jan/changes-health-care-use-associated-introduction-hospital.
 Centers for Medicare and Medicaid Services, Innovation Center, Maryland Total Cost of Care Model, Accessed July 22, 2020, https://innovation.cms.gov/innovation-models/md-tccm.
 Centers for Medicare and Medicaid Services, Innovation Center, Vermont All-Payer ACO Model, Accessed July 22, 2020, https://innovation.cms.gov/innovation-models/vermont-all-payer-aco-model.
 State of Vermont, Green Mountain Care Board, “ACO Oversight,” Accessed July 22, 2020, https://gmcboard.vermont.gov/aco-certification-and-budget-review.
 State of Vermont, Green Mountain Care Board, “Hospital Budget Review,” Accessed July 22, 2020, https://gmcboard.vermont.gov/hospital-budget.
 Pennsylvania Rural Health Model, Accessed July 22, 2020, https://www.health.pa.gov/topics/Health-Innovation/Pages/Rural-Health.aspx.
 Pennsylvania Rural Health Redesign Center Authority Act, Pub. L. 742, No. 108 (2019 Pa. Acts), https://www.legis.state.pa.us/cfdocs/legis/li/uconsCheck.cfm?yr=2019&sessInd=0&act=108.
*Erin C. Fuse Brown, JD, MPH, is associate professor of law and director of the Center for Law, Health and Society at Georgia State University College of Law. This work was performed in her capacity as a consultant to National Academy for State Health Policy.
Acknowledgements: The National Academy for State Health Policy (NASHP) wishes to thank Arnold Ventures for its generous support of NASHP’s Center for Health System Costs, for which this paper was commissioned.
Through a unique partnership between the Iowa Medicaid and public health agencies, Iowa’s I-Smile program addresses the disproportionate impact of dental disease on low-income individuals. I-Smile and its related I-Smile @ School for children and I-Smile Silver for adults help promote preventive oral health services and reduce barriers to dental care across the state.
In children, dental caries is the most common chronic disease, affecting 60 percent of individuals ages 5 to 17. Additionally, studies indicate that up to 40 percent of pregnant women experience periodontal disease, and 25 percent of adults over age 65 lack their natural teeth. Additionally, significant disparities exist. In 2016, Medicaid recipients accounted for more than half of dental-related emergency room visits, and in 2019, 44 percent of low-income adults had untreated tooth decay.
Dental disease not only adversely affects oral health, but is also associated with diabetes, heart disease, stroke, and low birth weight and preterm births. Fortunately, preventive oral health care, including sealant and fluoride treatments, can save money and lives. While many states are expecting budget cuts in response to COVID-19-related revenue declines, increasing access to preventive dental care through programs like Iowa’s I-Smile may minimize long-term dental and overall health costs by effectively reaching underserved populations.
In May of 2005, Iowa passed the IowaCare Medicaid Reform Act, which includes the provision that every child age 12 and younger enrolled in Medicaid must have a designated dental home. In addition, the legislature sought to ensure that children are provided with the dental screenings and preventive care identified as part of the Early and Periodic Screening, Diagnosis and Treatment (EPSDT) program’s oral health standards. I-Smile was created in response to this 2005 legislation and funded via a Memorandum of Understanding (MOU) between the Iowa Department of Human Services (IDHS) and the Iowa Department of Public Health (IDPH).* IDPH holds the majority of the responsibility under the MOU and contracts with local Title V agencies (public or private non-profit organizations), that administer I-Smile and ensure access to oral health services for children and pregnant women across the state.
Oral Health in Iowa at a Glance:
- In 2002, Medicaid reimbursement for preventive oral health services became the standard of care for dental screening centers in Iowa.
- In 2018, $22 million of a total $31 million spent on preventable dental surgeries for children ages 5 and younger was billed to Medicaid.
- In 2019, 73 percent more Medicaid-enrolled children in Iowa saw a dentist than in 2005.
- In 2018, 50 percent of Medicaid-enrolled children received a dental service, including two out of every three children ages 3 to 12. Iowa rates surpassed both the national average of 34.6 percent of low-income children receiving preventive dental care, as well as the Healthy People 2020 goal of 33.2 percent.
- In 2018, more than 30,650 children received preventive dental care in public health locations, including Women, Infants, and Children (WIC) clinics, schools, and Head Start centers. This number is almost four-times as many as in 2005.
- Medicaid costs per child (ages 0-12) per year have remained relatively steady since the start of the program in 2005. After accounting for inflation and a 1 percent rate increase in 2014, the average cost was $150.75 in 2005 and $170.74 in 2019.
