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2019 Medicaid Trends: Value-Based Purchasing & Whole Person Care

Medicaid provides health and long-term care coverage to more than 70 million low-income children, pregnant women, adults, seniors, and people with disabilities in the United States. The program represents $1 out of every $6 spent on healthcare in the US and is the major source of financing for states to provide coverage to meet the health and long-term needs of their low-income residents. Medicaid is administered by states and jointly funded by states and the federal government. As the nature of Medicaid remains dynamic and constantly evolving to fit the needs of the population it serves, aspects of the program, such as value-based purchasing and the focus on social determinants of health for positive health outcomes, will be tweaked in order to address the shortcomings of a fee-for-service model.

Value-based purchasing delivers greater efficiencies for Medicaid programs

Value-based purchasing (VBP) is key to a more efficient healthcare system. Value-based models reward providers for the quality of their service, rather than the quantity of billable services. Currently, payment for fee-for-service and capitated plans are based on the volume of services provided, whereas value-based purchasing is based on improved patient health outcomes. Among the many benefits to the value-based approach:

  • Due to the increased focus on overall health outcomes, rather than just the treatment of specific symptoms or conditions, providers are incentivized to care for the whole person.
  • It’s less expensive in the long run to help a patient avoid a chronic disease they may be at risk of developing than to treat that disease over their lifetime if they develop it.
  • An additional benefit of focusing on quality rather than quantity is that it tends to increase engagement with the patient, which has a positive effect on outcomes.

There is great interest in the model, but it’s not been without its drawbacks. Among the issues with value-based purchasing:

  • The tight budgets of safety-net providers and a lack of sustainable funding make it challenging to build a solid foundation for value-based purchasing.
  • Decades-old payment models, practices, and habits are so ingrained that they cause disinterest towards value-based purchasing, particularly to the financial exposure that comes from shared risk.
  • Stark Law regulations around referrals may need adjustments to offer protections for providers who inadvertently violate anti-kickback provisions, which may be more likely to occur under VBP models.

In order to realize benefits from VBP, providers will need to:

  • Rethink old payment and care delivery models.
  • Identify and reward cost-saving innovations, such as complex care management.
  • Implement effective tracking of quality measures at the patient and population levels.
  • Use technology to utilize resources more efficiently across the community.

Increased focus on social determinants improves care and outcomes

Social determinants of health (SDOH) have an enormous effect on patient outcomes. Studies estimate SDOH, such as access to food, housing, income security, transportation, clean water, and information about the healthcare system, can be responsible for as much as 80% of a patient's health outcomes. Medicaid programs, managed care plans, and providers are driving the next generation of SDOH efforts to address social service needs within an integrated care delivery model — often called “whole person care.” Some next generation strategies to integrate SDOH in clinical settings include:

  • Expanding the scope of SDOH interventions to more populations and social issues.
  • Aligning financial incentives to support SDOH interventions.
  • Building a stronger network of community-based organizations and collaborations with providers.
  • Evaluating the effectiveness of SDOH interventions and greater use of SDOH data.
  • Moving beyond screenings and referrals to design systematic efforts to integrate social supports.

Moving Forward

These issues are going to engage and challenge providers, payers, social services, and patients in the coming months. The political environment with a split House and Senate may create additional uncertainty and turbulence. Despite the split Congress, with healthcare cited as the number one issue on voter’s minds, it’s imperative that all stakeholders work together to create innovative policy proposals.


Medicaid Trends to Watch in 2019 Webinar | Manatt Health Strategies

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Medicaid Trends to Watch in 2019

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