State Innovations in Value-Based Care: ACOs and Beyond

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1 Advancing innovations in health care delivery for low-income Americans State Innovations in Value-Based Care: ACOs and Beyond Rachael Matulis, Senior Program Officer National Academy of Medicine Value Incentives & Systems Innovation Collaborative May 18, Center for Health Care Strategies

2 About the Center for Health Care Strategies Non-profit policy center dedicated to improving the health of low-income Americans

3 CHCS Projects Focused on Advancing Delivery System and Payment Reforms Medicaid Accountable Care Organization (ACO) Learning Collaborative State Innovation Model Innovation Accelerator Program (IAP) for Value-Based Payment (VBP) Delivery System Reform Incentive Payment (DSRIP) VBP Roadmaps

4 Alternative Payment Model (APM) Framework Level of financial risk Goal is to shift U.S. health care system toward payment models in Categories 3 and 4. In 2016, 18% of Medicaid payments fell in these categories. Category 1: Fee-for-service payments not link to quality/value Category 2: Fee-for-service payments linked to quality/value (e.g., pay-forperformance) Category 3: Alternative payment models built on fee-forservice payment (e.g., shared savings/risk) Category 4: Population-based payment (e.g. global payments) (e.g., traditional FFS, DRGs) 4 Degree of care, provider integration, and accountability Source: Health Care Payment Learning & Action Network (LAN) APM Framework, available at:

5 What is the Current ACO Market? Rapid expansion across payers Over 25 million covered lives Widespread penetration Over 800 ACOs in the United States Commercial: 17.2 million Medicare: 8.3 million Medicaid: 2.9 million ACO service areas in all 50 states and the District of Columbia 5 Source: Health Affairs: Accountable Care Organizations in 2016: Private And Public-Sector Growth And Dispersion.

6 What Does an ACO Look Like in Medicaid? Medicaid ACO models vary greatly, but we generally see three models: Provider-driven Provider establishes collaborative networks and assumes accountability for cost of care MCO-driven MCOs retain financial risk but implement new payment model and partnerships with providers Regional/Community Partnership-driven Regional/community organizations form care teams with providers and receive payments 6

7 Current Medicaid ACO Landscape CA OR WA NV ID AZ States with active Medicaid ACO programs UT MT WY CO NM ND MN SD WI NE IA IL KS MO OK AR MS TX LA NY MI PA OH IN WV VA KY NC TN SC AL GA FL ME VT NH MA RI CT NJ DE MD DC States pursuing Medicaid ACO programs 7

8 State Example: Minnesota In 2013, MN launched its Medicaid ACO program, Integrated Health Partnerships (IHPs) Key IHP program features include:» Provider-led with two tracks: (1) larger systems providing inpatient and outpatient care; and (2) smaller systems not integrated with a hospital» Shared savings payment arrangement, with upside/downside risk for larger systems and upside only for smaller systems» 21 IHPs oversee care for 465,000 enrollees, approximately 45% of MN Medicaid population Accomplishments: 8» Estimated savings of $156 million compared to trended targets, over first three years; IHPs received 85%+ of dollars at risk for quality

9 State Example: Oregon In 2012, OR launched Coordinated Care Organizations (CCOs), a type of Medicaid ACO Key CCO program features include:» Payer-led organizations with governing boards that include Medicaid members, providers, and local government» Global budgets with a fixed rate of growth to cover physical, oral, behavioral health; flexibility to spend funds on health-related services» 16 CCOs provide care for nearly 1 million enrollees, approximately 90% of OR s Medicaid population Accomplishments: 9» Estimated 23% decrease in emergency department visits; cost growth below national average; 15 of 16 CCOs earned 100% of quality bonuses

10 Future of Medicaid ACOs Version 1.0 Fee-for-service payment models (shared savings or P4P) Physical health only Medicaid only Many quality measures Payment tied to quality reporting / performance on process measures Version 2.0 Capitated or global payments Behavioral health, LTSS, dental, pharmacy, social services Multi-payer Fewer, more aligned quality measures Payment tied to quality outcomes and care coordination metrics 10

11 Other Innovative State Approaches to Advance VBP Medicaid ACOs are just one of many types of delivery system and payment reforms being implemented or planned by states

12 State Example: Tennessee s Health Care Innovation Initiative Primary Care Transformation Patient Centered Medical Homes Tennessee Health Link for Individuals with Serious Mental Illness Episodes of Care Long-Term Services and Supports 20 retrospective episodes of care in place 75 episodes of care designed by 2020 Quality and valueadjusted payments for nursing facilities and home and communitybased services 12 Source: Adapted from

13 What Does the Evidence Tell Us? In general, lack of evidence on payment reform initiatives in Medicaid» Only 17 of 355 payment reform evaluations identified through Duke s Payment Reform Evidence Hub focused on Medicaid However, early evidence indicates that a variety of state VBP initiatives have been successful» Reported improvements in quality and cost performance in both Colorado and Oregon s Medicaid ACO models (McConnell et al, JAMA Internal Medicine, 2017)» 7 percent relative reduction in Oregon s CCO expenditures compared to Washington state, primarily attributable to reductions in inpatient use (McConnell et al, Health Affairs, 2017) 13» Tennessee reported aggregate savings of $6.2 million in 2015 for three episodes of care (perinatal, acute asthma exacerbation, and total joint replacement)

14 State interest in VBP continues to grow, with focus on Implementation of VBP through managed care contracting Integrating long-term services and supports, behavioral health, and social determinants into VBP Alignment with MACRA

15 Visit CHCS.org to Download practical resources to improve the quality and costeffectiveness of Medicaid services Learn about cutting-edge efforts to improve care for Medicaid s highestneed, highest-cost beneficiaries Subscribe to CHCS , blog and social media updates to learn about new programs and resources Follow us on 15

16 Resources McConnell, K. John, Stephanie Renfro, Benjamin KS Chan, Thomas HA Meath, Aaron Mendelson, Deborah Cohen, Jeanette Waxmonsky, Dennis McCarty, Neal Wallace, and Richard C. Lindrooth. "Early Performance in Medicaid Accountable Care Organizations: A Comparison of Oregon and Colorado." JAMA Internal Medicine 177, no. 4 (2017): McConnell, K. John, Stephanie Renfro, Richard C. Lindrooth, Deborah J. Cohen, Oregon's Medicaid Reform And Transition To Global Budgets Were Associated With Reductions In Expenditures Health Affairs 36, no.3 (2017): doi: /hlthaff M. McClellan, R. Richards, and Mark Japinga. Evidence on Payment Reform: Where Are The Gaps? Health Affairs Blog (April 25, 2017). Available at: Oregon Health Authority. Oregon s Health System Transformation: 2015 Mid-Year Report. January 20, Available at: %20Jan% pdf 16