2021 Emerging Trend: Reforming the Delivery of Health Care

Delivery system reform includes a variety of activities designed to change the way care is delivered and paid for to promote more efficient and effective health care. At its core, delivery system reform involves “altering care delivery, payment incentives, or both to stimulate and sustain delivery system changes.”13 Value-based payment (VBP), value-based care, and alternative payment models (APMs) all fall within the broad category of “delivery system reforms.” In addition, change to how care is delivered such as using digital platforms to connect providers to members is also a trend in the transformation of health care delivery.

Trend 1: Alternative Payment Models and Value-Based Purchasing

Increasingly, states are encouraging or requiring Medicaid Managed Care Organizations (MCOs) to participate in and support delivery system and payment reforms. Specifically, MCOs are being asked to: 1) enter into diverse value-based arrangements with an increasing number and types of providers, 2) collaborate with other members of the delivery system to increase efficiencies, 3) support providers to take on greater risk for outcomes, and 4) use a variety of other strategies to coordinate care for beneficiaries with complex care needs.

In January 2020, Bailit Health released a report on behalf of the Medicaid and CHIP Payment and Access Commission (MACPAC) analyzing Medicaid VBP approaches in five managed care states. These encompassed state-established thresholds for minimum percentage of payments tied to value, quality, and performance withholds, Accountable Care Organizations (ACOs), medical homes, and bundled payments.14 The report is one of the few reviews of the opportunities and challenges tied to VBP models in Medicaid managed care. Bailit found that although states have multiple tools to promote the use of VBP and that related contract requirements are effective in changing MCO behavior, most providers are not yet ready or willing to engage in downside risk arrangements.

Impact of COVID-19

In the fall of 2020, the Health Care Payment Learning and Action Network (HCP-LAN) released the Healthcare Resiliency Framework, outlining steps for payers, providers, and other health care stakeholders in transitioning to APMs that support system resiliency in a post-COVID-19 environment. Simultaneously, CMS distributed a letter to State Medicaid Directors discussing the role of VBP in the post-COVID-19 health care environment. The letter quoted then-CMS Administrator Seema Verma, saying “…by accepting value-based or capitated payments, providers are better able to weather fluctuations in utilization, and they can focus on keeping patients healthy rather than trying to increase the volume of services to ensure reimbursement… Value-based payments also provide stable, predictable revenue— protecting providers from the financial impact of a pandemic.”15 The COVID-19 pandemic renewed conversations on the potential benefits of VBP arrangements to providers, particularly capitated models, to serve as pathways for financial resiliency. Even with the pandemic further illuminating the challenges of fee-for-service (FFS) reimbursement, providers are still likely to vary in their ability and desire to adopt capitated payment structures and accept financial risk.

APMs to Reduce Health Disparities and Improve Equity

The death of George Floyd in May 2020 and the more than 2,000 protests across U.S. cities that followed fueled growing public acknowledgement of the systemic racial inequalities in America. At the same time, COVID-19 continued to disproportionately affect communities of color in America, with Black, Hispanic, and Native American case and death rates far exceeding rates of White, non-Hispanics.16 These events combined to accelerate conversations with states on the role of the health care system and APMs in addressing health disparities, including how value-based interventions could be deployed to improve health equity. This topic is particularly relevant to the Medicaid population given that more than half of Medicaid beneficiaries under age 65 are a part of a racial or ethnic minority group.

State Medicaid agencies’ increasing interest in addressing health disparities through APMs has been reflected in both

MCO contracts and in recent RFPs.17

  • In Michigan, MCOs are held to plan-specific health equity measures as part of the state’s performance withhold program.18 To score well on these measures, MCOs must reduce the index of disparity between white members and Black and Hispanic members on certain metrics.
  • North Carolina has also expressed interest in exploring how VBP could be deployed to address health disparities, both through the state’s planned managed Medicaid program and through the Integrated Care for Kids (InCK) model.19
  • Minnesota’s recent Medicaid managed care RFP asked respondents to elaborate on how their organization uses VBP or other incentive arrangements to “improve racial equity in quality of care and health outcomes.”

