Research Finds States Remain Committed to Value-Based Payment Models
Alternative payment programs are now firmly rooted in state-level healthcare policy, as discussions regarding health reform continue in Washington. That’s according to a new national study commissioned by Change Healthcare which finds more than 40 states pursuing value-based payment programs, with 15 multi-payer initiatives across those states.
Much attention has been paid to the federal government’s role in accelerating the shift in healthcare payment from volume to value. For example, when it announced a commitment to tie 90 percent of Medicare payments to value by 2018, and 50percent of payments to alternative payment models by 2018,1 the Centers for Medicare & Medicaid Services (CMS) drove other healthcare stakeholders in the same direction.
Since then, the CMS has introduced numerous value-based programs, and has moved forward implementation of congressionally approved value-based payment initiatives, such as the Protecting Access to Medicare Act of 2014 (PAMA) and the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).
But CMS’s role in the payment reform landscape has overshadowed the importance and momentum of other work occurring at the state level. This report seeks to shed light on this other work through an examination of state-level value-based payment initiatives underway across America.
While Medicare remains an influential player in the healthcare system, states retain significant authority over their regional healthcare market and can play a critical role in moving healthcare toward value. Indeed, Medicaid now provides coverage for 20 percent of the covered lives in the U.S., behind employer-based coverage at 50 percent but ahead of Medicare at an estimated 14 percent.2 In addition, individual states have authority over both Medicaid operations and private insurance markets within their jurisdiction.
Not surprisingly, a review of state value-based payment reform initiatives demonstrates significant variation in approach, due in part to factors motivating the shift to value. State payment reform has historically been influenced by factors including state-focused CMS initiatives, state budget challenges, and state policymakers’ interest in healthcare innovation.
“This report clearly shows that most of the country is committed to value-based payment as a key component of health reform in order to bend the cost curve and ultimately achieve the Triple Aim,” said Carolyn Wukitch, senior vice president & general manager, Network and Financial Management, Change Healthcare. “To scale these complex payment arrangements, payers and providers will need to rely even more on their healthcare information partners to help them model, automate, and analyze their programs to ensure cost savings, appropriate care, and fast, accurate payment.”
Key findings of the 50-state review include:
- More than 40 states have a state-initiated plan or strategy to move toward value-based payment, and almost half of those initiatives are multi-payer in scope.
- Well-developed, value-based payment strategies have been implemented in six states for four years or longer, many with federal support; 23 states have initiatives that are two years or more in implementation; and 10 states are in the early stages of development.
- As with the federal government, 23 states have established value-based payment targets or mandates that payers and providers agree to achieve.
- Seventeen states have adopted or are considering adoption of ACOs or ACO-like entities to help manage costs and deliver better care, and 12 states have adopted or are considering adoption of episodes of care programs.
- Many states have used value-based payment reform to engage with healthcare stakeholders in the redesign of the state healthcare system, identifying unique and innovative strategies that work for their state healthcare market.
- Only seven states have little to no activity around value-based payment.
Overall, five states stand out for the breadth of their initiatives, their embrace of payment models that involve shared risk, and their willingness to test innovative strategies. These states include but are not limited to:
- Arkansas, which has a multi-payer EOC program in place for five years
- Colorado, which has a well-developed Medicaid ACO program, and is working with payers and large employers to implement value-based payment
- Minnesota, which was an early adopter of EOC and has now moved into ACOs
- Tennessee, which is on pace to roll out 76 episodes of care in its Medicaid and state employee programs by 2019
- Washington, which has committed to tying 80 percent of its state-financed health payments to value by 2021 and is seeking similar commitments from commercial payers in the state
The full report is available for download at StateVBRstudy.com.
1. Centers for Medicare & Medicaid Services. Better Care. Smarter Spending. Healthier People: Paying Providers for Value, Not Volume. January 1, 2015. Available: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-01-26-3.html.
2. Health Insurance Coverage of the Total Population, Kaiser Family Foundation, 2015. Available: http://www.kff.org/other/state-indicator/ total-population/?dataView=0¤tTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D. Accessed 7/13/2017.
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