Lessons From State Medicaid Agency Efforts on Population-Based Payments
Healthcare executives from three states — Colorado, Massachusetts, and Pennsylvania — recently shared their early experiences designing and implementing population-based payment models for Medicaid.
Speaking during a Dec. 6 Center for Health Care Strategies (CHCS) webinar, supported by Arnold Ventures, Rob Houston, director of delivery system and payment reform at CHCS, set the stage by giving the definition his organization uses when researching this topic. A population-based payment, he said, is an upfront prospective value-based payment model that includes provider accountability for both quality and cost of care, and is based on the number of patients a provider serves as opposed to the number of services a provider performs. “It really is moving away from the traditional fee-for-service architecture. We also have acknowledged hybrid population-based payments, which are VBP models where providers are reimbursed through a mixture of the existing fee-for-service payment model and a population-based payment.”
Why are population-based payments important? “Well, quite simply, population-based payments are the end state of value-based payment reform,” Houston said. “If you look at the Health Care Payment Learning and Action Network’s framework, category four is a population-based payment. There is no category five. This is the end of the road. Back when the ACA was being rolled out and implemented 10 to 12 years ago, this was the vision for what was going to be value-based payment. The reason for that is it really maximizes incentives to move away from volume-based, fee-for-service architecture. Population-based payments offer the greatest opportunity to achieve elusive healthcare goals such as improving costs, quality, health equity, patient and provider experience and population health.”
Primary Care Focus in Colorado
Trevor Abeyta is the payment reform section manager at the Colorado Department of Health Care Policy and Financing, where he leads the state Medicaid agency’s strategy, design, implementation, and operations of value-based payments. He described Colorado's Alternative Payment Model 2 (APM 2), the state’s primary care partial capitation model, which began in January 2022.
The program is currently voluntary in Colorado and is covering about 20 percent of Medicaid members through the program. APM 2 has two specific payment components. The first is partial capitation — a per member, per month payment for a defined set of services, which are mainly primary care services like evaluation and management codes. The primary care provider can choose to earn anywhere from between zero and 100 percent of their revenue prospectively as that partial capitation payment, he explained. “The reason we did a partial capitation is because we recognize that not all providers in Colorado are ready for a full-blown capitation payment or a prospective payment,” Abeyta said. “We wanted to give flexibility to providers to meet them where they're at with this program. We believe that the APM 2 program in Colorado can provide consistent and stable revenue to primary care providers and it's going to allow them to invest in innovations such as team-based care that generally are not reimbursable through fee for service.”
The second payment component is upside-only shared savings through chronic condition episodes of care. “When we looked at our total medical spending, 83 percent of our total medical spend is spent on a patient with one or more chronic conditions in Colorado Medicaid, so there's a big opportunity for savings with a lot of avoidable spending,” Abeyta said. The goal of the upside-only chronic condition episodes is to increase investment above and beyond fee-for-service payment in primary care to create a stable system of primary care in Colorado for Medicaid members.
“Right now, we have a legislative request to increase what is being paid through that partial capitation payment by 16 percent to match our rates in Colorado Medicaid to the Medicare program currently, so it's a pretty big rate increase for providers who are joining the APM 2 program,” he said. “The other part of that legislative request is to enroll all primary care providers in Colorado into the APM 2 program beginning Jan. 1, 2024. Our model is new and we do not have any results to share yet, with it being near the end of the first performance period. We are really looking forward to getting our first results and learning how we can improve the program.”
Accountable Care Partnerships in Massachusetts
Martha Farlow, deputy director for policy at MassHealth in Massachusetts, has led the development of MassHealth's Primary Care Payment Reform strategy, including efforts to move primary care away from fee-for-service incentives. She spoke about the Massachusetts Accountable Care Partnership (ACP) plans, which are partnerships between a Medicaid managed care organization and a provider organization.
