Just last week we covered the likely effects of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) not only on Medicare, but the U.S. health care delivery system as a whole. My colleague Monica E. Oss wrote about Medicare as the last frontier in moving from paying for volume to paying for value (see MACRA: The Big Picture). MACRA demonstrates that paying for value is an evolution (or revolution) in the making.
And having just completed our national survey of state Medicaid health plan contracts, I am inclined to agree. The finding that surprised me? The number of state Medicaid plans that are both contracting with MCOs on an at-risk, capitated basis and requiring those MCOs to reimburse provider organizations using alternative payment methodologies, or APMs.
What are APMs? Alternative payment methodologies (APMs) is an umbrella term used to describe payment models that focus on quality, cost of care, or both rather than utilizing pay-for-volume or fee-for-service payment models. Within APMs there are two main types of payments. First, pay-for-performance (P4P) – a payment system that offers financial rewards or penalties on top of existing fee-for-service payments for meeting or failing to specific performance measures. Second, value-based payments (VBP) – payments that are linked to the cost of care, usually with concomitant quality measure requirements.
Our survey found that out of the 34 states with at-risk Medicaid managed care organizations (MCOs), 16 states (42%) are requiring MCOs to reimburse provider organizations using APMs and another four are planning to do so in the future. For more see State-By-State Analysis Of Medicaid MCO Requirements For Provider Alternative Payment Reimbursement.
Why does this matter? We have written before about how health plans are moving to new network configurations – more provider partnerships with gain-sharing (see Four Keys To Success With MCO Contracting and Medicaid Episodes Of Care & Other Weird Arrangements), the creation of centers of excellence (see Pennsylvania Medicaid Selects 20 Centers Of Excellence For Opioid Treatment and Magellan’s Shift To Gainsharing), and narrow networks (see Narrow Health Plan Networks: Really Less Choice? and 41% Of Health Plans Sold Through The Health Insurance Marketplace Have Narrow Networks). Our new findings demonstrate a significant change in provider reimbursement, even if they are still being implemented in a patchwork fashion.
As always, when it comes to Medicaid, the state requirements for APMs vary. Each state has their own definition for APMs, measures MCO’s progress in moving to APMs differently, and place different requirements on the MCO. For example, in Michigan, MCOs must increase the number of APMs, but the specific amount of payments is not specified. And MCOs and provider organizations can implement any number of alternative payment models from payment for new services that promote more coordinated and appropriate care to limited capitation. Other states, such as Rhode Island, have given more concrete requirements. Rhode Island requires that 30% of payments are moved to value-based payments by 2017 and 80% by 2021 and that a certain percentage of payments be made through the state’s Accountable Entities.
What does this mean? This is another step in the road toward moving provider organizations away from pay-for-volume reimbursement scenarios and toward value-based reimbursement and population health management. Now is the time for provider organizations to start preparing to implement APMs. To see what is happening in your state, check out our new OPEN MINDS Market Intelligence Report, State-By-State Analysis Of Medicaid MCO Requirements For Provider Alternative Payment Reimbursement. For each state, we have outlined whether the state has capitated, at-risk MCOs; whether APMs are included in the MCO’s contract; the specific requirements; and how states define APMs.
For more on best practice population health management, check out these recent OPEN MINDS webinars:
- Key Interoperability Approaches For Success With Value-Based Payment Models,
- Optimizing Your Strategy Through Collaboration: Building Systems That Work Through Partnerships,
- Must-Have Technology Solutions For Competitive Population Health Management: Optimizing Behavioral Health For Better Plan Performance & Patient Health (Executive Web Briefing Recording)
- Assess, Extend & Grow: Key Functions Your Information Systems Need To Succeed In Managing Multiple Risk-Based Contracts
And for even more, don’t miss Brian Wheelan, Chief Strategy Officer & Executive Vice President, Beacon Health Options during his keynote, Partnering With Provider Organizations: How To Make Risk-Based Contracting Work on February 16, 2017 at The OPEN MINDS Performance Management Institute.