Catalyst for Payment Reform

Will Medicaid Managed Care States invent next-gen payment reform?

Will Medicaid Managed Care States invent next-gen payment reform?

At present, 39 states plus the District of Columbia contract with managed care organizations (MCOs) to provide care for some or all of their Medicaid enrollees. MCOS are private plans that receive capitated payments from the Medicaid agencies to manage the health care of their plan enrollees. As of July 2017 (the most recent data available) these MCOs enrolled over 54 million Americans, or 69% of the total eligible Medicaid population. Increasingly, states are directing these Medicaid MCOs to hold health care providers accountable on patient outcomes and clinical standards through contracts that reward providers for improved quality, efficiency, and cost performance.  Even though Medicaid, as a payer, lags behind Medicare, Medicare Advantage and commercial markets in its proportion of spend tied to alternative payment models, it is a fascinating and important laboratory for innovation and reform.  By working with private plans, Medicaid agencies benefit from the freedom private plans have to design their programs according to the unique needs of their markets.  Like Medicare, these Medicaid agencies have the clout that comes with being a large purchaser, allowing them to push the envelope on experimentation and design.

For the past eight years, CPR has produced model health plan contract language for purchasers in the commercial market.  While Medicaid agencies have utilized and borrowed from CPR’s contract language, we saw an opportunity to help Medicaid agencies learn from each other – and to help commercial purchasers learn from Medicaid contracting.  With support from the Robert Wood Johnson Foundation, CPR scrutinized the 40 Medicaid Managed Care Organization contracts, cataloguing all language that directs MCOs to engage providers in payment and other related reforms.  

CPR also reached out to states whose focus and commitment to payment reform distinguished them as leaders in the field.  We interviewed directors and administrators of these programs to get a closer look at their strategic approach, the trade-offs they faced, and the insights they gleaned from leveraging MCOs as instruments for innovation in provider payment.  

Back on December 10, 2019, CPR hosted a free Virtual Summit in which we shared key findings from our research. During the event, Medicaid leaders shared their stories about the tension between designing for consistency versus flexibility, the importance of meeting providers where they are, and the value of seeking input from the entire health care stakeholder community, among others.  Additionally, an expert panel discussed how value-oriented contracting with MCOs is likely to evolve. 

In tandem, CPR released a detailed report that includes:

  • An overview of the landscape and prevalence of payment reform strategies in Medicaid Managed Care states
  • Profiles of pioneering states and programs that leverage MCOs as instruments of payment reform and care delivery transformation
  • Language directly excerpted from MCO model contracts instructing MCOs on the goals, targets and mechanisms for executing payment reform.  The excerpts include general provisions for payment models, and programs specifically aimed at maternity care, behavioral health, pharmacy, provider enablement and social determinants of health.

We hope the Summit and report will help Medicaid agencies and other health care purchasers learn from each other, and spur continued innovation and acceleration of effective payment reform.

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