“We introduced our ACO models for the first time in 2018, which marked a really large shift in the way we think about care and value-based payment and quality and cost coming together,” Farlow said. There are about 725,000 members currently enrolled in 13 different ACP plans. “These plans run the gamut in terms of the providers that make them up. We've got some hospital-based ACPs; we've got some community primary care base ACPs. Some are large, some are statewide. We also have some more local and regional ones,” she added. “What makes these exciting is this partnership between the plan and the provider, where they're holding joint accountability for health outcomes, lower costs and improved member experience.”
Farlow described their pioneering work on risk adjustment. “We account for not just medical but social risk, and all of our capitation rates are adjusted based on social risk, which includes a factor that we call ‘neighborhood stress score,’ as well as adjustments for homelessness and for living in a rural county.”
The program has been running for five years, but the assessment aspect has been challenging, partly due to the impact of the pandemic. The Commonwealth had some promising early results in 2018. It saw increased connection to primary care — primary care visits went up from 2018 to 2019. It was 12 percent higher for patients in ACOs than for those who are not in ACOs. There was also improvement in avoidable readmissions. “Across the board, our clinical quality scores were high and rising between 2018 and 2019,” Farlow explained. “We have 22 quality measures that we're tracking across our program and also implemented some exciting programs like our community partners program in the community, as well as flexible services where we paid for housing and nutrition supports for members, that I think really helped our ACPs to grow and blossom to what they what they are, what they have become.”
MassHealth did see a decrease in cost in 2020, but that is likely more attributable to overall decreases in utilization across the country than because of the specific ACP program. “We are still working through how we think about those results,” she said, “and looking forward to hopefully things normalizing a little bit more in the future to help us evaluate better.”
Work on Rural Health Model in Pennsylvania
Janice Walters is the chief operating officer at the Pennsylvania Rural Health Redesign Center, where she has been leading the efforts on the Pennsylvania Rural Health Model since 2018. In her current role, she is responsible for the model’s overall implementation including recruitment of stakeholders, methodology development, transformation, planning and oversight of technical partners.
“We started with a hospital-based program, because the problem that we were looking to address is to provide an alternative solution for rural hospitals,” Walters said. “We have rural hospitals that are in crisis. So many weeks there are news article being published about rural hospitals that are at risk of closure. We were fortunate enough to be given the opportunity to test an all-payer model in cooperation with the Centers for Medicare and Medicaid Innovation.”
Pennsylvania is testing a seven-year program that is seeking to achieve three things: One, increase the financial stability to rural hospitals that choose to participate; two, improve population health results within the rural communities; and three, reduce the total cost of care over time.
The program currently has 18 participant hospitals across the Commonwealth. Residing in those communities are about 1.3 million Pennsylvanians, of which about 235,000 are Medicaid patients, “but because of the all-payer nature of the program, we estimate that we're impacting about 1.3 million Pennsylvanians,” she said.
The program started with a hospital global budget to help stabilize the financial position of the hospitals. “We also have a set of outcome measures that we've negotiated in cooperation with CMMI.” Walters said work of this nature is hard enough to implement absent a pandemic, “but throwing a global pandemic on top of an advanced payment arrangement certainly does create additional challenges.”
But they are far enough in their program that they are able to see that from a health outcomes perspective, they are meeting their measures as they measure themselves against other rural populations across the state. “Our quality metrics are either better than or consistent with the trends that we're seeing across the country specific to rural populations,” she said. “Certainly, our hospitals felt participation in this program helped stabilize them in the midst of the COVID pandemic,” she said. “Our hospitals have stated that they feel that for the first time in their healthcare careers, they have felt that it brought the hospital to the table as a partner as it related to improving the population health in the communities they serve.”
The program’s focus now is on a path forward. “Our program formally goes through the end of 2024 with a formal transition period,” Walters said. “We're looking to advance the program because our participant hospitals have come to rely on it. And we certainly hear that loud and clear through the formal evaluation process that CMMI has engaged NORC to do.”
