Payment and Delivery System Reform through Medicaid

Anya Rader Wallack, Ph.D.

January 23, 2014

What is everyone trying to affect?

Value Quality Cost

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The “Value Equation”

What is cost?

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Cost Price per Unit of Service

Use of Services

• Provider payment • Rate of growth in payments

• Covered services • Eligibility • Utilization

In Medicaid

What is quality?

Good clinical care – Measures of process – Measures of outcomes – Avoidance of unnecessary care

Good patient experience – Patient satisfaction – Patient “engagement” – Patient-directed services

Good health – Prevention of illness – Management of chronic conditions – Well-functioning people

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These are not mutually exclusive

How can Medicaid affect cost and quality?

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Value Quality Cost

1. Measure both 2. Create accountability for both

(for providers, government and enrollees)

3. Expand unit of payment

Example: episode/bundled payment for total joint replacement

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CURRENT PAYMENT • Many services, no accountability:

• Primary care physician • Orthopedic physician • Orthopedic surgeon • Hospital services • Anesthesiologist • Rehabilitation • Nursing home • Home health

• All services paid for separately • No comprehensive quality

measurement • No financial reward for provider

quality or efficiency (in fact, the opposite)

• No constraint on overall costs

BUNDLED PAYMENT • Scope of services usually

associated with the “episode of care” is included in a bundled payment

• Group of provider agrees to take a lump sum payment for full episode OR shared savings for reduced total costs – financial reward for saving $

• Financial rewards are modulated based on quality measures

• Providers have to work across organizations to perform better

Examples of Medicaid “value-based purchasing” from states

Pay-for-performance (many states)

Patient-centered medical homes or advanced primary care medical homes (many states)

Bundled payments for episodes of care (AR and VT)

Traditional Medicaid managed care (many states) – contracts with health plans

Shared savings accountable care programs (seven states) – contracts with provider-based accountable care organizations

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The federal government is supporting similar models

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Value based payment to hospitals

Enhanced payments for comprehensive primary care

Bundled payments

Shared savings accountable care

Pioneer accountable care

More provider risk and accountability

Less provider risk and accountability