Model Trends

Multi-Payer Alignment

Given CMS’s and HCP-LAN’s shared goal of having providers across all market segments shift to APMs with higher total cost of care accountability, it is likely that the recent trend of multi-payer alignment in models will continue. CMS’s recent letter to State Medicaid Directors on Medicaid VBP models emphasized the importance of developing models that apply to Medicaid, Medicare, and commercial populations. Multi-payer models can reduce fragmentation in the health care system and provider concerns over the number of VBP models and related quality measures they report on, which may encourage increased provider engagement.

While multi-payer participation in models is one method for easing provider burden during the transition to value-based reimbursement, over the long-term multi-payer initiatives must thoughtfully consider the differences between market segments, including payment and revenue structures and populations of interest. Given the variation between state Medicaid programs and the unique amount of churn within the member population, models that are successful in commercial and Medicare segments are not necessarily transferable to Medicaid. As CMS continues to develop multi-payer models, they must consider the methodological elements necessary to ensure models effectively apply to the Medicaid population as well as other market segments.

State VBP Targets and Shift to Downside Risk20

In an October 2020 op-ed, then-CMS Administrator Seema Verma wrote of the importance of incorporating value-based incentives into state Medicaid programs through contractual requirements, and noted that the primary takeaway of CMMI’s APMs to date is that “models where providers have downside risk perform better because they have ‘skin in the game.’”

Going into 2020, some states, like New York, Rhode Island, and Texas, had already established thresholds for the proportion of MCO payments tied to downside risk arrangements. But states have since had to reconsider such thresholds in light of the COVID-19 pandemic, given its unforeseen consequences on providers and service utilization. Rhode Island, for example, has since revised their 2021 target for 10% of providers engaged in downside risk agreements from mandatory to optional for Medicaid MCOs. As discussed above, the COVID-19 pandemic has prompted conversations on how to adjust VBP methodology and thresholds in response to a disrupted health care system. States will likely continue to alter their VBP programs and expectations this year to account for the pandemic, while keeping the overall intention and direction of their programs focused on increasing the proportion of providers moving to downside risk, even if they do so on a longer timeline.

Bundled Payments in Medicaid Managed Care21

Bundled payments have continued to gain traction in Medicaid managed care, including in maternity care, substance use disorder (SUD), asthma episodes, and joint replacement.22 Given the amount of churn in the Medicaid population, bundles may be an especially promising form of VBP in Medicaid as they are tied to a specific episode of care instead of a specific provider. Still, successful implementation of bundles requires intentional design of the payment model, including multi-payer participation and/or alignment with existing bundles to ensure consistent quality measure use and reduce provider abrasion. Additionally, to capitalize on bundles’ discrete nature, included diagnosis codes should be clearly established and guidance should be provided on providers subject to attribution.

Trend 2: Telehealth

As reported by both the American Telemedicine Association (ATA) and the Center for Connected Health Policy, going into 2020, all 50 states and Washington, DC had established policies supporting Medicaid reimbursement for telehealth but there was wide variation in the types of modalities covered, the payment requirements, and the providers eligible to provide services via telehealth.23 Though considered as a way to increase access to care, adoption by both providers and consumers was limited due to issues with access to needed technology, limited information on outcomes and effectiveness, and patient and provider preferences.24 However, the PHE significantly accelerated adoption as policymakers and the health care system looked to reduce the exposure and spread of COVID-19 while continuing to deliver needed health care services. This experience has forced policy changes related to some of the noted previous barriers to adoption that will have long-term implications for the Medicaid program.

Impact of COVID-19

In response to the pandemic, federal and state authorities quickly relaxed many regulations (e.g. use of telehealth during first visit with provider, audio only visits, expanded list of eligible providers of services via telehealth) and provided funding to facilitate rapid adoption of telehealth.25 These actions resulted in a more than 2600% increase in telehealth visits (46.8 million total services) among Medicaid and CHIP members between March and July of 2020, with the highest utilization occurring among working age adults followed by children and older adults.26

Telehealth use peaked in April and has since decreased as providers were able to start seeing patients in person (i.e. when safe-at-home/ stay-at-home orders were relaxed or lifted). However, demand has continued at a relatively higher rate than before the pandemic. Recent estimates show telehealth constitutes 8% of outpatient visits, compared to less than 1% pre-pandemic.27 While both specialty and primary care showed increases in telehealth visits, the largest increase, 56%, was seen for behavioral health services (Figure 1).28

Medicaid agencies and providers have reported seeing several benefits from telehealth during the pandemic, which are spurring interest in permanent regulatory changes to facilitate on-going use. These benefits include:30,31

  • Reduced no-show rates
  • Decreased non-emergent medical transportation costs
  • Greater access for individuals with work or childcare concerns
  • Increased engagement among new populations
  • Increased engagement in new service areas, such as tele nutrition
  • Increased member satisfaction

Telehealth Adoption Long-Term

The PHE has created a natural opportunity for states to see what greater utilization of telehealth for the Medicaid population could look like, and the benefits for providers and consumers. Based on the positive impacts to date, states have moved quickly to determine which telehealth policies should and should not continue long term and evaluate whether the policy changes need to be made via state legislation or regulation (including Medicaid and scope of practice/licensure laws). It is important to note that states have significant authority to set telehealth policy. In fact, there are no federal prohibitions on any form of telehealth in Medicaid for state plan services. For example, a state must only seek a state plan amendment specific to telehealth if it wishes to have provider payments differ when a service is provided via telehealth compared to a face-to-face setting.32

Policy areas states have or are currently considering for permanent adoption include:

  • Expanding where a patient can be located during a telehealth visit (e.g., member’s home),
  • Expanding the providers and services authorized for reimbursement via telehealth, and
  • Expanding which telehealth modalities are reimbursable, including remote patient monitoring, store-and-forward, and audio only/telephone. 

While the telehealth policy landscape will continue to take shape, there are key areas that will need to be addressed more substantively for telehealth to create sustainable, expanded access over the long-term. 

Bridging the Digital Divide

Low income and rural Americans are less likely to have access to adequate internet coverage33 or other technological resources34 necessary to facilitate a telehealth visit. In fact, people who wanted to but did not use telehealth during the pandemic “cited barriers such as […] lack of access to or comfort with using the required technology.”35 States are considering permanently covering and paying for audio-only telehealth in a limited scope, such as for rural areas or targeted services like behavioral health, to reduce telehealth barriers for Medicaid members. However, more will need to be done to advance equitable access, including implementing policies and tailored interventions for members who may face additional barriers to accessing services via telehealth (e.g., people with disabilities, limited English proficiency, mental illness).36

Advancing Health Equity

Medicaid covers a diverse group of individuals with unique care needs. Medicaid programs must effectively understand the impact digital care is having on members, paying close attention that telehealth does not unintentionally increase health disparities or negatively affect vulnerable populations (including outcomes and privacy). For example, a greater portion of Hispanic/Latinx adults reported using telehealth during the pandemic than their white counterparts but were less satisfied with the experience.37

Balancing Access and Cost

During the pandemic, many states allowed for telehealth visits to be paid at the same rate as in-person visits to stabilize the delivery system. Providers have advocated that payment parity should continue given the costs of technology and implementation, and the incentive it creates for investment in telehealth long-term even if the associated costs decrease over time. Expanded access offered by telehealth is especially valuable for Medicaid members, who have historically faced greater barriers accessing care than individuals covered by other insurance. This uniquely positions Medicaid programs and MCOs to work together to monitor trends and develop payment models and practices that strategically expand telehealth without sacrificing program stability or effective stewardship of public dollars.38 A growing number of states are interested in seeing value-based payment models used to grow telehealth capacity that promotes effective and appropriate utilization.

Building and Supplementing Local Capacity

States and providers are leery of telehealth programs that simply replace the local delivery system. Rather, as demonstrated in recent RFPs in Hawaii, Minnesota, and Oklahoma, states are interested in solutions that build or augment existing capacity to enhance access.

Related Content

Citations

  1. CMS Opens in a new window
  2. Ibid
  3. CMS Opens in a new window
  4. Health System Tracker Opens in a new window
  5. Revcycle Intelligence Opens in a new window
  6. Kaiser Family Foundation Opens in a new window
  7. Kaiser Family Foundation Opens in a new window
  8. Kaiser Family Foundation Opens in a new window
  9. Medicaid.gov Opens in a new window
  10. Kaiser Family Foundation Opens in a new window
  11. Kaiser Family Foundation; The Commonwealth Fund Opens in a new window
  12. AHIP; Health Management Associates Opens in a new window
  13. Commonwealth Fund Opens in a new window
  14. MACPAC five states studied were: MN, NM, NY, OH, SC Opens in a new window
  15. Medicaid.gov Opens in a new window
  16. NPR Opens in a new window
  17. Kaiser Family Foundation Opens in a new window
  18. Michigan.gov Opens in a new window
  19. Health Affairs Opens in a new window
  20. Downside risk APMs are included as Categories 3B and 4A, 4B, and 4C in the HCPLAN Framework. Opens in a new window
  21. Bundled payment APMs are included as Category 3B in the HCPLAN Framework. Opens in a new window
  22. American Medical Association Opens in a new window
  23. mHealth Intelligence; Center for Connected Health Policy Opens in a new window
  24. MACPAC Opens in a new window
  25. Commonwealth Fund Opens in a new window
  26. Medicaid.gov Opens in a new window
  27. Commonwealth Fund Opens in a new window
  28. Commonwealth Fund Opens in a new window
  29. Commonwealth Fund Opens in a new window
  30. Medicaid.gov Opens in a new window
  31. Journal of the Academy of Nutrition and Dietetics Opens in a new window
  32. Medicaid.gov Opens in a new window
  33. Federal Communications Commission Opens in a new window
  34. Pew Research Opens in a new window
  35. Robert Woods Johnson Foundation Opens in a new window
  36. National Governors Association Opens in a new window
  37. Robert Woods Johnson Foundation Opens in a new window
  38. Health Affairs Opens in a new window
  39. Kaiser Family Foundation Opens in a new window
  40. Despite successful passage of the ballot measure, Missouri legislature is currently advancing a budget that does not fund the Expansion setting up a potential lawsuit.
  41. Wisconsin is unique as it has a modified Expansion coverage today.
  42. HealthInsurance.org Opens in a new window
  43. Bloomberg Law Opens in a new window
  44. As of the timing of this publication, the Missouri State Supreme Court has ruled that the state legislature did not need to allocate funding in order to for the state to move forward with implementing Medicaid Expansion as approved by the voters.
  45. Robert Wood Johnson Foundation Opens in a new window
  46. Aspen Institute Opens in a new window
  47. Economic Roundtable Opens in a new window
  48. Feeding America Opens in a new window
  49. Center on Budget and Policy Priorities Opens in a new window
  50. Kaiser Family Foundation Opens in a new window
  51. Center on Budget and Policy Priorities Opens in a new window
  52. Kaiser Family Foundation Opens in a new window
  53. Healthy People.gov Opens in a new window
  54. Kaiser Family Foundation Opens in a new window
  55. Association of State and Territorial Health Officials Opens in a new window
  56. Kaiser Family Foundation Opens in a new window
  57. Medicaid.gov Opens in a new window
  58. Pew Research Opens in a new window
  59. NCBI Opens in a new window
  60. New England Journal of Medicine Opens in a new window

Looking for health plans in your area?

If you’re an individual looking for a health plan we can help.  Find the plan you’re looking for today. Visit UHCCommunityPlan.com