- Iowa met the Healthy People 2020 goal to reduce the proportion of adults 65-74 years old that have lost all of their teeth; in 2014, 13 percent of Iowa adults ages 65-74 years were without their natural teeth, well under the goal of 21.6 percent.
*The MOU for I-Smile does not include I-Smile @ School and I-Smile Silver.
I-Smile in Practice
I-Smile’s mission is to connect Iowa children with “dental, medical and community resources to ensure a lifetime of health and wellness.” I-Smile primarily targets the 47 percent of Iowa children ages 0-12 who are enrolled in Medicaid in order to provide dental care and disease detection early in life and limit costly, preventable dental procedures. Additionally, given the link between mothers’ oral health and their infants’, I-Smile also serves pregnant women.
Twenty-three I-Smile coordinators are responsible for implementing I-Smile strategies within all 99 Iowa counties by serving as a point of contact with the dental network. I-Smile coordinators work with families, dentists, medical professionals, schools, businesses, and local non-profits to assess community needs, coordinate dental care, improve oral health literacy and reduce barriers to care. I-Smile uses multiple approaches to improve dental care, including:
- Partnering with WIC clinics, schools, Head Start centers, preschools, and child-care centers to provide dental screenings and fluoride application;
- Coordinating dental appointments, including scheduling, setting up transportation assistance, and helping parents find payment sources for dental care;
- Training medical professionals to administer fluoride varnish and screen for dental disease; and
- Educating community members about the importance of oral health through public events, health fairs, and online informational tools.
I-Smile @ School
I-Smile @ School is a division of I-Smile that helps children access dental care by providing dental screenings, sealants, fluoride varnish, and oral health education in elementary and middle schools during the school day. I-Smile @ School strategies include:
- Assessing oral health needs of schoolchildren;
- Developing networks with dental offices; and
- Providing oral health education, preventive dental services, and care coordination.
I-Smile @ School is administered by 19 Title V agencies across the state. Funding sources include the Title V block grant, Medicaid reimbursement, a Centers for Disease Control and Prevention grant, and the Delta Dental of Iowa Foundation. Schools must have a minimum of 40 percent of students on free or reduced lunch plans to participate in the program. In the 2018-2019 school year, 43.4 percent of children who received a dental sealant through I-Smile @ School were enrolled in Medicaid, and an additional 9.8 percent had no dental insurance.
I-Smile @ School’s goals align with the Healthy People 2020 and Healthy Iowans 2017-2021 objectives, which include increasing dental sealants and preventive dental services for children and reducing untreated dental decay. In its Strategic Plan for 2018-2023, the program identified three outcome measures:
- Increase the number of schools served from 63 to 74 percent;
- Provide sealants to 5 percent more children; and
- Increase the sealant program consent return rate from 42 to 52 percent.
The strategic plan also identified a number of focus areas, including building cross-agency partnerships, implementing a state system for data collection, creating a communication plan for disseminating oral health information, and improving I-Smile @ School’s infrastructure.
Iowa is one of 19 states (including Washington, DC) in which Medicaid covers extensive adult dental benefits. Through Iowa’s Dental Wellness Plan, Medicaid enrollees ages 19 and older can access full benefits, provided they complete “Healthy Behaviors” annually, which include an oral health self-assessment and preventive services. Despite this, adults, and especially senior citizens, report widespread barriers to care and low utilization rates. In 2016, 38 percent of Iowa seniors had not seen a dentist in five years, and 53 percent reported they could not afford dental care.
|In Iowa, full adult dental benefits cover the following:
Diagnostic and preventive dental services
Fillings for cavities
Surgical and nonsurgical gum treatment
Dentures and crowns
I-Smile Silver is a pilot program implemented across 10 Iowa counties designed to help adults ages 21 and older access dental care. I-Smile Silver is administered by the Iowa Department of Public Health using funding from the Delta Dental of Iowa Foundation and a Health Resources and Services Administration grant. The pilot project began in November 2014. IDPH contracts with three county health departments (covering 10 counties) to conduct the project. Each contractor has a dental hygienist as the local I-Smile Silver coordinator who is responsible for implementing strategies that include:
- Assessing needs and assets related to oral health;
- Providing training for medical providers, direct care staff, and home care providers;
- Creating referral networks with dental and medical offices to address oral health needs;
- Working with hospitals and health systems to address oral health related to chronic disease;
- Promoting oral health through participation in community events and distribution of materials; and
- Providing care coordination and preventive dental services.
