Payment Reform, Value-Based Care Top 2017 Medicaid Priorities

December 22, 2016 - Delivery system and healthcare payment reform, especially through value-based care, topped the list of 2017 Medicaid priorities, according to the annual State Medicaid Operations Survey from the National Association of Medicaid Directors (NAMD).

Roughly half of the 47 state Medicaid agencies surveyed ranked delivery system and healthcare payment reform as one of their top three priorities in 2017, making it the most popular area of focus in the coming year across states.

Healthcare reform was also the most common long-term objective for Medicaid programs. Eight states pinpointed delivery system and payment reform as one of their long-term strategic priorities for 2018 to 2021.

“Indeed, NAMD's operations survey shows that Directors are keenly focused on moving the healthcare system from volume to value through innovation that reflects the distinctive landscape of each state and its beneficiaries,” the organization stated in a press release. “While 2017 may usher in significant changes in the Medicaid landscape, the shift towards value-based care will be a constant as policymakers confront rising healthcare costs and seek to improve quality.”

With healthcare reform topping Medicaid priority lists, Medicaid agencies stated that they intend to implement more value-based care and reimbursement models. Two out of every five states plan to increase value-based purchasing capacity in 2017.

Many states, however, have already started to introduce and use value-based care models. In 2016, 20 states implemented value-based reimbursement models that blended fee-for-service and quality-based payment.

Meanwhile, 10 states had value-based reimbursement models in place based on fee-for-service, but with some upside or downside financial risk. Another 11 states ran full financial risk models through population-based payments.

More states also expect to increase value-based reimbursements to providers that include more financial risk. Eleven states said they are planning to implement Medicaid reimbursement models with upside or downside risk and 15 states are planning to implement population-based payments.

To help implement value-based care models, more Medicaid directors plan to prioritize health IT investment and implementation. Following healthcare reform, 18 directors identified health IT and systems as the second most common Medicaid priority in 2017, increasing from just one-third of states in 2016.

Twenty states also anticipate to increase staff capacity to support health IT and systems efforts in 2017.

In terms of specific health IT projects, most Medicaid directors agreed that their IT efforts would focus on construction, refinement, and certification of the Medicaid Management Information System (MMIS). The federally-funded system verifies eligibility, processes claims, and reimburses providers.

“MMIS and other similar investments are being designed to not only modernize claims and encounter data, but also support quality improvement and delivery system and payment reform initiatives in states,” stated NAMD in the report.

Other top Medicaid priorities for 2017 included mental health and substance use disorder care improvement (15 states), managed care general improvement (12 states), and population health management implementation (10 percent).

Additionally, NAMD researchers revealed several challenges Medicaid directors may face in the coming year that could impede their efforts to transition to value-based care. The top challenges included insufficient budget, staffing shortages, and low director compensation.

Budgetary restrictions were a problem for 31 states, the survey showed. The states faced financial constraints at the administrative, agency, and state levels and cited budgetary issues as a significant healthcare reform impediment.

Insufficient budgets also exacerbated staffing shortages. Thirty-eight states experienced healthcare employment challenges in 2016.

Medicaid directors found it difficult to attract and retain employees, with 12 states reporting inadequate staff compensation, 12 states reporting insufficient recruitment, and 7 states reporting limited professional development as reasons why.

As a result, the average vacancy rate among states was 14 percent. Some other states also stated that more than one-quarter of their agency’s open positions were unfilled.

NAMD attributed some healthcare employment problems to the public nature of Medicaid programs.

“Often, staff recruitment and retention is most problematic around delivery system and payment reform,” wrote NAMD. “Individuals with the skill sets to drive innovation are highly sought after in the private sector, which offers higher compensation.”

Medicaid directors also faced healthcare employment challenges, including low compensation and tenure. Directors tended to either have experience within the Medicaid agency or in other related fields, such as pharmacy, medicine, nursing, and hospital administration, but their compensation was still significantly lower than their peers in the private sector.

In 2016, the median annual salary for Medicaid directors was $142,000 and compensation ranged from $105,000 to $260,000 per year.

The survey also found that Medicaid director tenure improved in 2016, but remained low. In the past year, median tenure increased from one year and five months to one year and seven months.

Most Medicaid directors also only had the job for a short period. Almost two-thirds of directors had been in the position for less than two years, and only six directors reported more than five years of experience.

“These short tenures, as well as the fact that most Medicaid Directors come from within their own agency, underscore the need for leadership development and training for new Directors and staff within the agency,” wrote NAMD. “Regardless of previous experience, assuming the role of Medicaid Director represents a mammoth transition, requiring a broadening of issue areas and the adoption of new skills and knowledge.”

Dig Deeper:

• What Is Value-Based Care, What It Means for Providers?

• Preparing the Healthcare Revenue Cycle for Value-Based Care