Value-Based Purchasing in NY Medicaid Deborah Bachrach, Esq. Medicaid Director Deputy Commissioner Office of Health Insurance Programs New York State Department of Health Presentation to State Coverage Initiatives National Meeting July 30, 2009 Care Coordination and Payment Reform

Coverage Streamlining enrollment and renewal. Expanding eligibility. Changing the message. 1

Access to Care Supporting practices in medically underserved areas and specialties. Loan repayment. Start-up grants. Enhanced Medicaid payment rates. Expanding Medicaid’s physician network. Improving access to care outside of business hours. 2

Medicaid Managed Care Mandatory program began in 1997 under an 1115 Waiver. 2.9 million beneficiaries are enrolled in managed care plans. Improved quality and contained costs. Significant and sustained improvements over time; even as a sicker population enrolls (SSI, SPMI). Narrowing of the gap between commercial and Medicaid rates of performance. 3

Reward Good Performance Health plans earn rewards up to 3% of premium for good performance: HEDIS or NYS-specific quality measures. CAHPS measures. Regulatory compliance (reporting, access and availability, provider network). Plans must qualify for incentive to receive auto-assignments. 4

Medicaid Children’s Measures Measure % change Immunization Status 54%70%+16% Lead screening 76%86%+10% Well Child 0-15 months 57%79%+22% Well Child 3-6 years 65%81%+16% Adolescent Well Care 41%58%+17% Annual Dental visit, ages %48%+19%

Medicaid Diabetes Care Measures Measure % change HbA1c tested 76%87%+11% HbA1C poor control* 52%34%-18%* Cholesterol Screening 68%85%+17% Nephropathy 45%82%+37% Eye Exam 49%62%+13% * A lower rate is better

Build on Managed Care Successes Expanding mandatory to more complex and costly populations. Evaluating the benefit package. Phasing-in risk adjusted rates. Adjusting for case mix differences. Priced regionally, not plan-specific. Aligning Medicaid fee-for-service. 7

Medicaid Managed Care Raises the Bar Medicaid Managed Care Raises the Bar Medicaid Stood Still Pre-1995 Medicaid Stood Still Medicaid FFS & Managed Care Raise the Bar 2007 & Beyond Medicaid FFS & Managed Care Raise the Bar Medicaid FFS & Managed Care Raise the Bar 2007 & Beyond Medicaid FFS & Managed Care Raise the Bar Improves Access, Quality, & Accountability Value Quality Accountability Transparency Medicaid Fee-For-Service Medicaid Managed Care Working In Tandem To Raise The Bar Access Efficiency 8

Medicaid Fee-For-Service Payment Policies Demanding transparency and accountability. Rationalizing and updating payment methodologies for hospitals, clinics, nursing homes and home care. Rationalizing payment levels – reducing inpatient rates and investing in outpatient rates. Incentivizing the development of patient-centered medical homes. Medical home incentives both fee-for-service and managed care. Adirondack multi-payer medical home pilot (except Medicare). Primary care case management in non-mandatory counties. Paying for quality; not paying for poor quality. 9

Medicaid Fee-For-Service Program Policies Focusing on specific services and populations to improve quality of care and control costs. Selective Contracting. Bariatric surgery. Breast cancer surgery. Retrospective utilization management. Chronic illness demonstration programs. Prior authorization of certain radiology services. 10

Selective Contracting for Bariatric Surgery Medicaid will contract with 5 New York City hospitals to perform bariatric surgery; currently 25 perform such surgeries. Why Bariatric Surgery? New York, like the rest of the nation, has an “obesity epidemic.” The volume of bariatric surgery is increasing, in part because of claims that bariatric surgery “cures” Type 2 diabetes and greatly diminishes many co-morbidities associated w/ long term obesity. The literature and our own research indicates that there are significant complication rates associated with bariatric surgery. There is significant variation in outcomes and re-admissions across NYC hospitals. 11

Selective Contracting for Breast Cancer Surgery The literature documents significantly higher 5-Year survival rates for women who have breast cancer surgery at high volume facilities. New York Medicaid now limits reimbursement for breast cancer surgery to sites that have performed more than 30 surgeries per year (both hospitals and ambulatory surgery centers). Exceptions granted to some sites due to access and provider experience. 12

Retrospective Utilization Review of Fee-For-Service Claims Contract awarded to APS through RFP process. 7 million fee-for-service claims per month will be reviewed. Evidence based guidelines, disease management analysis and resource utilization review techniques will be used to identify patterns of over-utilization and under-utilization. Providers demonstrating patterns above or below the norm will be notified and educated by peer consultants. Interventions will be identified for high-cost, high risk Medicaid beneficiaries. Total annual cost (with FFP) of $7 million; anticipated annual State share savings of $15M, or $45M over the 3 years of the contract. 13

Coordinating the Care of High-Cost, Medically Complicated Beneficiaries The Chronic Illness Demonstration Program (CIDP) will run for three years at seven sites at a cost of $30M (including FFP). Each project is required to have an integrated network of providers to assure facilitated access to medical, mental health and substance abuse services for participants and collaboration with community- based social services. CIDP uses a predictive algorithm to identify patients at high risk (est. 70%) for medical, substance abuse, or psychiatric hospitalizations in the next 12 months. 14

Coordinating the Care of High-Cost, Medically Complicated Beneficiaries (cont.) These patients have largely uninterrupted Medicaid eligibility, but limited engagement in primary care. Per patient average cost in the prior 12 months was $37,500. Average cost in the next 12 months is expected to be $46,000 without intervention. Shared risk and savings will be introduced in the second and third years of the project. 15

Moving Forward Continue to streamline and expand coverage and enhance access. Continue with finance reforms that hold providers accountable and support delivery system reform. Reduce potentially preventable complications. Reduce potentially preventable readmissions. Consider bundling of inpatient services. Support integrated care models. Continue with program reform. Support meaningful use of EHRs. Evaluate improvement in quality and reduction in costs. Align with federal health care reform. 16