Last week, over 1,000 state health policy leaders and others from every state joined the National Academy for State Health Policy’s (NASHP) first-ever virtual state health policy conference to discuss a path forward during an unrelenting pandemic and profound budget challenges. As one state official noted, “This was a chance to lift my eyes from the day-to-day challenges and look at the big picture.”
Gov. Charlie Baker of Massachusetts opened NASHP’s 33rd annual state health policy conference on Monday, Aug. 17, 2020, praising the hard work and innovation of state policymakers across the country as they confront COVID-19.
“COVID is like nothing any of us have dealt with before and we were all forced to make a lot of decisions in a very short period of time based on imperfect information and in many cases a scarcity with respect to resources and data and all the rest,” he told more than 1,000 state leaders who registered for the NASHP’s virtual conference, which continues today through Wednesday, Aug. 19, 2020.
“I’m incredibly proud of how many of us over these months have managed to find a way to get things done on behalf of the people we serve,” he said in his keynote address. Prior to COVID-19, the conference was scheduled for Boston before it was relocated to a virtual platform.
“… COVID has exposed all kinds of opportunities to improve our health care system,” he explained. “Certainly, the arrival of telehealth here in Massachusetts for all kinds of preventive health care and behavioral health services has been a godsend. Some of the rule changes we have made in regards to addiction treatment should continue as we go forward, and it’s obviously laid out for all of us a road map with respect to the things we need to do to dramatically improve health disparities and to deal with many of the social determinants of health, especially related to race and geography, that came about as a result of the presence of COVID and what it uncovered.”
Gov. Baker concluded, “…From my own experience, as someone who has been in the in the health care world, in government, and in the private sector for the better part of the past 25 years, gatherings are a great opportunity to learn, to hear from other people about a different way of solving a problem or thinking about an issue and I certainly hope in this virtual world you’ll all have a chance to do that. And, obviously we all hope and look forward to the fact that at some point, we’ll be able to do this the old-fashioned way which would be same place, face to face, and maybe with even a handshake or high five.”
NASHP will be tweeting and reporting on the three-day conference in the days ahead.
NASHP’s Center for State Rx Drug Pricing seeks a partner to provide technical and strategic expertise to help a workgroup of state officials from California, Nevada, Oregon, Connecticut, and Vermont implement their drug cost transparency laws and help Maine and New Hampshire develop transparency programs as mandated by recent legislation. This work will help all states maximize cross-state drug cost comparability.
The partner must have expertise in data collection, presentation skills, and analysis to provide guidance in the creation of a prescription drug transparency roadmap and template that states can use to create a searchable database for prescription drug cost information.
NASHP’s new State Transparency Implementation Network is supported by the Laura and John Arnold Foundation.
Read or download the RFP here.
Proposals must be submitted to Jennifer Reck by Oct. 5, 2018 by 5 p.m. (EST). For additional information, review NASHP’s chart comparing enacted transparency laws across states.
Medical homes are critical components of comprehensive care systems for children and youth with special health needs (CYSHCN). They can reduce costs and improve outcomes and care experiences for CYSHCN and their families. This new report, State Strategies to Advance Medical Homes for Children and Youth with Special Health Care Needs, examines effective strategies used by 16 states to advance a medical home model of care for CYSHCN and their families, as part of the Maternal and Child Health Bureau, Health Resources and Services Administration’s State Implementation Grants to Enhance Systems of Services for CYSHCN through Systems Integration. Read the report.
Additional children and youth with special health care needs resources:
If you’re working to control the cost of prescription drugs, you need to know the lingo used by the pharmaceutical industry. Below is a glossary of terms commonly used by players in the drug research, regulation, manufacturing, distribution, and purchasing worlds.
Drug Product Terms
Brand product: Branded products are not generic drugs or products. A brand can be an innovator (first-in-class) or not. It is protected by a patent or has an expired patent. It is licensed under a New Drug Application by the US Food and Drug Administration (FDA).
Generic drug: Competitors to a branded product that has an expired patent. Generics are considered identical to the brand product. Licensed under an Abbreviated New Drug Application by the FDA.
Biologic: A therapeutic drug or a vaccine, made from living organisms — human, animal, yeast, or microorganisms — licensed under a Biologic License Application by the FDA.
Biosimilar: Competitors to the first-in-class biologic product that has an expired patent. These drugs are not currently considered to be identical to the original product (because of the nature of manufacturing with live products), but are considered to be therapeutic alternatives.