In 2017, the IDPH conducted its first screening survey of older adults’ oral health. The project will continue to grow over the next two years, with the hope that its importance will be recognized and the program will receive funding to allow for statewide expansion of the pilot.
- Through an MOU, states can create cross-sector partnerships in order to fund oral health initiatives and create clear implementation responsibilities across agencies.
- States can effectively reach low-income children and pregnant women by partnering with local organizations to provide dental services and oral health education, including leveraging Title V agencies and schools.
- Providing strong care coordination services is a critical tool for helping individuals access preventive dental care.
Challenges and Next Steps
While Iowa continues to make strides in increasing access to dental and oral health care, particularly among Medicaid-eligible children, some challenges remain. Compared to 60 percent of children ages 3-12, only one in five Medicaid-enrolled children under age 2 saw a dentist in 2019. To increase these numbers, I-Smile started the Cavity Free Iowa campaign to train pediatricians to provide preventive oral health care, including fluoride varnish applications, and education on the importance of oral health.
Additionally, though the number of children on Medicaid is increasing, Iowa is experiencing a decline in dentists who accept Medicaid. Providers note that Medicaid has lower reimbursement rates than private insurance, and often comes with additional administrative burdens.
Finally, as the COVID-19 public health emergency continues to unfold and dental offices address the pandemic’s effects, the long-term impact on oral health care remains unknown. Especially for children who receive dental services through school-based programs such as I-Smile @ School, the pandemic raises concerns about children’s ability to continue to be screened and treated should schools remain closed in the fall. Moreover, older citizens, who are at increased risk for COVID-19, may not feel comfortable leaving their houses to go to the dentist.
To address some of these concerns, Iowa is working to increase the use of silver diamine fluoride, a preventive treatment that can arrest dental decay. The state anticipates there will be fewer dentists accepting new Medicaid patients in the future, and is therefore emphasizing the importance of preventive oral health now to limit future complications requiring care. Iowa is also looking at new points of contact to reach children and adults. As a result of COVID-19, IDPH is preparing to play a bigger role in the dental delivery system by screening for disease, triaging who needs to be seen within a dental office and collecting diagnostics to send electronically to dentists to complete a telehealth exam. While the pandemic may require I-Smile @ School and I-Smile Silver to revise some of their strategies, in the months and years to come programs like I-Smile will undoubtedly play a crucial role in helping Medicaid-eligible children, pregnant women and adults obtain necessary dental services.
Acknowledgements: The author wishes to thank the state officials in Iowa who graciously shared their experiences and reviewed a draft of this publication. Trish Riley, Neva Kaye, and Carrie Hanlon of NASHP provided helpful guidance and assistance. Finally, thank you to the Health Resources and Services Administration officials who provided thoughtful input.
This project was supported by the Health Resources and Services Administration (HRSA) of the US Department of Health and Human Services (HHS) under grant number UD3OA22891, National Organizations of State and Local Officials. This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the US government.
Updated May 7, 2020
In the past two months, 35 states* have rapidly amended their Medicaid home- and community-based services for older adults and their family caregivers to ensure access to long-term services and supports during the COVID-19 crisis. Under new federal rules, the states applied for Medicaid 1915(c) Appendix K waivers to make temporary or emergency-specific changes to protect enrollees.
Most of the states have also received approval for home- and community-based services waivers targeting other populations, such as children and people with intellectual/developmental disabilities. Of these 35 states, 19 (AK, AR, CO, DC, GA, IA, KS, KY, MA, MD, MN, MO, NM, NV, OR, SC, UT, VA, and WY) have Appendix K combination waivers that allow them to modify many waiver programs with one Appendix K application.
A Landscape of Flexibility
Overall, states are incorporating flexibilities to help Medicaid enrollees with long-term needs receive services, and some states have included flexibilities to help enrollees remain on the waivers during the emergency period. The major policy changes affect the following:
Telehealth: Nearly all of these states permit added flexibility for services, such as telehealth, or allowing services to be provided in alternative settings, such as private homes. To cut down on outsiders from entering family homes, many states are allowing for electronic and telephonic case management, service planning, evaluations, and monitoring, as well as electronic signatures or verbal approval to avoid face-to-face meetings.
Family caregiver supports: States often rely on family caregivers to provide home and community-based services to Medicaid enrollees. Recognizing this, some of these new COVID-19-related flexibilities directly assist family caregivers. Several states (AK, AZ, CA, CO, CT, DC, FL, GA, IA, KS, MS, NM, NC, ND, OK, SD, UT, and WV) are allowing family caregivers to provide services and, in some states, receive reimbursement when the hired aide is not available.
