40+ States Have A Value-Based Reimbursement Adoption Strategy

By Jacqueline Belliveau

– Over 40 states have a plan for value-based reimbursement adoption and only seven states have engaged in little to no activities relating to value-based healthcare payment reform, according to a new Change Healthcare report.

The report showed that states are starting to support the transition away from fee-for-service after Medicare took the lead with value-based reimbursement adoption. CMS aims to link 90 percent of Medicare fee-for-service payments to value by 2018 and 50 percent of those payments to alternative payment models by the same time.

While the federal healthcare program emphasizes value-based reimbursement, researchers pointed out that states can play a major role in the adoption process. States control Medicaid programs, which provide coverage for about 20 percent of covered lives versus just 14 percent for Medicare.

States also have authority in regional healthcare markets. About one-half of covered lives are enrolled in employer-based plans.

Additionally, recent federal health policies expanded state authority to require Medicaid Managed Care Organizations to transition to value-based reimbursement.

READ MORE: Understanding the Value-Based Reimbursement Model Landscape

Two CMS programs also support states with the shift away from fee-for-service. State Innovation Model (SIM) grants and Delivery System Reform Incentive Program (DSRIP) for Medicaid provide funds for states implementing value-based reimbursement programs.

State authority and supporting health policies spurred states to establish value-based reimbursement models in their Medicaid programs and private payer marketplaces. Six states have implemented “well-developed” value-based reimbursement strategies for four or more years, researchers reported.

Another 23 states have operated value-based reimbursement initiatives for two or more years and 10 states are in the early stages of developing a strategy.

In addition, 23 states set value-based reimbursement goals or mandates that payers and providers agreed to meet.

To achieve value-based reimbursement goals, states are mainly turning to accountable care organizations (ACOs) and bundled payment models. Seventeen states manage or are considering adoption of ACOs or ACO-like entities. Twelve states have or plan to adopt bundled payment models.

READ MORE: Best Practices for Value-Based Purchasing Implementation

The analysis revealed that most states are engaging in value-based reimbursement adoption efforts. But researchers highlighted the innovative strategies of five states: Arkansas, Colorado, Minnesota, Tennessee, and Washington.

Arkansas Health Care Payment Improvement Initiative

CMS granted Arkansas $42 million in 2012 under the SIM program to develop a value-based Medicaid payment initiative. Using the funds, the state developed the Arkansas Health Care Payment Improvement Initiative.

The initiative contains two strategies. First, the state aims to implement a medical home model for care delivery transformations. Second, the initiative aims to establish episode-based care delivery.

The episode-based care delivery strategy involves managing acute and chronic conditions by assigning a Principal Accountable Provider for each care episode. The state currently has six surgical and two behavioral health bundles to support the episode-based care delivery strategy. Officials plan to offer four more bundled by 2018.

Researchers also noted that both strategies are multi-payer efforts despite starting as a Medicaid payment reform initiative. The Arkansas Medicaid program partnered with the state’s largest private health plans, Arkansas Blue Cross Blue Shield and QualChoice of Arkansas.

READ MORE: How Value-Based Reimbursement Affects Physician Productivity

Looking forward, Arkansas intends to build on the value-based reimbursement initiative by reducing costs and improving outcomes for the long-term services and support population. The state is considering using ACO-like entities called Coordinated Care Organizations.

Colorado’s Regional Care Collaborative Organizations, Multi-Payer Collaborative

Colorado operates one of the oldest Medicaid ACO programs. The state established Regional Care Collaborative Organizations (RCCOs) in 2011.

RCCOs receive per-member per-month reimbursements to manage care for Medicaid enrollees on top of fee-for-service Medicaid reimbursement. The payment structure for the ACO-like entity also contains a quality performance incentive component, which is paid annually.

Building on RCCO efforts, Colorado established the Multi-Payer Collaborative. Ten public and private payers in the state joined the initiative. The payers agreed to use common measures sets and have over 80 percent of state residents under value-based reimbursement programs for integrated behavioral and physical health by 2019.

The initiative aims to pay providers using a care coordination payment and pay-for-performance bonuses.

CMS supported the Multi-Payer Collaborative in 2014, granting the state $65 million through the SIM program.

Colorado also plans to add Medicare, the Veteran’s Administration, and TriCare to the initiative. Officials also expressed interest in engaging the Colorado Business Group on Health, which represents 17 self-funds organizations in the state.

Minnesota’s bundled payment efforts, Integrated Health Partnership

Minnesota led the states with value-based reimbursement adoption by developing a bundled payment model program in 2008. The 2008 Health Reform Law directed the state health department to create “basket of care” models, which resembled bundled payments.

The state established seven baskets of care for chronic conditions and surgical procedures.

By 2010, Minnesota policymakers mandated the health department to implement delivery system reform under the Integrated Health Partnership demonstration. The demonstration is a shared risk Medicaid ACO program.

Using a $45 million SIM grant from CMS, the state plans to build on the Integrated Health Partnership model, which comprises 21 providers serving 465,000 Medicaid beneficiaries. The funds will help the state expand the model to other payers, as well as invest in an information-shared platform, data analytics resources for providers, and technical assistance for value-based reimbursement.

Additionally, Minnesota plans to use about 15 percent of the grant to create up to 15 Accountable Communities of Health. The entities aim to improve health outcomes through care coordination, partnerships between community and clinical organizations, and social determinants of health efforts.

Tennessee’s bundled payment State Innovation Model

CMS gave Tennessee a $65 million SIM grant in 2013 to implement a value-based reimbursement initiative centered on episodes of care.

Under the SIM, the state mandated all contracted Medicaid and employee health plans to participate in a three-pronged value-based reimbursement initiative. First, the plans had to engage in primary care transformations by creating patient-centered medical homes. The plans also had to use a web-based care coordination tool and the state Medicaid’s “HealthLink” care coordination model for beneficiaries with significant behavioral health needs.

Second, Tennessee required the plans to implement bundled payments for acute and specialist care. The bundled payments are retrospective with a quality and cost performance adjustment.

However, the state modified the bundled payment component after stakeholders voiced concerns about the financial risk on providers. The model is now a rewards-only program for plans in the commercial market, whereas state Medicaid plans include penalties.

Thirds, plans had to integrate value-based reimbursement into the long-term services and supports setting.

Tennessee aims to transition all Medicaid and employee benefit plans to the SIM initiative by 2017.

Private payers are also following the state’s lead and creating their own bundled payment programs.

The Washington Way, Accountable Care Program

Under a 2014 SIM grant, Washington established its state innovation plan, “The Washington Way.” The plan aims to pay out 80 percent of state-financed healthcare payments under value-based reimbursement models by 2021. The payments include reimbursements under the state Medicaid plan, Apple Health, and state employee health plans, which cover two million residents altogether.

Washington intends to achieve its value-based reimbursement adoption goal using a primary care initiative that shifts payments in the primary care space to prospective per-member per-month reimbursements that are adjusted for care quality.

The state also established the Accountable Care Program. The program provides integrated care for state employees.

In 2017, the Accountable Care Program created a bundled payment model for total joint replacements.

In addition, the Washington Way pushes private payers to engage in value-based reimbursement adoption. The plan intends to tie at least one-half of healthcare payments made under commercial health plans to value-based reimbursement by 2021.

The state intends to accomplish its private payer goal through the Public/Private Transformation Action Strategy. Under the strategy, commercial stakeholders will commit in writing to implement the strategy.

By 2019, the state hopes to have written commitments from companies that account for about 60 percent of the state’s healthcare market share.

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