Medicaid Moves Toward Quality-Based Payments

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Medical Economics Feature — December 2013

Tex Med. 2013;109(12):57-61. 

By Amy Lynn Sorrel
Associate Editor

Private payers aren't the only ones eyeing quality-based payment reform to control costs while improving patients' health. Now that Texas Medicaid has moved into managed care almost completely, the state is intent on similar strategies.

The Texas Health and Human Services Commission (HHSC) recently won a $3 million federal grant to design innovative delivery and payment systems. It hopes to win as much as $50 million to later test the models under the Centers for Medicare & Medicaid Services (CMS) State Innovation Models initiative. From accountable care organizations (ACOs) and medical homes to health information technology and bundled payments, the state is looking to physicians, health plans, and others to figure out what it takes to successfully implement such models for Medicaid patients across the multiple payers and providers that manage them.

The experiments are backed by several pieces of legislation Texas passed over the past two sessions that direct HHSC to develop a system that ties Medicaid payments to quality-based outcomes to bring down costs. (See "Medicaid Roadblocks," October 2013 Texas Medicine, pages 14-21.) The agency says Medicaid expenditures doubled over the past 10 years under a largely fee-for-service structure. The state spent roughly $30 billion a year on Medicaid over the 2012-13 biennium. 

Texas Medical Association leaders say this latest reform initiative is another sign the state is intent on holding managed care organizations and physicians accountable for quality and cost improvements by factoring those elements into payments. For it to work, however, the state has to strike the right balance, cautions Mary Dale Peterson, MD. She is a member of TMA's Select Committee on Medicaid, CHIP, and the Uninsured and chairs the state's Medicaid Quality-Based Payment Advisory Committee charged with studying and recommending a set of metrics that will be used in the near future to measure quality of care in Medicaid. She also is president and chief executive officer of Driscoll Children's Health Plan in Corpus Christi.

"Quality-based purchasing is certainly being ramped up. We are seeing it from the health plan side, and [the state] is expecting [plans] to pass that along on the provider side, as well," she said. "There are definitely things that can be done to improve care and save money. But everybody is looking for some magic bullet — an ACO or a medical home — that will fix costs, and it's not out there."

State officials acknowledge such hurdles. Nevertheless, the move is necessary, Texas Medicaid/CHIP Director Kay Ghahremani told a roomful of physicians, providers, and payers at an August meeting on the initiative. "We're talking about a lot of money being spent without a lot of control," she said. Managed care has slowly but steadily helped rein in costs and utilization, "but we know more can be done to drive quality."  

Focusing on Quality

Given the diversity of Texas' Medicaid population, geography, and health care settings, the state is looking at ways to do that, while at the same time searching out common approaches that work across the board, HHSC's Mark Chassay, MD, told Texas Medicine. He oversees the agency's quality initiatives as deputy executive commissioner for the new Office of Health Policy and Clinical Services. "Transformation is not easy. Right now we need stakeholders working together to find ways we can all collaborate."

The state plans to build on existing public and private quality initiatives to bring about that change in Medicaid. The move to managed care, for example, gave the state a way to collect and compare quality data across Texas and across health plans, something the fee-for-service model lacked, Dr. Chassay says.  

Texas' Medicaid managed care strategy starts by targeting four main areas that can both improve quality and hold down costs:   

  1. Better birth outcomes, 
  2. Avoidable emergency and hospital visits, 
  3. Behavioral health services, and 
  4. Long-term care services.    

Future quality measures will build on those areas, all of which require "a coordinated effort between providers, managed care organizations, and the state," to achieve improvement, Ms. Ghahremani says. 

The state also plans to draw on best practices gathered from the regional Medicaid 1115 Transformation Waiver projects and the Texas Institute of Health Care Quality and Efficiency. The latter is a state-appointed group charged with rolling out Texas' own version of health care reform, including innovative payment and delivery systems.

Because public health plays a role in improving care quality, Ms. Ghahremani added that Medicaid plans to partner with state public health agencies, too. Addressing issues like smoking and obesity, for example, can help tackle the chronic, and often costly, conditions many Medicaid patients face. 

Getting It Right

Perhaps one of the biggest challenges, however, is finding the right measures to evaluate quality improvement in Medicaid, Dr. Peterson says. State surveys of physicians, health plans, and other providers revealed those and other concerns. (See "Gauging Interest.") 

TMA continues to advocate for meaningful, evidence-based measures that are consistent across the multiple payers that physicians deal with. Roughly 20 different HMOs, each with its own metrics, now participate in Medicaid managed care. TMA also believes any alternative care delivery models for Medicaid managed care should include flexibility for practices of varying sizes and means so they aren't tied to any one model; administrative simplification of time-consuming and sometimes costly Medicaid HMO processes that can take away from patient care; and reasonable payment.

"It's really challenging when you look across the spectrum to figure out which measures really make a difference and are applicable across multiple populations in the state. There are thousands of measures out there, and it's too much for any organization — physicians' offices, managed care organizations — to concentrate on," said Dr. Peterson. And because carriers and various state agencies don't share information, due largely to their reticence to divulge proprietary information, physicians can't get the historical patient data they need on new patients, for example, to figure out what they need to improve. 

A partnership between Medicaid and state public health agencies could make a difference, however. If patients get ill from unsafe drinking water, for example, physicians may have no choice but admit them to the hospital. "Are we going to get penalized because public health hasn't addressed it?" she asked. "Some solutions are not at the physician or managed care level, but at the community, public heath level."

