THE COMMONWEALTH FUND Reforming the Health Care Delivery System – The Role of States Rachel Nuzum Vice President, Federal and State Health Policy The Commonwealth Fund Progressive States Network Payment and Delivery System Reform webinar July 15, 2013

Health care spending consuming larger proportions of state budgets 2 Source: “Summary: NASBO State Expenditure Report (Fiscal Data).” The National Association of State Budget Officers. December 20,

Estimated Change in Medicaid Enrollment, Uninsured Adults <133% FPL and Spending Over as a Result of the Medicaid Expansion* 29.8% 2.9% 26% 16.2% *Scenario assumes all states expand Medicaid. Compared to no ACA baseline. Projections based on an average take-up rate of 60.5% among newly eligible uninsured and 23.4% among currently eligible but not enrolled individuals. FPL refers to Federal Poverty Level. Source: J. Holahan, M. Buettgens, C. Carroll, S. Dorn, The Cost and Coverage Implications of the ACA Medicaid Expansion. Kaiser Family Foundation. November % Percent 3 Reduction in Uninsured Adults <133% FPL 0.3% 21% 12.3% Total change in Medicaid expenditure relative to no ACA baseline Incremental impact of Medicaid expansion

The Affordable Care Act 4 Reduced Payments for Avoidable Complications Medicare Advantage Plan Bonuses Bundled Payments Physician Quality Reporting System Meaningful Use Value Based Purchasing Accountable Care Organizations Hospital Inpatient Quality Reporting Medical Homes

ACA: Payment and Health System Reforms: Improving Outcomes and Lowering Cost Payment reforms to support and stimulate system innovation –Primary care: enhance payment and “medical homes” –Accountable care organizations: provider networks accountable for outcomes and total costs –More “bundled” payments: total costs of care episode –Pay for value: reduced payment for infections, readmissions Partnership with State Medicaid and Private Payers Federal Innovation Center: support private and state initiatives Investment in Information Systems & Data: guide and inform 5

State Policy Levers ACA reforms provide a foundation + new resources, tools –State policy and care system leaders’ action to move forward Key opportunities to build on momentum –Payer partnership with Medicare, Medicaid, private –Build innovation into state supported programs –Transparent all-payer data on quality and costs –Targets and benchmarks: populations and geographic areas Strategic action for public health as well as delivery systems Oversight to hold care systems and insurers accountable –Licensure and regulatory authority –Malpractice and other market reforms 6

State Innovation Models (SIM) Initiative CMMI launched SIM in July 2012 to assist states in planning, designing, and testing new payment and delivery system models to advance broad health system transformation. Emphasis on state flexibility while improving population health through multi- payer models that integrate public health and community resources. 7

Medicaid as a driver of payment and delivery system reform CO, MN, VT pioneering innovative models to align incentives, better coordinate care, reduce total costs, and improve outcomes Convened Medicaid directors and federal officials from CMCS and CMMI to articulate major state barriers and potential federal actions to better support state efforts CMMI awarded $300 million in State Innovation Model grants to support the development of multi- payer payment and delivery system transformation Medicaid cost trends impact program expansion decisions and sustainability of program. Major interest in multi-payer initiatives and ongoing payment and delivery system reforms at the state level.

Related Resources “Payment and Delivery System Reform in Medicaid: Progress Challenges, and Opportunities to Move Forward.” National Association of Medicaid Directors. February 11, “Aligning Incentive in Medicaid: How Colorado, Minnesota, and Vermont are Reforming Care Delivery and Payment to Improve Health and Lower Costs.” Silow-Carroll, S., Edwards, J. N., and Rodin, D. The Commonwealth Fund. March 1, “High-Performance Health Care for Vulnerable Populations: A Policy Framework for Promoting Accountable Care in Medicaid.” Bachrach, D., Bernstein, W., and Karl, A. The Commonwealth Fund. November 16, Populations.aspx “Care Management for Medicaid Enrollees through Community Health Teams.” Takach, M. and Buxbaum, J. The Commonwealth Fund. May 21, Management.aspx “State Medicaid Directors Driving Innovation: Payment Reform.” National Association of Medicaid Directors. July 20, “Building Medical Homes: Lessons from Eight States with Emerging Programs.” Kaye, N., Buxbaum, J. and Takach, M. The Commonwealth Fund. December 2, Reports/2011/Dec/Building-Medical-Homes.aspx “Community Care of North Carolina: Building Community Systems of Care through State and Local Partnerships.” McCarthy, D. and Mueller, K. The Commonwealth Fund. June 22, Community-Systems-of-Care-Through-State-and-Local-Partner.aspx 9

Acknowledgements 10 Jordan Kiszla Program Associate Federal and State Health Policy Cathy Schoen Senior Vice President Policy, Research, and Evaluation