How Is Each State Progressing on its Value-Based Care Journey?

April 16, 2019
Change Healthcare again conducted a review of all U.S. states’ approaches to value-based payment

Value-based care (VBC) programs are increasingly thriving across the U.S., with a seven-fold increase in the number of states implementing such initiatives in the past five years, according to a new report from Nashville-based Change Healthcare.

The paper, Value-Based Care in America: State-by-State, is the second national study of state healthcare payment (VBP) programs published by Change Healthcare, officials of the company stated. The study found that 48 states (including the District of Columbia and Puerto Rico) have now implemented value-based care or payment programs, and 50 percent of those programs are multi-payer in scope, while just four states have little or no value-based care initiatives underway.

The study also highlighted six states with well-developed value-based care strategies in place four years or more, 34 with initiatives two or more years into implementation, and eight states in early stage development.

Some other noteworthy findings included: accountable care organizations (ACOs) and ACO-like entities are in place or considered in 22 states, and 16 states established or are planning bundled-payment programs. Three states—New York, Pennsylvania, and Vermont—are noteworthy for the broad scope of their breadth of initiatives, embrace of payment models that involve shared risk, and willingness to test innovative strategies, the researchers pointed out.

Over time, the number of states with value-based reimbursement programs has significantly increased. In 2008, Change Healthcare found there to be just one state with such a program; in 2013, six states, and in 2014, 14 states. Now, every state/territory—all but Mississippi, Georgia, West Virginia and Indiana—have implemented a VBC program. And, more than 20 states have evolved their value-based care efforts since the prior study.

As the report’s authors noted, among public payers, the Centers for Medicare & Medicaid Services (CMS) has taken a leadership role in implementing value-based payments. The Obama administration set a goal in 2014 of tying 30 percent of Medicare payments to value by 2016 and 90 percent by 2018.

As a result, numerous value-based payment initiatives have been created by the Centers for Medicare and Medicaid Services Innovation Center (CMMI), including the creation of the Health Care Payment & Learning Action Network (HCP-LAN), a public-private partnership aimed at spurring payment innovation in the healthcare system at-large. Congress also has passed major legislation (PAMA and MACRA) that require value-based payment in Medicare.

But according to the report’s authors, “While Medicare is obviously an influential player in the healthcare system, states retain significant authority over their regional healthcare market and can play a critical role in moving healthcare toward value. Medicaid now provides coverage for 21 percent of the covered lives in the U.S., behind employer-based coverage at 49 percent but ahead of Medicare at an estimated 14 percent.”

As such, Change Healthcare set out to conduct another review of state value-based payment reform initiatives. The researchers gathered information from a variety of sources, including state resources, federal government resources, and contractors that participate in state-initiated value-based payment programs, to name a few.

For the research, Change Healthcare officials relied on the consensus alternative payment model (APM) framework developed by HCP-LAN, which they believe provides a useful starting point for understanding and communicating the taxonomy of value-based payment models.

The framework establishes four categories of payment: Category 1, or fee-for-service; Category 2, which are fee-for-service payments with a link to quality and value; Category 3, which are alternative payments based on fee-for-service with either shared savings or shared savings and risk, including episode-based payments; and Category 4, which are population-based payments, which provide a risk-adjusted per-patient payment to providers that agree to manage all care for a patient or for a particular condition.

“Much of the public’s attention is focused on the federal government’s role in catalyzing healthcare payment reform, but the significant work being done at the state level is no less important and meaningful,” Carolyn Wukitch, senior vice president & general manager, network and financial management, Change Healthcare, said in a statement, “Based on the report, it’s obvious that managed Medicaid programs are actively exploring numerous VBP models, and that states implementing more advanced strategies around healthcare payment transformation will ultimately drive the commercial markets.”