With Medicaid already such a poor payer, financially penalizing physicians is not likely to prompt change, Dr. Peterson adds. 

Nor should doctors be punished for not achieving full medical home or ACO status, for example, says Dallas internist Sue Bornstein, MD, a member of TMA's Physician Services Organization implementation team. Physicians can take steps that move in that direction and still make a difference in quality, like extending office hours, sending out patient reminders, and tracking their health using electronic health records. 

Even those steps take time and money most practices don't have, says Dr. Bornstein. TMA helped her launch a medical home pilot among seven North Texas practices and several private payers in 2008 as executive director of the Texas Medical Home Initiative. 

"The issues we have in the Medicaid world are similar to those in the private world: In order for practices to do the work of transformation, it takes resources, and it takes resources up front. And I don't just mean increased payments, although you think that would be a given in Medicaid," she said. "It's one thing to get an extra $2 per member per month because you've demonstrated [quality improvements]. The catch-22 is that practices have to invest in the infrastructure to do it. And when it comes down to it, it's difficult to get folks to commit to funding." 

The average primary care practice does not have the financial wherewithal to set up the basic information technology or patient registries needed to track patients' health, or the time to shut off the phones for one hour per week to create medical home policies and procedures. And compared with private patients, coordinating and improving care for Medicaid patients accustomed to going to the emergency department for primary care could prove more difficult. On top of that, "Medicaid has a lot of red tape" physicians have to cut through, Dr. Bornstein says. 

Reform "is more challenging in Medicaid, but it can be done," she says, adding that there is more evidence now that new delivery and payment models such as medical homes are working to improve care and reduce costs. "In Texas, it's frustrating to see the evidence and not have champions to step up." 

Moving the Needle

Medicaid managed care plans — whose contract payments also are at risk if they don't improve quality — say they are taking steps to incentivize change. But they agree the task is challenging. 

Some plans have begun experimenting with new models, but the movement is not widespread. Driscoll was the first Medicaid HMO to initiate a shared savings program that financially rewards physician practices for quality improvements. Blue Cross and Blue Shield of Texas has had success using medical home models to coordinate care, reduce costs, and improve the health of its commercial patients by providing practices with resources like care coordinators. 

The Blues plan is working with the state to apply those strategies to Medicaid. "But the Medicaid population is more challenging from a financial and administrative perspective," Blues executive Scott Albosta says. For instance, Medicaid patients typically require more outreach but can enroll and disenroll on a monthly basis, making it difficult to track and coordinate their care.

Mr. Albosta, vice president of network performance management, says the Blues plan is responding to the state's call to find a solution, including working with other carriers on common quality metrics and models. "It's really going to take trial and error. But not unlike what we did in the commercial population, we evolved as we went and got better."

Ms. Ghahremani acknowledged that reducing costs by cutting payment rates "does not do us proud and does nothing to improve quality," but says physicians and health plans must do their part. 

Overuse of certain services, for example, remains an obstacle to reducing costs. She pointed to new guidelines cutting back the frequency of recommended mammogram screenings that she described as largely ignored. "And if we really want to make change … payers need to talk to each other." 

Dr. Chassay added that the state "hopes to align with quality measures that are already out there" to help minimize the burden on physicians and others. "All stakeholders have to come together to decide how much improvement we have to make, but we have to continue moving the needle."

Considering the challenges, Dr. Peterson says, physicians and health plans have already made significant progress since the move to managed care. Texas exceeds the national average, for instance, on quality measures related to immunizations, well-child visits, and asthma care. 

"And there are bright spots that we need to replicate, like the low caesarean section rates in some of our teaching hospitals," she said. While those are good places to start, the next step will be finding "those elements that are already working, and the two or three things we want to concentrate on improving in the state of Texas that we [payers and providers] can all agree on," which will take time. 

Amy Lynn Sorrel can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.


Gauging Interest

In exploring new ways to deliver and pay for care in Medicaid, the state surveyed physicians, clinics, hospitals, health plans, and others on what it would take to successfully implement different coordinated care models. 

Below is a sampling of responses:   

  • Seventy percent said inadequate payment to support ongoing coordinated care staff and their activities was a "significant impediment"; 51 percent pointed to a lack of adequate access to certain specialty providers; and 45 percent indicated insufficient levels of dedicated care coordination staff.
  • Fifty-six percent said the inability to electronically exchange health information with other providers was a "significant impediment"; 30 percent pointed to a lack of access to an electronic medical or health record system; and 30 percent indicated a lack of access to a patient or disease registry system.
  • One respondent directly commented that "direct measurement of [individuals'] health status and [population] health outcomes is still so crude that providers would be crazy to go at risk for such measures at this point in the transformation of the delivery system."  
  • Seventy-one percent said they were "very interested" in patient-centered medical home models, 53 percent in shared savings arrangements. There was less interest in accountable care-type organizations (37 percent) and bundled or episodic payments (32 percent). Surveys showed mostly health plan interest in the latter.
  • More interest was seen in certain "elements" of some of the innovative models mentioned above. Seventy-two percent said they were "very interested" in patient education and accountability. Respondents also expressed high interest in behavioral and physical health integration (69 percent), prevention and public health issues (65 percent), long-term services and supports (54 percent), and health professional workforce shortages (54 percent).  

Source: Texas Health and Human Services Commission, State Innovation Models Initiative

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Last Updated On

April 19, 2018

Originally Published On

November 19, 2013