Nov. 17, Dear Mr. Slavitt:

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1 Nov. 17, 2015 Mr. Andrew Slavitt Acting Administrator Centers for Medicare and Medicaid Services U.S. Department of Health and Human Services 200 Independence Avenue, S.W. Washington, DC Re: NAMD Response to CMS RFI Implementation of the Merit-based Incentive Payment System, Promotion of Alternative Payment Models (APMs), and Incentive Payments for Participation in Eligible Alternative Payment Models (CMS-3321-NC) Dear Mr. Slavitt: On behalf of the nation s Medicaid Directors, we appreciate the opportunity to comment on the development of the Medicare provider incentive program under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Medicaid programs are leaders in establishing valuedriven alternative payment models (APMs), and we are pleased to offer insight on the inclusion of Medicaid APMs in the incentive program beginning in The National Association of Medicaid Directors (NAMD) is a bipartisan organization which represents Medicaid Directors in the fifty states, the District of Columbia, and the territories. Medicaid programs are often the largest insurers in a state, with responsibility to provide coverage for the sickest, frailest and most complex and costly patients in the country. To best serve these populations, Medicaid Directors are reorienting the health care system to achieve better care, better health and lower costs. With this movement toward value, APMs are rapidly becoming the payment paradigm in Medicaid with approaches ranging from accountable care organizations and health homes to pay-for-performance and bundled payment models. While these models and other APMs like them are taking hold, we recognize that success can be expanded through multi-payer collaboration and thoughtful alignment. As CMS develops this new provider incentive program, especially the multi-payer component, Medicaid programs can serve as a partner to this work and share our learning to drive effective, thoughtful alignment and achieve success. In particular, NAMD is undertaking a first-of-its- 444 North Capitol Street, Suite 524 Washington, DC Phone:

2 kind analysis to examine value-based purchasing across Medicaid programs. One goal of this report is to understand how state Medicaid strategies align with or differ from activities occurring in Medicare and the commercial insurance market. Most importantly, the report will provide a thorough picture of innovative Medicaid payment methodologies (i.e., pay for performance, global payments, bundled payments, shared savings and risk), payment components of key delivery system reforms (i.e., patient centered medical homes and health homes), and other value-based purchasing strategies in Medicaid (i.e., health plan assignments based on quality scores). Due to the prominence of managed care delivery models, the analysis will also explore state efforts with managed care organizations (MCOs) to institute value-based purchasing arrangements. Finally, it will examine overarching Medicaid goals and strategies for the move towards value-based purchasing. This report will be released early in 2016, and we believe the study s findings will inform CMS inclusion of Medicaid APMs in the multi-payer component of this incentive program. We welcome the opportunity to brief CMS on our findings at the earliest point possible in our process. In addition to this forthcoming analysis, there are a few key considerations that CMS should take into account to maximize the success of this provider incentive program. These are unique issues to Medicaid, which should be built into the framework for rewarding provider participation in multi-payer APMs. Specifically, CMS should: Recognize fundamental differences between Medicaid and Medicare, but promote bidirectional alignment in APMs where possible. There are fundamental enrollee and service delivery differences between Medicare and Medicaid, which affect the design and implementation of APMs. For example, unlike Medicare, Medicaid is responsible for the majority of long-term services and supports and is the nation s largest public payer of behavioral health care. At the same time, there is significant opportunity for thoughtful alignment across payers, especially around models that impact the Medicare-Medicaid dually eligible population. Such alignment will incentivize providers to implement innovations that improve care and reduce costs, without which providers may struggle to implement multiple models and fail to realize success. However, this alignment must be bi-directional. In other words, Medicare should be nimble enough to align with Medicaid and commercial APMs where appropriate. Further, in conjunction with the new statutory requirements, we call on CMS officials to identify the specific facets of Medicare that are ripe for cross-payer modularity. Account for state-to-state variation between Medicaid APMs. Medicaid programs differ from one another due to variation in covered populations, political culture, budget parameters, administrative infrastructures, stakeholders, provider capacity, and a host of other factors. Successful APMs are structured in the context of these state-specific dynamics to meet the needs of the population. For example, Medicaid health home models differ significantly across the country in order to successfully improve health outcomes and reduce costs. States incorporate different provider types and set up unique payment structures in the context of their program. 2

