Medicaid Innovation Accelerator Program: Value-Based Payment & Financial Simulations
State Medicaid programs request assistance with developing value-based payment approaches.
For much of Medicaid’s history, payments to medical providers were based on units of care—a visit to a hospital, for instance, or a prescription—and not the actual value of care or its price tag. However, Medicaid agencies can now tie provider compensation to quality and cost for broad categories of care, but need assistance with identifying, designing and implementing those value-based payments (VBP).
NORC identified which payment incentives improve patient outcomes and lower costs.
The Medicaid Innovation Accelerator Program (IAP) provided technical assistance to states interested in designing, developing, or implementing VBP approaches. These approaches can range from rewarding for performance in fee-for-service to capitation, including alternative payment models and comprehensive population-based payments. Further, if a state sought to pursue a particular VBP approach, IAP provided the state with support to conduct financial simulations and forecasts that analyze the financial impact of these payment and delivery strategies.
Through one-on-one technical assistance, including a team of coaches and SMEs, NORC advised administrators of over 18 state Medicaid programs plus the District of Columbia on various VBP approaches. Some programs came to NORC with specific proposals that needed refining. Others simply asked for ideas that were effective in other states. With our partners—the Center for Health Care Strategies, RAND Corporation, Actuarial Research Corporation, and Stratis Health—we drew from previous experience and new stakeholder research to provide the programs with resources necessary to implement VBPs.
A third of states now have tools to provide care more effectively.
Following the NORC team’s assistance with designing and implementing VBPs, 18 Medicaid programs are better equipped to manage costs without sacrificing care. For example, NORC:
- Created a memo on health home performance measures used for VBPs such as the Medicaid Adult Core Set of measures to support Illinois’ in developing adequate systems for monitoring of health homes.
- Supported Kentucky’s inclusion of VBP language in their managed care contracts that leveraged their purchasing influence to improve health outcomes for its beneficiaries.
- Conducted financial simulation analyses in Minnesota to examine how a beneficiary’s total cost of care varies by social determinants of health factors, in order to assess the reasonable savings associated with different payment arrangements.
- Leveraged survey examples from other states to develop a survey that South Carolina used to focus and advance its VBP work with managed care organizations.
- Explored options in Washington State for designing a perinatal episode of care (EOC) that incentivizes postpartum care and integrates payment for pediatric services, including examining the projected financial impact of these perinatal care elements.
Learn More About the Project
For more information about the Medicaid Innovation Accelerator Program: