NY Medicaid Program Bringing Value-Based Payment to Pediatrics

August 26, 2019 - New York is overcoming the challenges of developing value-based payment models for pediatrics to bring value to the approximately 1.8 million children enrolled in its Medicaid program, according to a new case study from the Commonwealth Fund and United Hospital Fund (UHF).

The case study, Reforming Payment for Children’s Long-Term Health: Lessons from New York’s Children’s Value-Based Payment Effort, provides key takeaways from New York’s efforts to create a value-based payment model that addresses the health needs of most children enrolled in Medicaid. The takeaways included:

• Do not treat children as “little adults,” meaning typical value-adding strategies and disease-oriented quality measures do not appropriately apply to child well-being
• Longer timeframes for assessing cost savings are key to maximizing healthy growth and development, which will reduce future healthcare needs and bring long-term value to Medicaid
• Support high-quality pediatric care by incentivizing quality improvements, care coordination, and other development promotion services that improve outcomes over the life of a children, including addressing social determinants of health
• Create payment models using input from children’s health stakeholders, including providers from pediatrics, children’s behavioral health, managed care, child welfare, and children’s advocacy

“Value-based payment approaches for children’s health care are urgently needed to overcome fragmented approaches to care and encourage providers to focus on a child’s long-term health,” Suzanne C. Brundage, director of UHF’s Children’s Health Initiative and a co-author of the report, stated in an emailed press release. “New York’s commitment to designing child-centered, value-based payments in Medicaid could be a model for other states pursuing efforts to promote high-quality health care for children.”

Creating value-based payment models that address the health needs of children is difficult. Compared to adults, children in Medicaid have lower acute healthcare utilization, lower costs, and greater use of preventative services, making the short-term cost savings necessary for some value-based payment models hard to achieve for providers.

As a result, few value-based payments models apply to pediatrics, and the limited number of models that do typically address episodic care and common chronic conditions in children like asthma, researchers found.

With children comprising nearly 40 percent of the Medicaid population nationally, there is an opportunity to bring value to pediatrics. So, when New York launched a redesign of its Medicaid program in 2015, committing to shift at least 80 percent of Medicaid managed care payments to value-based payments by 2020, state policymakers knew they had to include pediatrics in their value-based efforts.

To start, the state established the Children’s Health Subcommittee/Clinical Advisory Group, which included experts and providers from pediatrics, children’s behavioral health, managed care, child welfare, and children’s advocacy.

After assessing existing value-based payment models, the subcommittee determined that a new model was needed to achieve significant savings and quality improvements for generally well children, which accounted for 90 percent of their program’s children.

The subcommittee determined that the model should meet certain value-based payment criteria, including capitated payments to allow for flexible funding of traditional health services, as well as risk-adjusted care coordination and new workflows that address developmental and behavioral health needs and social determinants of health.

To tie payments to quality performance, the subcommittee also identified appropriate quality measures, including measures approved by the state for immediate use (e.g., adolescent well-care visits, annual dentist visit) and measures needing further validation by experts (e.g., developmental screening in the first three years of life, maternal depression screening).

The subcommittee also recommended that the state pursue or support the development of “aspirational” measures. For example, the subcommittee determined that parent-child attachment in the first year of life and a child being on developmental trajectory to kindergarten are key outcomes of pediatric primary care. However, providers currently do not have the ability to measure those outcomes.

New York’s Medicaid program has yet to implement a pilot of the value-based payment model. However, the case study stressed that the subcommittee and its recommendations have increased attention to quality, leading to the program adopting recommended child quality measures in all Medicaid value-based payment contracts beginning in plan year 2018.

The state has also committed in its annual update to CMS to testing a value-based payment model consistent with the one put forth by the subcommittee.

“This is an exciting step to incorporate children into value-based payment, enabling us to pay for what works,” Melinda Abrams, senior vice president at The Commonwealth Fund, concluded in the announcement. “Creating value-based payment models that are specific to children’s health care needs could allow states to intervene early in the life course, prevent long-term health issues, and ultimately curb costs. New York’s initiative and what we will learn from it, has the potential to give us the evidence we need to adopt and spread models like this nationwide.”