We’ve reported on the adoption of VBR from a number of perspectives. Our February 2019 survey, Where Are We On The Road To Value found that 69% of provider organizations are participating in any type of alternative payment arrangement including pay-for-performance, capitation for specific services, capitation for care coordination, and case rates. The majority—45%—pay-for-performance arrangements.
Our survey of health plans, published in 2019 Trends In Behavioral Health: A Population Health Manager’s Reference Guide On The U.S. Behavioral Health Financing & Delivery System, 2nd Edition found that 93% of health plans are using pay-for-performance, 72% are using shared savings, and 64% are using capitation. And the use of these models has increased overall between 2017 and 2019.
There are many factors driving the increased use of value-based reimbursement. Payers are facing cost pressures and as a result are focusing on driving better value through integrated care. Competition between health plans is creating the need for better synergy with their contracted provider organizations. Finally, the volume of new technologies that allow for new treatment modalities and better administrative functions mean that reimbursement models that leverage these technologies are needed.
As the largest health care payer organization, the Center for Medicare & Medicaid Services (CMS) has set the tone for VBR and their policies are a big driver in the shift. In Medicare, there are 518 Shared Savings accountable care organizations serving 10.9 million beneficiaries (see Shared Savings Program Fast Facts – As of July 1, 2019). There is the expansion of the bundled rate program (see HHS To Launch New Mandatory Bundled Payment Models). There are pending new models for reimbursing primary care (see CMS Announces ‘Primary Cares Initiative’ With Five New Value-Based Models). In Medicaid, there are an increasing number of mandates for Medicaid health plans to use alternative payment methodologies (APMs)–either performance-based or value-based reimbursement models–to reimburse their provider networks.
The state-specific mandates to Medicaid health plans to use APMs in provider reimbursement is the focus of our recent analysis, published in our new report: Medicaid Health Plan Requirements For Provider Alternative Payment Models: The 2019 State-By-State Update. The report looks at which state Medicaid programs require the Medicaid health plans to implement APMs and what that mandate exactly means.
What did we find? The number of states with APM requirements for health plans continues to increase. When we completed the report in 2017 of the 38 states with managed care, 22 required the use of APMs. In 2019, that number has increased to 28 of 40 states with managed care.
The six states that added APMs in the past year and a half include California, Colorado, District of Columbia, Kansas, Louisiana, and Wisconsin. Additionally, there are three states with active plans to add APMs in the next two to three years. Those states include Kentucky, North Carolina, and Virginia.
States with especially notable APM requirements include Washington and New York both of which have value-based roadmaps intended to drive changes in financing in delivery. New York plans to have 80-90% of payments in VBR arrangements by the end of 2020 and Washington plans to have 75% of payment in VBR by the end of 2019 and 90% in 2021. While Arizona, Pennsylvania, and New Mexico do not have requirements to move such a high percentage of payments to APMs in the near term, these states have specific requirements around the inclusion of behavioral health provider organizations in APMs.
At the state level, the implications for provider organizations varies by state like so many market factors. Typically, the mandates are not particularly prescriptive. Health plans are given the opportunity to decide the types of payment arrangements and the types of provider organizations they would like to contract with. Additionally, there is the issue of how the state is “counting” APMs. It can be the number of contracts with APMs, the percent of medical expenditures in APMs, or the number of enrollees who receive a service that is paid for using an APM.
At the macro level, the increase in the number of states offering these arrangements and the increasingly percentage of payments in APMs is indicative of the trend that VBR is reshaping the health and human services landscape. The pressure for VBR is not only coming from the state and government, but also from private sector as health plans work to implement these initiatives with or without a mandate. Provider organizations regardless of the state they operate in need to at minimum begin readying their organization for VBR. For more on this check out these resources:
- The Four-Part Checklist For VBR Success
- VBR @ Scale—Changes Required
- Crawl, Walk, Run To VBR
- Successfully Managing Bundled Rates—The Voice Of Experience
- The New Board Conundrum—Managing Value
- Developing Case Rates? Better Find Your ‘Single Source Of Truth’
- The Five Key Competencies Of Technology & Reporting Infrastructure
- When New Contracts Mean New Technology: 4 Things To Remember
- Why Clinical Guidelines Matter More With Risk-Based Contracting
- Can Success With Value-Based Reimbursement Happen Without Analytics?
For a more in-depth look at state health plan requirements check out our latest Market Intelligence Report: State-By-State Analysis Of Medicaid Health Plan Requirements For Provider Alternative Payment Models: The 2019 Update. The report explores whether or not the state has Medicaid health plans, whether their contract requires the use of APM, the specific requirements related to APMs, and how APMs are defined. It also includes a comparison to APM requirements in 2017.