3 Further, the outcome goals for these models are based on the needs of each state s target population and these often evolve over time. Massachusetts Medicaid, for instance, is in the midst of developing a health home model for those with significant behavioral health needs. To effectively serve the target population in the context of their program, Massachusetts is considering having a Community Mental Health Center or other behavioral health provider serve as the health home. On the other hand, a different state Medicaid program may find it appropriate to designate traditional primary care provider as the health home. This type of variation extends across other Medicaid APMs, such as ACOs, pay-forperformance programs, and bundled payment models. CMS should build a multi-payer incentive program that is flexible enough to account of these fundamental differences in approach. Recognize Medicaid APMs are implemented through a variety of delivery models, including managed care and other risk-based approaches. Increasingly, Medicaid programs are using risk-based managed care and other innovative risk-based models to serve program beneficiaries, including those with disabilities and complex health care needs. While fee-forservice still dominates in Medicare, managed care is the primary mode of delivery in Medicaid. As a result, states are working with plans as a key partner in reform, and holding them accountable to drive value-based purchasing. Medicaid Directors may broadly direct plans to implement value-based purchasing approaches, or may require plans to implement statedefined APMs. In addition, some Medicaid programs are using other risk-based delivery models, including ACOs and community-based organizations to serve beneficiaries. States are also partnering with these entities to encourage or require alternative payment models. Oregon offers one example of the vision and initiatives underway in states. Many of Oregon s coordinated care organizations (CCOs), which deliver care to the state s Medicaid beneficiaries, have implemented risk-based capitation APMs for their providers. Examples include: AllCare CCO has created a per member per month payment for all adult and pediatric primary care providers, which uses graduated risk tiers calculated for each provider based on patient acuity. Primary Health of Josephine County has piloted an APM for a maternal medical home whereby the CCO pays the clinic a per member per month allotment for all patients, using a risk-stratification model to allow higher payments for high-risk patients. PacificSource Community Solutions CCO, Central Oregon Region combines partial capitation and shared savings for all providers as well as inpatient and outpatient hospital services except for behavioral health. 3

4 It is vital that the multi-payer component of this CMS incentive program reflects the full scope of APMs carried out through various delivery models, including in managed care, fee-forservice Medicaid, and in other risk-based approaches. Ensure the guideposts for qualifying Medicaid APMs are flexible enough to account for the ongoing evolution of innovative payment models. The nature of innovation is such that there is ongoing evolution of models and approaches. While a range of APMs exist today, such as ACOs, pay-for-performance programs, bundled payment, and shared savings models, these are constantly adapting to be more effective, and new models will emerge that we cannot conceive of today. In this climate of innovation, the framework that CMS develops should encourage provider engagement in Medicaid APMs that continue to emerge between now and 2021, and beyond. Work with its federal partners to support the use of Medicaid APMs for FQHCs/RHCs and incentivize providers in these settings to engage in APMs. While FQHCs/RHCs are a vital element of the health care delivery system, the prospective payment system for FQHCs/RHCs and the disconnect between CMS and the Health Resources and Services Administration limit Medicaid s ability to drive value in this care delivery setting. A few states, such as Oregon and Washington, have moved forward incremental innovations in spite of these challenges and complexity, demonstrating the opportunity to expand value-based purchasing with these providers. But to maximize the impact of this new provider incentive program, key barriers in APMs for FQHCs/RHCs should be addressed by CMS and its federal partners. Further, this program should encourage all providers, including those practicing in FQHCs/RHCs, to engage in APMs. Identify ways to support the infrastructure for reform, including through the Innovation Accelerator Program (IAP). States ability to stand up successful APMs, and provider readiness to engage in them, requires a significant investment of time and resources. While MACRA makes available technical assistance for certain practices under this program, CMS should ensure adequate support is available across the health care system to promote the success of value-based payment models. Specifically, there is a need to support the infrastructure for reform at the state level. NAMD s most recent Operations Survey 1 revealed that Directors are standing up an array of large scale systematic reforms, while facing staff shortages and other capacity challenges. One way CMS can provide needed support to states is by leveraging the IAP to support the design and implementation of APMs. To effectively do this, we encourage CMS to use NAMD s forthcoming value-based purchasing report to help inform the future direction of the IAP. Engage in further exploration of electronic health record (EHR) requirements and potential challenges when applying them in the multi-payer context. Medicaid programs have faced unique challenges in promoting the use of EHRs and health information exchange (HIE) at the 1 4

5 provider level. Overly restrictive federal regulations governing substance use disorder (SUD) health information, 42 CFR Part 2, has hindered the ability of states and providers to leverage EHRs and HIE to support coordinated care for beneficiaries with SUDs. This is a key concern for Medicaid, as the program is increasingly responsible for serving individuals with these conditions. At the same time, there is also a low uptake of EHRs and HIE among key Medicaid providers, including behavioral health and long-term care providers. This challenge has emerged, in large part, because these providers were excluded from the federal EHR incentive program. When considering EHR or HIE requirements for the multi-payer component of this program, CMS should account for these unique issues. Specifically, CMS should partner with SAMHSA to remove regulatory barriers to substance use disorder information exchange and support the engagement of all providers in APMs and HIT, rather than excluding them from incentives altogether. Again, we greatly appreciate the opportunity to help inform your early thinking on the provider incentive program created under MACRA and its focus on multi-payer engagement in APMs beginning in We look forward to the opportunity to share the results of our forthcoming report on Medicaid value-based purchasing and to engage in an ongoing dialogue on this effort to achieve better health, better care, and lower health care costs. Sincerely, Matt Salo Executive Director 5