Retail drugs: Any kind of drug typically available at a pharmacy counter. Usually billed on a pharmacy claim.
Physician-administered drugs: Any kind of drug that cannot typically be self-administered. Usually billed on an office visit claim.
Specialty drug: A drug that is costly, requires special supply chain features (such as freezing or cold storage), typically indicated for a small group of patients, and where the patients may need special case management services. This is the broadest definition. There is no single agreed-upon definition, so sometimes specialty drug will only mean high-cost. For instance, specialty drugs in the Medicare Part D program are only defined by cost – currently $670/month (2018) – and indexed annually.
Innovator drug: The drug from which generics or biosimilars are made – the first product of its type.
Multisource drugs: Any and all the generic drugs (included the innovator) which are competing against each other.
Small molecule products: These are capsules, tablets, powders, ointments, sprays – that are generally self-administered and available at retail pharmacies with no live ingredients.
Large molecule products: These are known as ‘biologics’ – and contain live active ingredients. They are infused or injected and are not typically self-administered.
Pipeline drugs: Drugs (small or large molecule) under development by a manufacturer.
In-line or post-market drugs: Products that are licensed and in the market.
Distribution System Terms
Wholesaler: In a simple distribution system, the wholesaler is the first purchaser of a drug product – direct from the manufacturer. Wholesalers buy very large quantities and then resell either direct to provider-purchasers (like a large health system, pharmacy or pharmacy chain), or resell to smaller, regional distributors for regional or local distribution to retail pharmacies and hospitals.
Specialty pharmacy: These organizations may or may not take ownership of the drug product. Their clients are drug manufacturers that want or need limited distribution of specialty drugs. Specialty drugs are typically (but not always) high cost, require special shipping and storage (freezing or cold storage), are indicated for relatively small patient populations treated by physician specialists. Manufacturers have been accused of using specialty pharmacies to limit access to a drug by potential generic or biosimilar competitors (limited distribution can make it difficult to obtain a drug sample if the entity is not a treating provider on a list approved by the manufacturer). Specialty pharmacy can deliver ‘just in time’ products by working with treating providers to supply the appropriate drug in time for a patient visit at the location where the drug will be used.
Administrative Organizations in the Supply and Payment Chain Terms
Health plan: Health insurance coverage provided by an individual or group that provides or pays the cost of medical care. Health plans can be provided by public (Medicaid) or private (an employer) entities.
Payers: The entity responsible for processing insurance claims. It can handle eligibility, enrollment, and premium payment oversight.
Pharmacy benefit manager (PBM): PBM clients are health plans. PBMs handle some or all of the pharmacy benefit for health plans (formulary design, cost sharing and tiers, pharmacist networks and contracts, price concession negotiation with manufacturers). PBMs may own mail order pharmacies and/or specialty pharmacies. Unless the PBM owns a pharmacy, it is not part of the drug distribution/supply chain.
Group purchasing organization (GPO): These entities represent groups of drug purchasers, such as hospitals and health systems. A GPO negotiates on behalf of its clients for either up-front, on-invoice discounts or back-end rebates. Importantly, GPOs do not take ownership of a drug; they are not part of the supply chain. GPOs essentially negotiate a purchase-order from which members of the buying group can purchase in whatever quantities needed. Wholesalers supplying to GPO members typically provide the drug at the discounted price on the invoice and then are compensated by the manufacturer after the fact. GPOs may provide additional client administrative services as well.
Pharmacy services administration organization (PSAO): Similar to a GPO, but it serves independent pharmacies. In addition to price negotiation with PBMs, PSAOs offer a variety of administrative services to pharmacies. PSAOs are often owned by wholesalers or PBMs.
Wholesale acquisition cost (WAC): The price the wholesaler pays the manufacturer. Generally considered the ‘list’ price. This price is under the control of a manufacturer.
Average wholesale price (AWP): The price at which a wholesaler sells product to others in the supply chain (hospitals or pharmacies for example). AWP is independent of whatever price concession deals a manufacturer might make with hospitals or other purchasers. AWP is generally estimated by companies that provide “pricing files” to insurers or PBMs so they can know how much to reimburse pharmacies, hospitals, clinics, etc. for dispensed drugs. AWP of the pricing files is thought to be higher than what dispensers actually pay. Therefore, many payers reimburse pharmacies something like AWP-17 percent or lower – reflecting what they believe to be the cost that needs to be reimbursed.
Actual acquisition cost (AAC): Increasingly health plans and other large payers are trying to ascertain what pharmacies and other dispensers actually paid to get the drug in stock. Payers want to reduce the extent to which dispensers profit on the drug price and move profit or revenue to the professional fees associated with the dispensing of the drug.
Types of Manufacturer Price Concessions
Rebates: These are provided by manufacturers and are typically based on the ability of a payer to move market share for the manufacturer’s product. Rebates are confidential. Rebates are billed periodically by the insurer or PBM based on drug utilization subject to the rebate. Rebates allow the manufacturer to retain a high list price (which can be important to the manufacturer so any US price that might wind up in the reference pricing system of another country is high).
On-invoice discounts: Whatever price concession agreement a manufacturer has with a purchaser, the discount is on the invoice (rather than a post-sale rebate).
Coupons: These are given to consumers for use at the point of service (the pharmacy counter). Coupons mitigate the impact of insurance coverage cost sharing for a manufacturer’s product. A coupon might cover the full deductible cost, copays or coinsurance. Pharmacies redeem the coupons with the manufacturer or its coupon administration vendor. There are different views about coupons. They provide patient out of pocket cost relief for drugs where insurance benefits require significant cost sharing on high cost drugs. They also can undermine insurer efforts to control utilization (and costs) by encouraging a patient to move to less costly generics or alternative branded treatments. Coupons are not permitted in Medicaid or Medicare because of the effect on program costs. They are restricted in the commercial markets of California and Massachusetts.
Medicaid Rebate Terms
Average manufacturer price (AMP): This is a Medicaid term and does not have any meaning or use outside the Medicaid program at this time. It is calculated by the manufacturer and provided to CMS, which uses it to let state Medicaid programs know the unit rebate amount for billing manufacturers. It is the average of manufacturer prices to the wholesale and retail class of trade (does not include sales from wholesalers to retailers but only the prices in any direct agreement between manufacturer and a retail seller). The Medicaid rebate is 23.1% of the AMP. AMP is confidential and not publicly available.
Best price (BP): Is a Medicaid term and does not have any meaning or use outside the Medicaid program at this time. It this best price the manufacturer offers to any purchaser in the U.S.; this could be a clinic, a hospital, a health plan, a PBM, and so on. Generally speaking, if the BP is greater than 23.1% of the AMP, all state programs will get the BP rebate. BP is confidential and not publicly available.
Provider Drug Reimbursement Payment Limit Methods
Average sales price (ASP): This is a Medicare Part B reimbursement term used to pay for Medicare Part B drugs (which are typically physician-administered drugs). This is the weighted average manufacturer price for a product in the market. This applies to multi source drugs and patented products. Medicare reimburses physicians ASP+ 6 percent for Part B drugs.
Maximum allowable cost (MAC) and federal upper limits (FUL): Briefly, these payment limit methods apply only to multisource drugs (including the off-patent brand). The approach appears to be used by almost all payers. MAC/FUL is the average price of all the multisource drugs in a group. The frequency the MAC/FUL is recalculated is at the discretion of the payer. The multi-source drugs to which a MAC is applied is also at the discretion of the payer.
Actual acquisition cost (AAC): Discussed elsewhere, payers increasingly are moving to an AAC model, which is calculated using provider cost survey data.
Some percentage of average wholesale price (AWP): Payers assume that a published AWP is higher than what a pharmacy or provider actually pays for a drug, so payers reimburse pharmacies and other providers some percentage less than AWP, for instance AWP – 17 percent.
Reference price: This is generally not used in the US at this time for drugs. A reference price limits the amount the insurer will pay for one product to the price of a similar product in the market. There are a number of ways to structure reference pricing, an example would be to tie the amount an insurer will pay (to a doctor or pharmacy for instance) to the lowest price of any drug in the therapeutic class, or limit the insurer payment to the average price of drugs in a class. If the consumer choses a product that exceeds the reference price, the consumer pays — to the provider or pharmacy– the difference between what the insurer will reimburse the pharmacy and the pharmacy’s costs/charge of the more expensive drug.
Dispensing fee/Professional fee: There are two parts to pharmacy payment: ingredient cost and dispensing fee. The ingredient cost is where payers apply MAC, AWP, AAC etc. The dispensing fee remunerates for the professional services of the pharmacist. Dispensing fees have trended upward in recent years as payers try to move from pharmacy profits on the ingredient cost to profits on the dispensing fee and as pharmacists have taken on a greater role in case management type services for some health plans.
(Last updated June 2018)
When and where is #NASHPCONF18?
NASHP’s 31st Annual State Health Policy Conference is Aug. 15 to 17, 2018, at the Hyatt Regency Jacksonville Riverfront, in Jacksonville, FL.
What will this year’s conference explore?
NASHP’s conference, entitled Shifting Tides in State Health Policy, addresses the most pressing and critical issues facing state health policymakers, such as health care reform and cost containment, the opioid crisis, stabilizing state health insurance markets, and social determinants of health. In fact, in 2017 more than 97 percent of attendees rated the content as either “very good,” or “excellent!”
Check out our full conference agenda to learn more about the topics covered.
Why should I attend the conference?
Planned by state health policymakers for state health policy makers, NASHP’s annual conference is a must-attend event for the state health policy community. With a carefully crafted agenda focusing on emerging issues and current best practices within states, our conference brings together the nation’s leading experts to share, learn, and discuss. This premier event offers unparalleled access to the most cutting-edge industry knowledge, the nation’s leading experts, and exceptional networking opportunities that will help take you and your state to the next level. Need more reasons to attend? Check out our Top Five!
Who usually attends the conference?
State health policymakers representing all branches and of government and all 50 states and Washington, DC, attend. Also present are federal and government officials and representatives from nonprofit organizations that focus on state health policy, advocates, consultants, foundations, health plans, private providers, trade associations, health technology firms, and more! In short, anyone invested in advancing excellence in state health policy attends #NASHPCONF18 to benefit from the educational and networking opportunities.
What is the cost of attending the conference?
The cost varies, based on your type of company or organization, and what portion of the conference you will attend (preconference only, conference only, or the entire event). Please visit the registration fees webpage for a complete breakdown of registration options and fees. Don’t forget, discounted early bird rates are available until July 20, 2018, so register soon to lock in the discounted rate!
How can I pay to attend the conference?
Registration fees can be paid by credit card when you register online, or by purchase order or check.
Please mail your conference registration payment to the following address:
Center for Health Policy Development
Attn: Accounts Receivable
PO Box 10571
Albany, NY 12201-5571
Are scholarships available?
General scholarships are not available. Through the generous support of some state foundations, limited scholarships are available to participants from those states. For more information about whether a foundation in your state is supporting scholarships, please visit the NASHP State Leaders Program webpage.
How do I register for the conference?
Registering for the NASHP 31st Annual State Health Policy Conference is easy, just visit the online registration portal.
What is the cancellation policy?
If you wish to cancel your registration before Friday, July 20, 2018, NASHP will provide a refund of the registration fee less a $50 cancellation fee. No refunds will be processed for registrations canceled after July 20, 2018. If you register and cannot attend, another person from your organization may attend in your place. Hotel cancellation policies are at the discretion of the hotel and apply separately.
Is there a conference hashtag I can use on social media?
Yes, our conference hashtag is #NASHPCONF18. Feel free to include this when talking about the conference on social media for a chance to be retweeted/shared by our official NASHP social media accounts.
Is there an official hotel for the conference?
Yes, the official conference hotel is the Hyatt Regency Jacksonville Riverfront Hotel at 225 East Coastline Drive, Jacksonville, FL, 32202. The hotel phone is 904-588-1234.
Is there a discounted room rate for conference attendees?
Yes! NASHP has worked with the Hyatt Regency Jacksonville Riverfront Hotel to provide conference attendees with a room rate of $159/night, plus 14.13 percent tax. This room rate will only be available until July 23, 2018, or until the room block is full.
For information about how to book a room at the Hyatt Regency at NASHP’s special group rate, visit the Lodging page on our website or go directly to NASHP’s unique Hyatt Regency reservation page to book your reservation now!
Will I be contacted by NASHP and/or the conference hotel to book and pay for my stay?
No! Please be aware that third-party housing companies may contact NASHP conference attendees, speakers, sponsors, and exhibitors to promote lodging for our annual conference. If you are contacted by anyone who states they are contacting you on behalf of NASHP or the Hyatt Regency Jacksonville Riverfront to book reservations and obtain credit card information, please exercise extreme caution, as it is a scam. NASHP and the Hyatt Regency Jacksonville Riverfront Hotel will not contact you to request credit card numbers or housing reservations over the phone.
If you have made hotel reservations and provided a credit card number to any company, please call your credit card company immediately and request that they investigate the charge.
What is the conference dress code?
Please dress in business casual during conference hours. You are welcome dress casually for evening events.
Can I earn Continuing Education credits at the conference?
No, unfortunately NASHP does not offer continuing education credits for sessions attended during the annual conference.
Can I submit an idea for a session or a speaker?
Yes, NASHP’s Annual Call for Ideas starts in mid-January each year. Please check our website in January 2019 for details on when and how to submit your ideas.
Will there be food and beverage provided during the conference.
Yes, all breakfast, lunch and coffee breaks are provided during the days that you are registered for conference and preconference sessions.
Will Wi-Fi be available?
Yes, complimentary Wi-Fi will be available to all conference attendees in meeting spaces. Please watch for an email about one week before the conference with instructions detailing how to download the mobile app and utilize Wi-Fi on-site.
Will presentations be available to conference attendees?
Yes, presentations are made available approximately one week prior to the conference through the mobile app.
If I have registered but can no longer attend conference, can someone attend in my place?
Yes, follow the instructions below to change and update the attendee information.
- Go to the registration login page.
- Enter your email address and the confirmation number provided in your registration confirmation email.
- Under “More Options” select “Substitute Registration.”
- Enter the new registrant’s info as prompted. You will be asked to confirm the new registrant’s info. Hit “Confirm,” and the process is complete!
The Trump Administration announced a series of initiatives earlier this month to reduce prescription drug prices and patient drug costs. Its American Patients First provides an outline of ideas for future action and reprises initiatives the Administration recently began. The Administration is now seeking public input on many of these proposed policies.
The Administration’s Request for Information (RFI) — entitled HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs — seeks responses to questions about a great variety of policy ideas described in the Patients First document.
While there are many ideas on the table, the National Academy for State Health Policy (NASHP) is examining proposals to expand US Department of Health and Human Services (HHS) data collection and transparency. If expanded and made current, this data could bolster drug price transparency initiatives, which are of great interest to states and have been recently approved by several state legislatures.
As part of its initiative, the Administration took a significant step last week by rolling out its revised Medicare and Medicaid drug spending dashboards. To date, the dashboards provided information about past program spending, but now they include specific drug prices with annual price changes dating back to 2012. This is a great new transparency tool for states and researchers. In its RFI, the Administration asks how this drug price-tracking effort can be improved.
How to Improve Drug Cost Data
The current dashboards use insurance claims information. While offering a great tool for price transparency tracking, years-old information will not help states that are trying to develop strategies to lower drug prices in real time, as new state transparency efforts do. HHS should take additional steps to provide more current list prices and price changes on its website, which would create efficiencies for states. If that information was readily available, states would not have to recreate systems to track price increases and could instead focus their resources on collecting manufacturer price increase justifications as new state transparency laws now require.
The RFI also asks for input on improving other HHS data about prescription drug costs. For example, the RFI asks if it would more informative to publish information on national gross (before rebates) and net (after rebates) spending. Providing gross and net prescription drug spending would certainly assist the industry in demonstrating that their net prices are lower than the public understands. However, it will be even more helpful for the public to understand how prescription drug costs impact health care coverage and spending. Currently, the Centers for Medicare & Medicaid Services’ Office of the Actuary presents prescription drug spending as a portion of total national health expenditures (NHE).
NHE includes spending on health and medical research, long-term services and supports, and other important health expenditure categories. In the context of all national health spending, spending on drugs may not appear as significant as it does when examined in the context of personal medical service spending or health care coverage.
A separate, annual analysis of prescription drug spending as a percentage of federal, federal/state, and commercial health coverage spending would give policymakers an informative representation of the significance of prescription drug spending and spending increases where it counts most.
NASHP’s Pharmacy Costs Working Group will be responding to the HHS RFI about these and other ideas, and will feature the responses on its Center for State Rx Drug Pricing website.
The US Centers for Disease Control and Prevention estimates that children in 4 million households are exposed to high levels of lead. Elevated blood lead levels increase risk for damage to the brain and nervous system, slowed growth and development, and learning, behavior, hearing, and speech problems, along with long-term financial financial and health implications.
In 2018, NASHP scanned state health care policies in all 50 states and Washington, DC that promoted lead screening and treatment for children and pregnant women. The review, which included metrics, incentives, provider guidelines, CHIP abatement coverage, and reporting requirements, has been summarized in a new 50-State Scan of State Health Care Delivery Policies Promoting Lead Screening and Treatment.
NASHP, in partnership with the Association of Maternal and Child Health Programs (AMCHP), developed this resource as part of the Health Resources and Services Administration’s Maternal and Child Environmental Health (MCEH) Collaborative Improvement and Innovation Network (CoIIN).
This project is supported by the Health Resources and Services Administration (HRSA) of the US Department of Health and Human Services (HHS) under grant number UJ9MC31105 – Maternal and Child Environmental Health Collaborative Improvement and Innovation Network (CoIIN) for $849.999. 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.
Greg Moody, director of Ohio’s Office of Health Transformation, has quietly spearheaded one of the most effective redesigns of a state health care payment system in the country, generating cost savings and improving public health by showing providers how the cost and quality of their care compares with their peers.
This value-based cost-savings and quality improvement approach, embraced by Ohio’s employers, insurers, and Medicaid managed care plans, pays for health care value instead of volume by analyzing two factors — how much it costs a provider:
- To provide high-quality comprehensive primary care, and
- To treat an “episode of care,” such as treating an acute asthma episode.
Providers are given a report card that assesses their charges, quality of care, and patient outcomes. If they deliver value-based care, they are financially rewarded with a $4 per patient per month bonus. If their care is over-priced and poor quality, compared to their peers, they get bad reviews and no rewards.
This value-based payment approach with its financial inducements has reduced acute asthma treatment costs by 21 percent and acute COPD treatment costs by 18 percent in 1 million Medicaid enrollees over a two-year period. Not only are the state’s Medicaid and employer plans saving money, patients are healthier because doctors are doing more to keep them well, which benefits overall population health.
“We can spend time fighting about health care coverage, like the federal government has for the last few years, or we can address the underlying health care costs,” observed Moody, a member of the National Academy for State Health Policy’s executive committee. “Today, I think it’s up to states to experiment and explore how to create sustainable health care costs.”
How Ohio Launched Value-Based Payment Reform
Ohio, which has been conducting its health care payment delivery reform experiment for eight years, is finding success with a value-based approach that replaces a pay-per-visit system with one that promotes comprehensive primary care and rewards providers who deliver efficient episodes of care. The state focused on improving care coordination, integrating physical and behavioral health, rebuilding behavioral health system capacity, strengthening home- and community-based services, improving community services for the disabled, and modernizing its Medicaid administration.
To date, a handful of states have taken small steps to develop a value-based payment system, but early results have not yielded dramatic, financial successes and many state policy makers are still casting about for a system that quickly delivers cost savings and quality care. According to Moody, Ohio found it and has spent more years implementing and refining it than any other states.
Moody, who worked for then-Congressman John R. Kasich researching Medicaid funding while staffing the US House Budget Committee, was appointed by newly-elected Governor Kasich to Ohio’s new Office of Health Transformation in 2011.
“Governor Kasich did something I never saw anyone do and it is key to how we got it done,” he explained. “About 18 months before he became governor, he assembled a health care team and told us, ‘I’m not running for governor unless we have ideas to propose.’ Now normally, you start recruiting and developing policy proposals after you get elected, but on his third day in office in January 2011, we had already done our homework and released our strategic plan. Now, eight years later, we are using the same plan.”
Ohio modernized its Medicaid system by creating a stand-alone Medicaid department with a new claims payment system and it provided an online eligibility tool to residents who no longer had to travel to county offices to apply. It also consolidated mental health and addiction services as the state’s opioid epidemic exploded and expanded Medicaid.
State leaders also began engaging partners, including provider groups, health plans, and Medicaid managed care organizations, to identify public health priorities that their payment reforms – in this case applying the episodes-of-care payment system – could support. “The starting point,” Moody explains, “is to be clear about our population health priorities – or in payment terms, define what we want to buy.’”
Ohio decided it wanted to prioritize improvements in three main health care areas:
- Mental health and addiction, addressing depression, suicide, drug dependency, and drug overdoses;
- Three chronic diseases: heart disease, diabetes, and asthma; and
- Maternal and infant health.
Shaping Physician Reimbursements to Improve Population Health
Next, Moody’s office asked high-performing primary care practices what they did to keep patients well. “The problem is none of these activities [recommended by doctors] are properly reimbursed under fee-for-service – for example, holding time for same-day appointments, providing 24/7 access to care, risk stratification of patients, and scheduling based on risk.” Moody knew that a new value-based care system had to reward providers who delivered those successful — though uncompensated — services.
To achieve these goals, Ohio created a Comprehensive Primary Care Model that enrolled 161 primary care practices to serve 1 million patients. Ohio collected and evaluated 1,800 performance reports that included patient cost and care quality measures. It also provided $3 million in “enhanced payments” to providers who delivered value-based care. To qualify for the $4 PMPM bonus, providers had to keep patients well by meeting the new quality requirements, including the same-day appointments, team-based care, patient outcomes, and reduced hospitalizations and emergency department use.
In December 2014, Ohio won a federal State Innovation Model test grant to implement an episode-based payment model statewide. The timing of the grant was perfect, Moody noted. It allowed Ohio to expand the state’s limited data analytic capacity, and create new insights about how best to improve health outcomes while holding down the total cost of care. Ohio could now pull in all insurance claims related to certain episodes of care for its value-based analysis.
For example, to assess a joint replacement episode of care cost, Ohio combined the total cost of the surgeon, implanted device, hospitalization, medication, and rehabilitation, and used the data to compare providers’ cost-effectiveness across the state. “We then take back money from the rates of the high-cost providers (in red) and share savings with the high-value providers (in green),” Moody explained.
To qualify for bonuses, providers had to meet both cost and quality targets. “This creates a powerful incentive for the principal accountable provider to pay attention to the total cost of the episode,” Moody explained, “[which is] very different from fee-for-service, which pays the surgeon the same regardless of other costs.”
In January, 2018, Ohio started paying the 161 practices that participated in Ohio’s comprehensive primary care pilot program $4 PMPM for meeting the basic efficiency and quality targets. “In addition, practices that meet quality targets while holding down the total costs of care compared to peers and based on self-improvement earn a significant annual performance bonus,” Moody explained.
Similar initiatives in other states are starting to yield substantial savings and care improvements. Minnesota achieved cost savings and an 89 percent improvement in quality measures and one regional initiative in northeast Pennsylvania achieved an 83 percent improvement in quality measures.
With this performance data, primary care providers are able to make value-based recommendations when referring patients to specialists, and insurance plans can also promote providers who receive high value-based rankings to their members.
Using Episodes of Care Costs to Tackle the Opioid Epidemic
By breaking down costs within each episode of care, Ohio has also been able to address another population health-related problem – opioid over-prescribing – by analyzing claims information to see which providers over-prescribe. The analysis, for example, revealed a provider who prescribed opioid painkillers 100 percent of the time for ankle sprains — meanwhile the state average hovered below 18 percent. More careful opioid prescribing data collections and oversight has produced a 28.4 percent decline in the number of opioid doses prescribed in Ohio between 2012 and 2017.
While the cost-savings opportunities generated by this value-based system appear tailor-made for simple procedures like joint replacement, its application to more complex care, such as perinatal episodes of care, is not currently clear. While acute COPD and asthma episodes of care costs dropped markedly 2014 and 2016, perinatal costs increased 3 percent, about what Moody would have expected in a conventional fee-for-service environment. “At this stage, these results create new questions,” he said, “for example, how do we make complex episodes more sensitive to value-based results? How do we identify the greatest sources of value in complex care and share that information with providers who can use it to improve?”
Ohio recently expanded its episodes of care data collection from three episodes to 43, which include many opioid clinical and quality measures. “Eventually, all of this needs to be transparent to the public and easily available online — it’s what we need everyone to see to make real progress on population health priorities,” he said.
Moody considers his work in Ohio as the pinnacle of his professional experience. He encourages other states to replicate Ohio’s approach. “You don’t wake up one morning and do this, it took years for us to get buy-in to make this happen,” he said. “This is something any state can do, but it takes time. We spent a lot of time defining the key health care delivery problems in Ohio, inventorying existing resources, and identifying the two to three policy changes that would leverage change, it’s a fairly rigorous process.
“There are now more than 30 states with gubernatorial elections in November, those candidates should start now to develop their policies and approaches,” said Moody, who will step down from his job in December when Gov. Kasich leaves office. “Ohio has created a blueprint to make these reforms. There are other ways to do this and be successful, but it’s critical that candidates start thinking and planning now.”
Read Ohio’s Health Transformation report, Moving Ohio’s Health Care Payment System Upstream.