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Medicaid’s reform will lead to greater care coordination, a focus on reducing costs and more possibilities of risk and preferred provider networks. What opportunities lie ahead?

By: Lisa Remington, President Remington Health Strategy Group 

The future of Medicaid will revolve around changing the way care it is paid for. "It's all about a holistic approach to the healthcare system -- breaking down the silos between physical health, mental health, environmental health, and social determinants of health," said Matt Salo, executive director of the National Association of Medicaid Directors.

Currently, 75 million beneficiaries are served by Medicaid.

  • Thirty-nine states have incorporated MCOs into their Medicaid programs.
  • Two-thirds of all beneficiaries are members of comprehensive MCOs and
  • In 28 states, managed care accounts for 75 percent or more of beneficiaries and over 40 percent of total Medicaid spending.

Medicaid Managed Care

In an issue brief titled: Medicaid Payment and Delivery Reform Insights from Managed Care Plan Leaders in Medicaid Expansion States, leaders of Managed Care Organizations (MCOs) provide insight into the future of Medicaid, managed care organizations and value-based advancement.

  • Two-thirds of Medicaid’s nearly 75 million beneficiaries are enrolled in managed care organizations.
  • With Medicaid expansion under the ACA requiring plans to rapidly increase capacity to meet the demand for care, managed care plan leaders have focused on identifying high-risk populations and addressing the social determinants of health.
  • Plan leaders are finding needed reforms difficult to achieve when community providers lack experience with alternative payment methods and the infrastructure necessary to manage financial risk.

Most MCO leaders reported that they are either employing value-based purchasing strategies or are in the process of doing so. Their approaches include:

  •   full or partial capitation bonuses linked with performance outcomes.
  •   incentives tied to accountable care that is coordi­nated and high-quality.
  •   bundled payment for episodes of care.
  •  alternative payment models for federally qualified health centers.

Delivery System Reforms

As payment reforms have developed over time, newer, more complex models of care have emerged. These models aim to change both how medical services are paid and how care is delivered in order to improve population health. The Affordable Care Act (ACA) promoted a shift to more integrated care models like Medicaid Accountable Care Organizations (ACOs).

As of January 2018, 11 states are operating Medicaid ACOs and at least another 11 are pursuing them. ACOs can take different shapes, but the core components are: care coordination, value-based payment incentives, provider and community collaboration, quality measurement and accountability, and data sharing and integration. To date, ACOs have tended to limit interventions to an enrolled patient population—e.g., only those patients covered by Medicaid on a particular physician’s patient panel—and focus on high-cost, high-need patients in order to show cost savings in the short term.

“At least 22 states are exploring ways to integrate long-term care services into their Medicaid programs.”

The Centers for Medicare & Medicaid Services (CMS) launched the Accountable Health Communities Model to promote clinical-community collaboration by screening community members for unmet health-related social needs, referring them to appropriate community services, and providing navigation services to those at highest risk. The model also seeks to align clinical and community services to make sure they are responsive to community needs.

Value-Based Purchasing (VBP) Strategies

The four most common VBP approaches in Medicaid are:

  1. Pay-for-performance: provider payments are tied directly to specific indicators of quality or efficiency, including rewards for positive outcomes and/or penalties for not meeting specific metrics;
  2. Clinical episode/bundled payments: provider payments for multiple services are linked to quality outcomes and bundled based on a certain setting, procedure, or condition;
  3. Shared savings/risk: providers are paid retrospectively based on cost and quality performance and a portion of any savings achieved for keeping costs below a specified benchmark are passed down; and
  4. Capitation/global payments: providers are paid prospectively on a per member per month basis and can invest in quality improvement to improve efficiency but bear full financial risk for any excess costs.

What are Leaders Thinking About?

Leaders said that implementing payment reform is easier in local health care markets where providers have become accustomed to alternative payment models such as payment bundles and partial capitation, in which providers share the risk of losses as well as the opportunity for gains. Leaders stated that tolerance for risk comes with experience and sophisticated budgetary management capabilities. As a result, they noted that progress in payment innovation will be sensitive to provider experiences as well as the type of service involved. Several noted that they distinguish among their network providers, using alternative payment strategies such as capitation for primary care providers while maintaining fee schedules or episodes of care for specialists. Several also noted that their payment reform strategies were part of their State Innovation Model grants.

Changes Ahead to Integrate Long-Term Care Services into Medicaid Programs

At least 22 states are exploring ways to integrate long-term care services into their Medicaid programs and some states also have begun to integrate long-term care with behavioral health and physical health services.

In Michigan, they are moving forward with a plan to move $2.8 billion Medicaid nursing home and long-term care services programs under private health plan management. Long-term-care services under consideration for managed care contracts include nursing homes, assisted living centers, rehabilitation facilities and various home and community-based programs.

Currently in Michigan, Medicaid contracts with some 450 nursing homes, assisted living facilities, rehabilitation centers and other long-term centers. Overall, state spending on health services in 2017 totaled $18.4 billion.

In 2013, Ohio put dual Medicaid and Medicare enrollees, including some long-term care patients, into managed care plans under a pilot program called MyCare Ohio.  Ohio's Gov. John Kasich is pushing hard to move Medicaid members who need long-term services into managed care plans. He has said he believes coordinated care can reduce costs and increase services.

In a survey by MetLife Mature Market Institute, data shows that care costs Medicaid more than $250 a day in a nursing home, $113 per day for assisted living, and $80 per day for adult day care or home health services.

Key Takeaways:

  1. Medicaid plans will be developing networks of nursing homes and home and community-based care providers.
  2. Quality metric development will monitor provider performance and consumer experience.
  3. A goal of Medicaid managed care is to reduce nursing home usage and a more appropriate balance with home and community-based programs.
  4. Future models: Alternative care models that move away from a high number of office-based, face-to-face encounters for all members and toward a strategy that makes better use of alternative communication strategies.
  5. Care management strategies to include telephone and text consultations coupled with high-touch time such a home visits for members with serious health needs requiring greater integration of health and social services.

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