Meals and other services: To provide added support, many states (such as AZ, CO, CT, IA, KS, KY, LA, MA, MS, NC, ND, OK, SC, and UT) are expanding home-delivered meals. Several of these states (including AZ, CT, IA, MA, MS, SC, and UT) are allowing for non-traditional providers to provide the meals.
Providers: Many states are relaxing provider qualifications, including training, certification, and recertification requirements, to incorporate new, current, returning, or out-of-state providers. Several states also allow for flexibility on certain types of background checks, or qualifying relatives/family members to be direct care workers pending background checks. States (such as AK, AR, CO, DC, GA, KY, LA, MA, MS, NE, ND, OR, UT, and WA) allow for temporary payment rate increases for some providers to ensure continuity of services. Additionally, many states (such as AK, AZ, CO, DC, FL, GA, IA, KY, LA, MT, NM, NC, NY, OK, OR, UT, VA, PA, and WA) allow for retainer payments if a Medicaid enrollee or provider is not available because of COVID-19. These states often limit the payment to no more than a certain number of consecutive days, for example, 30 days.
Reporting: A number of states are loosening reporting requirements. For example, Kansas has requested a nine-month extension for its waiver reports and Oklahoma requested flexibility on its audit requirements.
State Medicaid programs have great flexibility in what services they provide and how they fund them, especially during the pandemic. For example, states can tap the temporary 6.2 percentage federal matching increase that was recently enacted in response to COVID-19. These Appendix Ks are an important tool for states because home- and community-based services waivers are serving people in the community who meet the level of care needs for services in nursing homes.
These policy changes are temporary, only lasting during the pandemic. After the COVID-19 crisis, it will be important to better understand the impact of these policy changes (telehealth, family caregiver supports, meals, provider flexibilities, and the ease of reporting) on cost and quality of life and determine if some of these changes should continue after the public health crisis abates.
The National Academy for State Health Policy (NASHP) developed an interactive map of state Appendix K waivers and will continue to update this information as more states make these modifications. In addition, NASHP’s RAISE Act Family Caregiver Resource and Dissemination Center, funded by The John A. Hartford Foundation and in collaboration with the US Administration for Community Living, published a report and interactive map on Medicaid information, training, and counseling resources for family caregivers.
*As of May 7, 2020, the 35 states that modified their aging and disability waivers were Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington State, Washington, DC, West Virginia, and Wyoming.
States and the federal government are taking unprecedented steps to address the health needs of individuals impacted by COVID-19, including children and adults with chronic and complex health care conditions who are vulnerable to infection and to changes in the health care delivery system that may impact their ability to access much-needed primary and specialty care, home- and community-based services.
The Centers for Medicare & Medicaid Services (CMS) has awarded the Lewin Group and its partners, which includes the National Academy for State Health Policy (NASHP), a seven-year contract to support implementation and monitoring for CMS’ Integrated Care for Kids (InCK) Model.
Launched in January 2020, this model is part of CMS’s strategy to fight the opioid crisis and address its impact on vulnerable Medicaid and the Children’s Health Insurance Program (CHIP)-covered children and their caregivers. The InCK Model aims to improve child health, reduce avoidable inpatient stays and out-of-home placement, and create sustainable payment models to coordinate physical and behavioral health care with services to address health-related needs. InCK funding will provide Connecticut, Illinois (2 awards), New Jersey, New York, North Carolina, Ohio, and Oregon with the flexibility to design interventions for their local communities that align health care delivery with child welfare support, educational systems, housing and nutrition services, mobile crisis response services, maternal and child health systems, and other relevant service systems. By bringing together medical, behavioral, and community-based services, InCK strives to reduce fragmentation in service delivery and expand access to care for children and youth.
The Lewin Group, NASHP, and the other team members will support implementation of the InCK Model through technical assistance, program monitoring, measuring awardees’ progress on critical program milestones and outcomes measures, data collection and analysis, and critical feedback loops to support awardees’ work toward their goals.
“The Lewin Group is excited to contribute to this innovative approach that breaks new ground in the delivery of child- and family-centered care and the development of pediatric alternative payment models. We look forward to working with CMS to positively impact of the health of the next generation,” said Lisa Alecxih, Lewin Chief Capabilities Officer.
“NASHP is delighted to partner with the Lewin Group to support this innovative CMS InCK model,” said Trish Riley, NASHP’s executive director. “We bring to this work our decades of expertise in state health care delivery system design, cross-sector partnerships, payment reform, and the unique needs of children and their families.”
The Lewin Group is an established leader in health care and human services policy research, analytics and consulting at the federal and state level.
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.