State Strategies: Value-Based Payment for Medicaid Populations with Complex Care Needs

Taylor E, Dyer M, Bailit M
Publication Year: 2017
Patient Need Addressed: Long-term services and supports
Population Focus: Complex care, Medicaid beneficiaries, Vulnerable/disadvantaged
Demographic Group: Adult
Type of Literature: Grey


Insights Results

Overview of brief

  • Driven to improve care coordination and contain costs by moving away from a volume-based payment model, an increasing number of states are implementing risk-based managed care programs to deliver long-term services and supports (LTSS). As the primary payer for LTSS, state Medicaid programs have a significant interest in ensuring that entities with which they contract deliver high quality and cost-effective care to members
  • This brief examines Medicaid payment reform strategies that states may wish to contemplate for their populations with complex care needs that are receiving LTSS. The brief identifies current payment models for LTSS, observes the role of quality in these models, and describes state levers to advance efforts in value-based purchasing for seniors and individuals with disabilities enrolled in managed care

    Key takeaways/implications

    • Generally, state purchasers and health plans are applying value-based strategies for persons with complex care needs using payment models that are consistent with those implemented for other populations including: 1) Pay-for-performance (P4P) programs; 2) Supplemental per member per month payments; 3) Shared savings/shared risk; and 4) Episode-based payments. Additional details on these payment models are highlighted below
    • At the state level, P4P programs are largely aimed at improving the quality of care in nursing facilities. Tennessee’s Quality Improvement in Long-Term Services and Supports (QuILTSS) program directs P4P payments through Managed Care Organizations (MCOs) to nursing facilities for performance improvement in specified quality domains. P4P programs are relatively easy to design and implement, and are appropriate to encourage entry into value-based contracts. Payers can structure P4P programs to initially reward providers for reporting on specific measures and then for improvement or achievement on those measures
    • Some states are supporting primary care providers that serve a large number of individuals receiving LTSS with supplemental per member per month (PMPM) payments for services traditionally not reimbursed under fee-for-service (e.g., care management, care coordination). This model is value-based when the payment is attached to performance on quality measures or cost targets
    • When contracts with shared savings and shared risk arrangements are implemented, they are generally more appropriate for larger, integrated health organizations with adequate financial reserves;
    • While few payers develop episode-based payment arrangements for LTSS, it is possible to do so, (e.g., for home health agencies for post-acute care or for personal care services)
    • States encounter several challenges for value-based approaches for LTSS including: 1) The LTSS provider system is often made up of many small, independent providers that serve a small number of health plan members. Smaller providers may lack the infrastructure for value-based contracts; 2) The readiness of LTSS providers to enter into value-based contracts is highly variable; 3) The heterogeneity of the population creates small population cohorts and other measurement challenges; and 4) Lack of standardized measures and benchmarks presents hurdles related to tracking quality and holding health plans and providers accountable for performance. However, the National Quality Forum published a report with recommendations aimed at promoting quality measurement for home and community-based services
    • States can support and direct value-based strategies in a number of ways, including supporting entry into value-based contracting for LTSS providers through grants or capacity-building opportunities
    • States can apply the follow levers to promote their value-based purchasing strategies: 1) States can structure their Medicaid MCO contracts that include LTSS and populations with complex care needs to encourage or direct value-based payment models. States can include explicit targets for value-based payments for implementing data-sharing and reporting requirements, and for directing provider contracts. For example, Arizona established value-based payment targets for the state’s Arizona Long Term Care System (ALTCS) plans, and Minnesota requires plans that serve seniors and individuals with disabilities to enter into value-based contracts with primary care, long-term care, and/or behavioral health providers through the state’s Integrated Care System Partnership (ICSP) initiative; 2) States can propose waiver terms that support efforts to promote value-based purchasing for LTSS and include requests for financial support through federal waiver programs like Delivery System Reform Incentive Payment (DSRIP). States can also use waivers to implement their MLTSS programs; and 3) States are using their Dual Eligible Special Needs Plans (D-SNP) and Fully Integrated Dual Eligible Special Needs Plans (FIDE-SNP) contracting authorities to further integrate the financing, delivery and coordination of Medicare and Medicaid services for individuals with dual eligibility, thereby expanding opportunities for value-based payment
    • Overall, states can look to align value-based strategies across programs and consider how to expand current strategies for populations with complex care needs receiving LTSS. States can also consider aligning value-based payment models with national frameworks, such as the healthcare Payment Learning and Action Network (HCP-LAN) or the payment models