States and Medicaid managed care organizations are experimenting with value-based payment models, but their policy choices come with difficult tradeoffs.
Federal law gives states plenty of flexibility to encourage value-based payments in Medicaid managed care, but rolling out those payment reforms requires a lot of effort from states, according to new research presented by the Medicaid and CHIP Payment and Access Commission's staff at a meeting on Thursday.
"There's this general sense out there that value-based payments are going to save the world," said MACPAC commissioner Tricia Brooks, a research professor at the Georgetown University McCourt School of Public Policy's Center for Children and Families. "That if more states would adopt them, it's going to take care of a lot of our problems, and I think the jury's still out on that."
While several states are pushing value-based payment in Medicaid managed care, some have followed a more prescriptive path, and others have permitted more flexibility in how the payments are adopted.
States that use a prescriptive approach report that providers benefit from more consistency and standardization, but managed care organizations are less able to customize the payments to meet the needs of specific providers.
Value-based payment requirements, a more flexible approach, allow managed care organizations to design and test different payment models. But that can create more administrative work for providers because they need to negotiate multiple contracts across several managed care organizations. It also makes it tougher for states to evaluate which models are working the best because they can't monitor them as easily.
Managed care organizations have changed their behavior thanks to contracts that require them to adopt value-based payments. But state Medicaid programs are still having trouble getting providers to participate because many providers aren't ready to embrace value-based payment or willing to take on more risk, said Amy Zettle, a senior analyst for MACPAC.
"While states have been implementing these approaches for several years, there is limited data available to assess whether it's lead to delivery system reform, improved quality of care or reduced costs," she said.
Many policymakers and healthcare experts have long advocated for the broad adoption of value-based payments, which link providers' financial rewards to the quality of care that they deliver to their patients. But only about a third of healthcare payments were value-based in 2018, according to the Health Care Payment Learning and Action Network.
The majority of healthcare services delivered by doctors and hospitals are still reimbursed on a fee-for-service basis. Experts say that widespread adoption of value-based payment will require significant delivery system reform.