On the Policy Front, Lots of Action at the State Level

Jay Want, M.D., executive director of the New York-based Peterson Center on Healthcare, says his organization’s philosophy is that while they like to see work at the state level, there’s a role for the federal government to enable state action. “If we’re not going to have a sweeping kind of reform across all 50 states, at least make it easier for states to act,” he says. Previously, the federal government has used State Innovation Model (SIM) grants that allowed for experimentation and infrastructure building. In addition, Medicaid Section 1115 waivers are useful jn terms of allowing experimentation, Want adds.

Lauren Hughes, M.D., is state policy director of the Farley Health Policy Center at the University of Colorado Anschutz Medical Campus and associate professor of family medicine in the University of Colorado Department of Family Medicine. She says states serve as valuable health policy laboratories. “That’s where the innovation has been taking place and I don’t see any reason why that won’t continue, or that it shouldn’t continue,” Hughes says. States have quite a few levers that they may not fully appreciate, she adds. One is around their convening ability. “If it’s a governor’s priority or a really prominent agency’s priority to drive change, that’s a powerful tool to bring people to the table to work together.”

On the other hand, Hughes notes, state governors have four-year terms and that is a short window to implement a policy and see change. Stakeholders may wonder if the next administration will have the same priorities. Also, if legislative or regulatory change is required to support a new payment and delivery model, that’s going to take a long time. When it comes to converting policy design to operationalization at the state level, Hughes says, leadership, resources and time are all necessary to get something off the ground, as well as a culture of collaboration.

In a previous position, Hughes helped set up the Rural Health Model in Pennsylvania, an alternative payment model transitioning rural hospitals from a fee-for-service model to a global budget payment. “There are no other models like it, and innovation in rural communities is perhaps more difficult than in urban settings, in large part because your risk calculation is very different — you have smaller populations over which to spread risk,” she says. Also, there is a digital divide, and greater underlying health disparities and population health needs.

As the Peterson Center looks for states to work with on payment innovation, data assets are important. “If you have an all-payer claims database (APCD), that’s ideal. It doesn’t exclude you from working with us if you don’t, but without one it’s a lot harder to,” Want says. (Approximately 20 states have APCDs currently, he adds.)

“We also look for leadership from the governor or somebody in the governor’s office. There has to be state leadership that has its own reasons for trying to examine this, and then we look for places that have to have some history of collaborative action in the past. Colorado is an example of a state where it’s a pretty small healthcare community — everybody pretty much knows everybody else. Rhode Island, where we’ve done recent work, is that way, too.”

The New England States Consortium Systems Organization (NESCSO) is seeking to standardize measurements of primary care spending across six states, taking advantage of the APCDs in those states. One goal is to build on early evidence that an increased percentage of total payments invested in primary care is associated with improved quality, utilization and cost outcomes.

A focus on equity in Pennsylvania

In Pennsylvania, an Interagency Health Reform Council (IHRC) recently recommended the creation of a Health Value Commission that would set cost benchmarks and monitor payer and provider performance relative to those benchmarks. The idea would be to set healthcare cost growth targets annually as well as spending targets for behavioral health, primary care and value-based purchasing, because the focus is on whole-person health reform, says Douglas Jacobs, M.D., the chief innovation officer of the Pennsylvania Department of Human Services.

Pennsylvania already has the Rural Health Model — a global budget model like they have in Maryland, but that’s only in rural settings. “It doesn’t include urban and suburban settings, so we are looking at ways that we can identify urban and suburban counterparts, and eventually perhaps get to a statewide model,” Jacobs says, “but I think we’re not there yet.”

The IHRC recommendations include aligning physical and behavioral health measures across state agencies and other payers. In addition to his role as chief innovation officer at DHS, Jacobs still sees patients regularly. “If I see seven patients in my clinic and they all have different insurers, each one of those insurers is focused on different quality measures, and they’re all likely rewarding for different things,” he explains. “It’s really hard for any provider group to know how they can move forward with population health when they have got one foot in seven different canoes. Multi-payer alignment is what really drives the healthcare system forward.”

In working with Medicaid managed care organizations (MCOs), the Commonwealth has built in requirements around reducing specific racial inequities and building ties to community-based organizations. “We’ve seen these disparities, particularly among Black Pennsylvanians, for example, in maternity care, and so we put into our MCO agreements for this year equity incentives that have rewards for MCOs that hit certain national benchmarks with their Black membership, specifically in timely access to prenatal care and well child visits in the first 15 months of life,” Jacobs says. He adds that addressing issues like food insecurity and housing insecurity can reduce the total cost of care. “It’s not just important to screen for social determinants, you have to have community-based organizations that you’re partnering with at the back end to address those issues. So we added those requirements for 2021 to make sure that community-based organizations are part of our healthcare system in a way that they haven’t been in the past.”

The IHRC also recommended creating regional accountable health councils as forums to make health equity a priority. “When you look at maps of Pennsylvania, if you’re born in certain parts of North Philadelphia, your life expectancy is 63 years and if you go just a mile or so to the south, your life expectancy will go up to 86. We see these really profound differences in geography. That necessitated the need for these regional accountable health councils,” Jacobs says. “The idea is to provide a forum for strategic planning across payers, providers, and community-based organizations. The main goal in the first year is to identify these areas with profound inequities. We’re calling them health equity zones. A subsequent step is to identify strategies to actually combat those equity issues. You can’t just do it with providers and payers. We need everybody at the table to focus on this.”

Ambitious efforts in Maryland and Vermont

Several states are engaged in long-term ambitious efforts to transform care and control costs. The State of Vermont is working to combine a global all-payer reimbursement model with community health teams responsible for coordinating care between the medical, social services and public health sectors.

The Green Mountain Care Board oversee hospital budgets, commercial payer rates, ACO budgets, and the financial impact of the All-Payer ACO Model agreement with CMS. The state’s reform goals remain to control healthcare spending; move from a fee-for-service system to one that pays for volume; and to create a value-based system that allows for investments to keep the population healthier. The all-payer model enables Medicaid, Medicare and commercial payers to pay an ACO (called OneCare Vermont) differently than through fee-for-service reimbursement. Hospitals are starting to receive a fixed, pre-determined all-payer fee for all necessary services, and all Vermont hospitals are voluntarily participating.

In 2014, Maryland implemented a model that shifted the state’s hospital payment structure to an all-payer, annual, global hospital budget that encompassed inpatient and outpatient hospital services. In 2019, the state said that over the first five years of the program, Medicare beneficiaries had 2.8 percent slower growth in total expenditures ($975 million in savings) during the Maryland All-Payer Model relative to a comparison group, largely driven by 4.1 percent slower growth in total hospital expenditures, according to the report from RTI International.

States also are working on integrating primary care and behavioral healthcare. Legislation passed in Washington State in 2014 changed how the state purchases mental health and substance use disorder services in the Medicaid program. It directed the state to fully integrate the financing and delivery of physical health, mental health and substance use disorder services in the Medicaid program via managed care by 2020.

Hughes points to North Carolina as another state that is moving in the right direction. Between Medicaid through the Department of Health Services and the state’s largest insurer, Blue Cross Blue Shield of North Carolina, they cover approximately two-thirds of the state population. “So they are able to make pretty significant changes,” she says, “because they share a similar philosophy of moving from volume to value.”