Nearly Every State Engaged in Value-Based Payment Models

Value-based payment is not just for Medicare and private payers, states are also engaged in a multitude of value-based payment initiatives. While variation exists in the scope, leadership commitment, and resources devoted to these efforts, “more than 40 states have a state-initiated plan or strategy” to move toward value-based payment instead of fee-for-service (FFS) payment, and “almost half of those initiatives are multi-payer in scope,” according to the report by Change Healthcare, based on a national study of  publicly available information compiled from May through October 2017.

Of note:

• Of the states engaged in VBP, nearly all are using patient-centered medical homes (PCMH) or health homes (HH).
• For the most part, these tests are being tried in Medicaid; 31 states are testing one of these value-based approaches in Medicaid alone. In three states, they are testing at least one of the two in Medicaid and with their state employees: Oklahoma, Tennessee, and Washington. Thirteen states have multi-payer efforts: Arkansas, Colorado, Connecticut, Delaware, Idaho, Iowa, Maryland, Michigan, New York, Ohio, Pennsylvania, Rhode Island, and Vermont.
• Fourteen states have chosen the ACO model: seven in Medicaid (Illinois, Maine, Massachusetts, Minnesota, New Hampshire, New Jersey, Oregon), two in Medicaid and with state employees (Oklahoma, Washington), and five in multi-payer arrangements (Colorado, Iowa, New York, Rhode Island, Vermont).
• Episodes of care (EOC) is another approach being used; currently in 12 states though some are considering it and some only use EOC in a single service area: Colorado, Maine, and South Carolina are considering EOC; New York is using it only in maternity and chronic care; Washington is using it only for total joint episodes of care.
• Pay for performance is also being tried in the following 12 states: California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Iowa, Maryland, Missouri, New Hampshire, Texas, and Wisconsin.
• Seven states have “little to no activity around value-based payment” (Georgia, Indiana, Louisiana, Mississippi, North Dakota, South Dakota, Wyoming).

The following map (created by M2 based on data in the Change Healthcare report) shows the details of each state’s initiatives in this area:

For a few states, testing alternative payment models is not new. Some states have been engaged in these efforts for nearly a decade. Minnesota was the first state to engage in a value-based payment approach of some sort, in 2008. Colorado and Maryland began their efforts in 2011; Oregon in 2012, Arkansas and Vermont in 2013.

States are often the leaders in testing new ideas. Alternative payment models for health care are no different. As health care costs continue to rise, and most states need to balance their budgets every year, it makes sense that finding different ways to pay for Medicaid and state employees’ health care is something nearly every state is focused on.

VBP is not dead, as evidenced by nearly all states are taking action to transition from a FFS approach to one that is focused on value. To slow health care costs, we have to stop paying for what doesn’t work. The more we can reward outcomes in health care, the more likely it is that providers and patients will make decisions based improvements in care, rather than adverse financial incentives for low-value care.