48 States Running Value-Based Reimbursement, Care Initiatives

April 17, 2019 - Forty-eight states have implemented value-based reimbursement or care programs as of February 2019, representing a seven-fold increase compared to five years ago, a new Change Healthcare study shows.

The second national study of state healthcare payment programs also found that about one-half of the value-based reimbursement initiatives are multi-payer in scope, and only four states have little to no value-based payment (VBP) initiatives underway.

“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 and general manager of network and financial management at Change Healthcare stated in a press release.

“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.”

The update to the 2017 Value-Based Care in America: State-by-State report reveals that state adoption of value-based reimbursement and care delivery models is making progress.

Publicly available data from 2017 to February 2019 shows that six states have implemented well-developed value-based reimbursement strategies for four years or longer, 34 states have initiatives two years or more into implementation, and eight states are in the early stages of development.

Additionally, fewer states do not have any or have limited value-based reimbursement activity, the study adds. The first study found seven states had limited or no value-based reimbursement or care delivery initiatives in place in 2017.

The study notes that more than 20 states have evolved their value-based reimbursement and care delivery efforts since the 2017 study. And states are pursuing value-based initiatives through a wide-range of strategies.

Twenty-three states are using value-based reimbursement targets or mandates to encourage local markets to shift away from fee-for-service.

Another 22 states have adopted or are considering the adoption of accountable care organization (ACOs) or ACO-like entities, while 16 states implemented or are considering the implementation of episodes of care (EOC) programs, which use bundled payments to encourage value-based care.

Since the 2017 report, 18 regions also implemented the Comprehensive Primary Care Plus (CPC+), a multi-payer advanced primary care medical home model run by the CMS Innovation Center that uses value-based reimbursement to improve primary care.

Additionally, 69 percent of states are implementing value-based reimbursement initiatives using State Innovation Model (SIM) grants from CMS, the study shows.

Starting in 2013, CMS began issuing SIM grants to states looking to implement multi-payer healthcare payment and delivery system reform models. The agency gives states either a “Design” or “Test” grant based on whether a state was planning and designing strategies for healthcare transformation or implementing and testing strategies.

More than 20 states have received a Design grant ranging from $1 to $3 million, which provided funding for about a year, while 17 states have benefited from Test grants that provided tens of millions of dollars per state over a three- to four-year period. Eleven states are still completing the second round of SIM grants, the report states.

Only Vermont’s ACO initiative, which was developed using a first-round Test grant from 2013, has generated relative Medicaid savings, CMS recently reported. The state’s value-based reimbursement model saved Medicaid $97 million over three of the five implementation years, the fifth annual evaluation report showed.

Medicaid spending generally increased in the other models after the first year, which CMS pointed out was not unexpected considering the time it takes to modify consumer and provider behavior.

Like with state adoption of value-based reimbursement initiatives, states need time to realize savings and care quality improvements from their alternative payment and care delivery models.

Nevertheless, states play a critical role in shifting the healthcare industry toward value, the report explains. State Medicaid programs provide coverage for 21 percent of the covered lives in the US, following employer-based insurance with 49 percent and besting Medicare at 14 percent.

In addition, states have the authority to move private insurance markets to value-based reimbursement using value-based payment targets and other initiatives.