March 8, 2017


The Road to Value in Health Care : For Medicaid and other programs, state policymakers can learn a lot from new payment models that are evolving. (MARC BERG, MARCH 8, 2017, Governing)

Two evolving approaches in particular are moving to the forefront as policymakers look for alternatives to the traditional and much-maligned fee-for-service system: "capitation," in which a health-care provider receives a fixed, per-person payment covering the broad needs of its patient population, and bundled payments, in which providers are paid for all of the care needed for an individual patient's particular medical condition.

One key lesson for leaders seeking a value-based payment (VBP) model is the importance of communicating a vision for a future operating framework. This should not be a mere top-down vision: Stakeholders will need to be engaged in multiple initiatives across services lines. Looking for synergy rather than yet more fragmentation is key. This begins with early conversations with stakeholders, gathering information concerning best practices, and anticipating challenges, while also engaging community-based organizations and Medicaid member advocacy groups.

New York State provides a prime example of how these conversations can unfold and have impact. During 2015, more than 500 stakeholders participated in 16 subcommittees and clinical advisory groups focused on the move to VPB. Throughout the implementation process, a core group of stakeholders, including managed-care organizations (MCOs), other providers, community-based organizations and patient advocates, met regularly to monitor progress, suggest improvements and new ideas, and ensure that objectives were being met.

A second important lesson is understanding the importance of flexibility when developing a payment framework. States need to decide where to require uniformity and where flexibility and freedom can better realize the long-term vision. Flexibility in the type of arrangements -- capitation versus bundled payments, for example -- can allow providers to focus on areas where they're best suited to provide care and manage risk.

Texas' Medicaid-CHIP program, for example, utilizes various payment methodologies across the 19 MCOs involved in value-based contracts. Generally, the payment structures in these contracts are represented by one of three methods: fee-for service with bonus payments, partial capitation, and shared savings, in which lowering the total cost of care results in reimbursement to providers that achieve that goal. By allowing for various payment structures, Texas has ensured that a greater number of Medicaid providers are able to participate in value-based contracts.

Posted by at March 8, 2017 5:31 AM