Medicaid payment models in many states are shifting away from rewarding providers for the quantity of care they provide to models that reward high-quality, coordinated care that addresses some of the broader social factors that influence health and well-being. One example is New York’s Value-Based Payment (VBP) Roadmap, which rewards Medicaid providers and community-based organizations for addressing the social and economic impacts on health — such as access to healthy food, safe housing, and reliable transportation — that make up 80 percent of the factors affecting people’s health.
In New York’s model, Medicaid VBP contractors — such as accountable care organizations (ACOs), hospitals, or individual providers and their partnering networks — enter into value-based payment arrangements with Medicaid managed care organizations (MCOs). Those arrangements take one of three forms. In the Level One VBP arrangement, a traditional fee-for-service arrangement is augmented by a shared savings payment to the VBP contractor when quality scores are met. Level Two is similar to Level One, but the VBP contractor is responsible for losses if care costs more than expected and if quality targets are not met. In Level Three VBP, the MCO gives VBP contractors a set amount — a capitated or per patient, per month payment — to cover the total cost of care while meeting quality targets.
For example, a Medicaid MCO can pay a VBP contractor a flat rate or capitated payment for all the care and services required by a person with diabetes, including assistance meeting health-related social needs. VBP contractors can also develop innovations to support their VBP models. For example, one ACO in western New York partnered with a ride-sharing company to take people to urgent care or after-hours primary care as needed.
As part of the National Academy for State Health Policy’s (NASHP) accountable health models workgroup, Ryan P. Ashe, director of Medicaid Payment Reform at the New York State Department of Health, explained in a recent interview how his state’s Value-Based Payment Roadmap addresses social determinants of health.
What is your state’s value-based payment roadmap?
It is a plan to move New York Medicaid’s payment system toward a VBP model that emphasizes value instead of volume, in order to ensure the long-term sustainability of investments in clinical improvement, system transformation, population health, and community engagement, among other things. The roadmap, which charts a path toward making at least 80 percent of Medicaid managed care provider payments contracted in a VBP model, was approved in July, 2015 and updated in June 2016 and given final approval by the US Centers for Medicare & Medicaid Services (CMS) as part of the state’s Section 1115 demonstration project. The shift to value-based payment is intended to improve health and well-being of people and populations, increase the quality of clinical care, and reduce costs.
Did patients, providers, community members, and other stakeholders provide input into the roadmap’s design?
Yes. The roadmap was developed through a comprehensive and significant stakeholder engagement process. A VBP workgroup served as the advisory body guiding all major policy decisions that shape the model. The VBP workgroup was composed of providers as well as individuals from advocacy groups, community-based organizations, MC0s, and representative associations (including health plan, hospital, and physician-focused associations), among other groups. Clinical advisory groups were developed to inform clinical and behavioral health-related VBP arrangements. They also provided expertise and thought leadership, especially in relation to the design of the individual VBP arrangements such as integrated primary care and the total cost of care arrangements, for example. Subcommittees were developed to tackle specific opportunities within the VBP model. For example, a social determinants of health (SDH) subcommittee tackled a number of topics, including how the state can incentivize providers and MCOs to invest in the social factors affecting health. Comprehensive stakeholder engagement has been a cornerstone of our VBP model, and enabling a channel for public comment on the roadmap was a very important element as we moved forward. In fact, it is a practice we continue today and will continue tomorrow.
How does the roadmap motivate payers and providers to address the social determinants of health?
The VBP model requires VBP contractors — such as ACOs, hospitals, or individual providers and their partnering networks — to implement at least one intervention that addresses an SDH. The model also requires investment in interventions and rewards contractors for addressing social determinants of health, depending on the level of risk adopted in the VBP arrangement.
VBP contractors contract with MCOs under one of three arrangements:
- Level 1 is an upside-only shared savings arrangement
- Level 2 is an upside and downside risk-sharing arrangement
- Level 3 is a prospective per-member, per-month payment and/or prospective bundled payments
|“… effectively addressing social determinants of health gets to the root cause of poor health. For example, establishing stable housing helps individuals manage their medication, and access to healthy food helps address complications related to obesity or diabetes.”|
VBP contractors in Levels 2 or 3 must address at least one social determinant of health.
VBP is a mechanism to stimulate innovation and sustain transformation where it occurs. The idea is that by establishing a target goal based on overall spend and incentivizing quality, health care providers at all levels, including MCOs, will work together to provide the absolute best level of care, achieving the highest level of quality in a manner that avoids complications or emergency rooms visits that otherwise results in higher costs. In many instances, effectively addressing social determinants of health gets to the root cause of poor health. For example, establishing stable housing helps individuals manage their medication, and access to healthy food helps address complications related to obesity or diabetes. VBP creates a framework where investments in SDH interventions becomes much more important and a foundation for successful arrangements between provider partners and MCOs.
Community organizations have important insight into the needs of the communities they serve. How are they involved in implementing and guiding the roadmap?
Community based organizations are a key stakeholder in the our VBP model. It’s the community-based organizations that often have the direct line into the communities. VBP contractors in Levels 2 or 3 are required to contract with at least one community-based organization. The roadmap also recommends that MCOs and providers work with community-based organizations on interventions targeting SDH. There is a template that MCOs and community-based organizations must use when contracting with one another to implement an intervention targeting a social determinant of health. The template asks the MCO and community-based organization why they selected the intervention. For example, did they leverage an existing assessment of community needs? Or, was the decision informed by existing information sources such as the 211 service database, which tracks calls to the state’s health and human services information line? The template is a way for the state to operationalize the inclusion of CBOs in VBP arrangements. Moreover, it helps us to begin to collect information on best practices that explain why SDH interventions are being selected and how their success is being measured.
Does the state have any say over which social determinants of health that MCOs, providers, and community-based organizations address?
We want to give MCOs and community-based organizations the flexibility to design their interventions to meet the needs they see, and we want to emphasize and support opportunities to achieve the true value of the interventions. The VBP model accepts interventions that focus on five key social domains. To that end, the social determinants of health subcommittee developed a menu of evidence-based interventions that target these five key areas:
- Economic stability;
- Health and health care;
- Neighborhood environment; and
- Social, family, and community context.
The menu identifies the specific social determinants affecting each area, and lists evidence-based interventions providers can use to address them. For example, prescriptions for fruits and vegetables and nutritional counseling are possible VBP-funded interventions for food insecurity. Rental assistance, respite care, and legal services are interventions for people experiencing homelessness and housing instability. VBP contractors can pay for such interventions with savings from their Medicaid MCO payments.
Can you share any examples of how partners have used the menu of interventions to address the social determinants of health?
Yes. One provider partnered with a ride-sharing company to provide better access to medical appointments for low-income patients, because evidence shows that a lack of reliable transportation is often the main cause for missed appointments.
Another community-based organization subcontracts with some Medicaid plans to deliver medically-tailored meals to people with life-threatening illnesses. The organization says it has reduced health care costs by 28 percent compared to the costs incurred by people with similar diagnoses who did not receive medically-tailored meals, and evidence suggests such programs can improve health by reducing spending.
What is next for the roadmap?
The roadmap is a “living document,” that is updated annually and reviewed with CMS. Updates to the roadmap reflect the evolution of the model, which includes feedback from the stakeholder community. We continue to refine our arrangements and overall approach and those updates are included in the annual submission to CMS. The VBP model will continue to look at all areas of health care within Medicaid, including pharmacy, dental and transportation.
The state is committed to achieving the goal of transitioning at least 80 to 90 percent of total MCO expenditures into Level I or higher VBP arrangements. It is important to establish a framework where innovative models of care delivery can move forward, and once refined, can be sustained. This is a transformation about the way we deliver care, and also about the way we think about care, and that is where social determinants become very important. The roadmap establishes the way forward, but it also seeks to achieve a key goal — improving health outcomes for people — and that is important to remember.
Support for this work was provided by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the foundation.
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.
Walkabout Medical Homes with Mary Takach: A 10-month Study of Australia
What can states with large frontier areas such as Alaska, Texas, Montana, and Arizona learn from how Australia organizes and supports primary care delivery in its vast outback?
What do publicly financed community-based teams, networks, and organizations found in states including Vermont, North Carolina, Oregon, and Colorado have in common with the Australia government’s four-year experiment in financing and organizing local primary health care organizations nation-wide?
What lessons can states such as Massachusetts, Rhode Island, and Pennsylvania share with the Australian government on how to evolve primary care provider payments from fee for service (FFS) (yes, Australia general practitioners also get paid FFS) to blended payment models that include capitation and shared savings to better support access to medical homes?
Tuesday, July 29, 2014
1:00 – 2:15 pm ET
View Webinar Here
This webinar explores the leap from health system transformation planning to practice by showcasing four leading states that are designing and implementing multi-payer payment reforms. Through a facilitated discussion, state officials discuss policy levers to shift payment systems away from fee-for-service, offer strategies for sustaining stakeholder momentum and commitment, and share perspectives on promising practices for and operational challenges of turning a plan for multi-payer payment reform into reality.
This webinar is the first in a six-webinar series, supported by Kaiser Permanente Community Benefit, highlighting specific policy and technical issues critical to achieving multi-payer payment reform. It is useful for all states contemplating, designing, or implementing multi-payer payment reforms, particularly SIM Round 2 Model Design applicants.
- Moderator: Anne Gauthier, Senior Program Director, NASHP
- Marcela Myers, Director, Pennsylvania Center for Practice Transformation and Innovation, Pennsylvania Department of Health; Pennsylvania SIM Project Director
- Karen Matsuoka, Director, Health Systems and Infrastructure Administration, Maryland Department of Health and Mental Hygiene; SIM Project Director
- Mark Schaefer, Director, Healthcare Innovation, Connecticut’s Office of the Healthcare Advocate; Connecticut SIM Project Director
- Vatsala Kapur Pathy, Founder, Rootstock Solutions; Colorado SIM Project Director
by Jill Rosenthal and Manel Kappagoda of ChangeLab Solutions
The United States ranked 15th among affluent countries in life expectancy in 1980. By 2009, it had dropped to 27th place. Our fragmented health care delivery and public health systems, and the lack of coordination between the two, has resulted in an imbalance of high health spending and poor health outcomes.
A recent report by the Robert Wood Johnson Foundation’s Commission to Build a Healthier America, confirms what we already know: dramatically changing these statistics requires a combined approach that comprises investment in health care delivery and expanding “our focus to address how to stay healthy in the first place.”
This report, developed by the National Academy for State Health Policy and produced by ChangeLab Solutions, highlights leading states’ approaches to support community-based prevention initiatives by bridging the health care delivery and public health systems. It examines various mechanisms – both previously existing and created through health reform – that states can leverage to implement sustainable community-based prevention programs. They include Medicaid waivers, federal grants, accountable care and medical home models, pooled funding, and new federal requirements for nonprofit hospitals. The report includes opportunities and lessons from featured states (California, Maryland, Massachusetts, Minnesota, North Carolina, Oregon, Texas, and Vermont).
|Download the ChangeLab Solutions for the Publication.||5.6 MB|
Arkansas Health Care Payment Improvement Initiative
In early 2011, Arkansas’s Department of Human Services proposed an initiative they call “Transforming Arkansas Medicaid” (in later documents, “Transforming Arkansas Health Care”). The Arkansas Department of Human Services (which oversees Arkansas Medicaid) has partnered with two large private insurers in the state, Arkansas Blue Cross and Blue Shield and Arkansas QualChoice, to implement this broad payment and delivery system reform initiative.
The alliance, known as the Arkansas Health Care Payment Improvement Initiative, introduced the first phase of reform in October 2012. This model attempts to move away from fee-for-service payments and towards a system that rewards value and outcomes by instituting a shared-savings/shared-risk model based on providers’ average costs for selected episodes of care. To learn more about Arkansas’s Payment Improvement Initiative, visit the Arkansas page on NASHP’s Accountable Care Activity Map.
