1. www.chcs.org National Trends in Medicaid Payment Reform California DHCS 1115 Waiver Renewal Plan/Provider Incentive Programs Expert Stakeholder Workgroup November 12, 2014 Tricia McGinnis and Greg Howe

2. A non-profit health policy resource center dedicated to advancing access, quality, and cost-effectiveness in publicly financed health care ► Priorities: (1) enhancing access to coverage and services; (2) integrating care for people with complex needs; (3) advancing quality and delivery system reform; and (4) building Medicaid leadership and capacity. ► Provides: technical assistance for stakeholders of publicly financed care, including states, health plans, providers, and consumer groups; and informs federal and state policymakers regarding payment and delivery system improvement. ► Funding: philanthropy and the U.S. Department of Health and Human Services. 2

3. Select CHCS National Initiatives Technical Assistance for State Health Reform Assistance Network Charity Care Affinity Group Enhancing Access to Coverage and Services Complex Care Innovation Lab Technical Assistance for CMS Integrated Care Resource Center* CMS Medicaid Health Homes Technical Assistance * Integrating Care for People with Complex Needs Technical Assistance for the State Innovation Model Resource Center* Medicaid and CHIP Learning Collaboratives* Advancing Medicaid Accountable Care Organizations: A Learning Collaborative Advancing Quality and Delivery System Reform Medicaid Leadership Institute Annual Medicaid Boot Camp Building Medicaid Leadership and Capacity *Federally-funded initiatives 3

4. Emerging Trends in State-led Payment Reform Moving beyond P4P and structural payments Setting a glide path for increasing provider accountability for cost and outcomes Incentivizing coordination across care continuum, particularly for complex patients Investing in data infrastructure to monitor utilization, inform care improvement strategies, and compare and share information across care team Pursuing opportunities for multi-payer alignment 4

5. Key Payment Reform Policy Questions Incentives and payment methodology: What rewards and penalties are included, and do they stimulate the intended change? Care delivery model: How is care managed, integrated, patient- centered, safe, effective? Provider accountability: Who comprises the team, and who is ultimately accountable? What services is the team responsible for? Quality and measurement strategy: What evidence will be used to assess achievement of value, and therefore reward (or penalty)? Implementation in managed care: What is the right balance of program flexibility and prescriptiveness? Supports available to providers: What information/ data does the provider team have access to in order to better manage patients? 5

6. Considerations for Provider-facing Incentives in California What payment reforms will work most effectively within current delegated/sub-capitated model? How to leverage existing commercial and Medicare payment reforms in the market, like ACOs? What incentive structures will foster-provider level behavioral health integration, given county-led behavioral health services carve out and mental health benefit expansion? What supports will participating providers need (e.g. data, technical assistance)? 6

7. State-led provider-facing payment strategies Shared savings/risk arrangements to ACOs, PCMHs, and Health Homes Episode-based payments Partial capitation arrangements Global payments to totally accountable care organizations 7

8. Provider-facing Payment Strategies: Lessons from Massachusetts The Massachusetts Primary Care Payment Reform (PCPR) Initiative rewards improvements in quality of care and cost reductions through three independent funding streams ► Comprehensive Primary Care Payment – Risk-adjusted capitated payment for primary care and some behavioral health services ► Quality Incentive Payment – Annual incentive for quality performance on primary care quality metrics ► Shared Savings Payment – Shared savings on non-primary care spend (e.g., hospital use, specialist services) 8

9. Provider-facing Payment Strategies: Lessons from Minnesota Implementing ACOs or Integrated Health Partnerships Shared savings/risk modeled on Medicare Shared Savings Program ACOs can increase services included in the total cost of care over time State contracts directly with ACOs, even within managed care Strong uptake among multi-payer and safety net providers 9

10. Behavioral Health Integration: Provider-level Incentives Paying for/promoting integrated care delivery (MA PCPR, CO SIM, NY OMH incentive) Paying for care coordination (health homes in NY, WA, KS where MCOs have role) Process-based performance incentives (MD – incentives for use of evidence-based practices) Outcomes-based performance incentives (MA PCPR TCOC shared savings) 10

11. Key Policy Decisions for Implementation in California Managed Care Level of MCO flexibility vs. cross-plan consistency across key program domains Building continuous innovation into MCO contract language Alignment with other payers and broader state policy goals Vehicles for MCO accountability Aligned incentives for MCOs and county-based behavioral health Incentives for mental health patients served by MCOs 11

12. Plan-facing Payment Reform Strategies Beyond Traditional P4P Linking a certain % of health plan total spend to payment initiatives in the provider network Linking a certain % of health plan total spend to % of members Requiring plans to invest in infrastructure and transformation of the provider network (e.g., medical home, health homes, ACOs, EHRs, learning collaborative, etc.) Holding a % of the health plan’s premium at risk for quality and/or cost performance Requiring plans to adopt alternative payment methodologies (e.g., shared savings) Requiring adoption of payment reform strategies as part of the procurement/contracting strategy 12

13. Plan-facing Payment Strategies: Lessons from Arizona In 2013, Arizona implemented the Acute Care Program Payment Reform Initiative (ACPRI) Requires plans to establish shared savings arrangements with providers Each plan can determine its approach Proportion of each plan’s revenue subject to shared savings arrangements increases over time Incentive payments are paid to health plans that meet quality measures and make 5% of provider payments through shared savings arrangements 13

14. Plan-facing Payment Strategies: Lessons from New Jersey ACOs In 2011, New Jersey passed legislation implementing state-led Medicaid Accountable Care Organization (ACO) certification within managed care State creates program requirements for eligible entities, services provided and quality measurement Shared savings agreements left to MCO and ACO to negotiate State contracted with Rutgers to develop optional shared savings methodology, based on Medicare Shared Savings 14

15. Plan-facing Payment Strategies: Lessons from Oregon Oregon’s 1115 waiver established Coordinated Care Organizations (CCOs) CCOs are held accountable for reducing the growth in Medicaid expenditures while also improving health care quality and access CCOs must move providers to alternative payment methodologies and submit a detailed transformation plan for achieving this requirement Two percent of the PMPM budget goes to a quality incentive pool based on an initial set of 17 metrics. The percentage assigned to this pool will increase over the course of the demonstration 15

16. Plan-level Incentives: Behavioral Health Integration General themes from national landscape ► Increasing number of carve-ins ► Specialty plans for SMI ► Move toward holistic outcomes State examples ► Outcomes-based Performance Incentives (KS, NY, CT) ► Shared Accountability across MCO/BHO (Cal MediConnect, PA SMI pilots) ► Full integration (NM) 16

17. Visit CHCS.org to…  Download practical resources to improve the quality and cost-effectiveness of Medicaid services  Subscribe to CHCS e-mail updates to learn about new programs and resources  Learn about cutting-edge efforts to improve care for Medicaid’s highest-need, highest-cost beneficiaries www.chcs.org 17