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CMS Releases Guidance on Advancing Value-Based Care for Medicaid Populations

September 17, 2020

This week, the Centers for Medicare & Medicaid Services (CMS) released guidance aimed at assisting states in moving to value-based care models within their Medicaid populations. In keeping with its strategy to enhance and increase value-based care models for Medicare beneficiaries, CMS believes aligning the Medicaid program, as well as encouraging private payors to adopt similar new payment models, will help drive care transformation and adoption of these new models. The guidance also includes new flexibilities awarded to states to help them with this transition.

Movement toward value-driven reimbursement models has been a goal for the Trump Administration though CMS Administrator Seema Verma admitted efforts had been piecemeal until now. She notes that the guidance is intended to encourage all payors to engage in these payment models to improve quality, enhance patient care delivery, and curb the rising cost of care.

Utilizing key lessons learned from early state and federal pilots, the guidance encourages the assessment of multi-payer alignments, delivery system readiness, stakeholder engagement, and the scope of financial risk to providers in designing models appropriate for each state. The guidance outlines alternative payment and delivery models including:

  • Payment models built on a fee-for-service architecture
  • Payments for “episodes of care”
  • Payments models involving total cost of care accountability

In 2017, the Pennsylvania Department of Human Services first announced that it was setting targets for value-based payments under Medicaid in its physical health managed care contracts for Medicaid managed care organizations (MCOs). These targets ranged from 7.5 percent of revenue paid through a value-based payment methodology during 2017 to 70 percent during 2021.

Pennsylvania also launched a pilot in collaboration with Centers for Medicare & Medicaid Innovation to test a new, value-based payment methodology during 2019. The PA Rural Health Model, a global budget payment methodology, is in its second year of operation with thirteen participating hospitals. The model, intended to be an all-payor model, includes six payors currently including Medicare and some Medicaid MCOs.

For additional information, contact Kate Slatt, HAP’s vice president, innovative payment and care delivery.