On that note, the National Academy for State Health Policy (NASHP) recently published an important brief highlighting exciting and innovative payment reform efforts designed to improve health care and lower costs in state Medicaid programs. It emphasizes the importance of data as a critical component to these payment reform efforts.
Two types of Medicaid utilization data are introduced: fee-for-service (FFS) claims data and managed care encounter data. The states of Arkansas, Michigan, and Missouri, in many respects, have been sailing in these uncharted waters for quite some time. These states have tackled some of the most difficult data and implementation issues and there are important lessons to be learned. The brief also identifies the challenges these states faced in collecting, analyzing, and reporting Medicaid data, in addition to providing strategies for addressing these challenges.
Medicaid is a major funder of health care. Medicaid comprises a significant portion of state budgets and directing Medicaid spending toward high value care through payment reform is fairly new. Historically, Medicaid has reimbursed providers through what is referred to as “fee-for-service” (FFS) payments. Because FFS payments do not link payment with accountability for outcomes, the FFS payment system can incentivize providers to deliver a high volume of services instead of high value services, leading to unnecessary spending, poorly coordinated and ineffective care, with little to no measurable impact on the health outcomes of people and populations being served. The brief emphasizes that the concept of high value care encompasses both cost and quality. Suffice it to say, high value care is fundamental to payment reform.
These payment reform examples hold tremendous promise on how Arkansas, Michigan, and Missouri pay Medicaid providers through value-based incentives with the aim of controlling the growth of spending and improving health care. A disruptive innovation. Simply put: it is transformative!
States are in position to follow suit. How? States can start by maximizing how they utilize the data they already collect as Medicaid payers. As a first step, states must fully understand the complexities of their data sources, including their potential challenges and limitations. The brief provides real world examples of how data generated by Medicaid payments in both the FFS and managed care settings can be utilized as a resource for achieving cost reductions and quality improvements through payment reform.
The initiatives highlighted in the brief are potential game changers! They arguably demonstrate ways that Medicaid claims and encounter data can be utilized as a resource for achieving cost reductions and quality improvements through payment reform. The exciting news is that many states have, or are developing, methodologies to use Medicaid claims and encounter data to look at costs and health outcomes. Have we made progress? Yes! But there is still a long way to go to overcome the fragmented service delivery and payment systems that still drive the financing of our health care system.
The push to value-based payment will be accelerated and more effective if Medicare continues to develop and actively seek out collaborative partnerships with private health plans and payors, state Medicaid offices, and other federally-funded programs that adopt value-based payment methods. Engaging providers to participate in value-based payment pilots on a more widespread basis and using data that focuses on high quality, cost efficient care that lead to improved health outcomes will be equally important. These actions will be critical to the success of any new financing approach. It won’t happen immediately but we are off to an exciting start with the payment reform efforts currently underway in Arkansas, Michigan, and Missouri.
There is another piece to health care reform: the design and redesign of healthcare with an emphasis on delivering high quality care. Focusing on the costs and financing of health care alone won’t solve the problem. Providers and health care systems tend to focus on providing health services as opposed to producing health. Better health versus more health services. Makes sense, right?
Does better health care, improved health outcomes, and reduced health care costs matter to you? Critical mass will be the “tipping point” for states to begin payment reform pilots like the exciting efforts underway in Arkansas, Michigan, and Missouri. And finding the “sweet spot” of aligning payment of high quality health care to positive health outcomes. The ultimate goal is to transform and improve the health care system for everyone, to improve health care outcomes and health care experiences, to prevent avoidable and repeated hospitalizations, to reduce administrative burdens (unnecessary record keeping/reporting and other non-value added activity) and to lower health care costs. Better health versus more health services. This would be a huge step toward improving the health care system for everyone and result in healthy people, healthy families, healthy communities, and a healthy nation.