Arkansas envisions medical homes as a key component of a transformed health care system. Currently, the state is implementing medical homes through CMS’s Comprehensive Primary Care Initiative (CPCi). In the future, the state envisions a voluntary program for interested practices, with plans to grow to include most, if not all, practices in the state.
In April 2013, Arkansas enacted the Health Care Independence Act of 2013, requiring insurers offering plans in the state’s health insurance marketplace to participate in the Health Care Payment Improvement Initiative by supporting medical homes and sharing clinical data with providers.
Arkansas is one of six states selected in February 2013 by the Centers for Medicare and Medicaid Innovation (CMMI) to receive a State Innovation Model (SIM) Model Testing Award. Arkansas received $42 million to implement and test its State Health Care Innovation Plan, which builds on the state’s Health Care Payment Improvement Initiative and emphasizes development of medical homes and health homes in the state.
- Arkansas is one of seven markets participating in CMS’s Comprehensive Primary Care Initiative (CPCi). In this multi-payer initiative, Medicare is collaborating with public and private insurers in the selected states and regions with the goal of strengthening primary care. In Arkansas, CPCi launched in October 2012, bringing together four payers, as well as 69 participating primary care practices with 275 providers across the state.
- Arkansas has received a planning grant from the Centers for Medicare & Medicaid Services (CMS) to develop a state plan amendment to implement Section 2703 of the Affordable Care Act (ACA), establishing health homes for Medicaid enrollees with chronic conditions. For more information on the Arkansas’s application, visit the state’s archive for their health homes planning initiative. To learn more about Section 2703 Health Homes, visit the CMS Health Homes webpage.
Last Updated: April 2014
Arkansas Health Care Payment Improvement Initiative: Arkansas has received input on their payment and delivery system transformation initiative from Arkansans via meetings with key stakeholders, workgroups, webinars and town hall meetings. Project staff have met with a wide range of stakeholders, including:
The state Department of Human Services partnered with Arkansas Medicaid and two large private payers, Arkansas Blue Cross and Blue Shield and Arkansas QualChoice, to form the Arkansas Care Payment Improvement Initiative. This group worked with providers, health administrators, patients and advocacy groups to design the initiative.
For more information, visit the state’s archive for this initiative.
|Defining & Recognizing a Medical Home||
Arkansas Health Care Payment Improvement Initiative: The Payment Improvement Initiative defines medical homes as “a doctor or care team that takes responsibility for the overall health of a patient.”
Comprehensive Primary Care Initiative (CPCi): Practices were selected for participation in CPCi through a competitive application process. Under CMS’s Comprehensive Primary Care Initiative, practices are not required to attain formal PCMH recognition; however, formal PCMH recognition through NCQA, AAHCC, the Joint Commission, URAC, or a state-based recognition program was viewed favorably in practice selection. Additional criteria included:
|Aligning Reimbursement & Purchasing||
Comprehensive Primary Care Initiative (CPCi): This four-year multi-payer initiative, launched in October 2012, includes five payers in the Arkansas market: Medicare, Arkansas Medicaid, Arkansas Blue Cross and Blue Shield, Humana, and Qual Choice of Arkansas.
Medicare pays selected practices a per-beneficiary per-month (PBPM) risk-adjusted care management fee which ranges from $8 to $40. CMS has indicated that it expects care management fees to average $20 PBPM during the first two years of the initiative. In Years 3 and 4, care management fees will average $15 PBPM. Medicare will also introduce a shared savings component beginning in Year 2, calculated at the market level.
The CPCi solicitation for payers indicates that participating payers (non-Medicare) are expected to follow a similar framework, paying per-member per-month (PMPM) care management fees to participating practices on top of fee-for-service and incorporating a shared savings component. Payment amounts will be negotiated individually with participating practices to comply with anti-trust laws.
|Click for the Publication||302.68 KB|
|Click for the Publication||358.64 KB|